Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 95842r1
December 2, 2010
Dear [Client]:
Subject:
GST/HST Ruling - [...] [the Society]
Thank you for your letter of October 16, 2008, in which you ask that we consider the comments therein that support your contention that [...] [(the Society)] is entitled to an 83% PSB rebate under section 259 in respect of its operation of the [...] (Home). Your letter is further to our Ruling dated December 18, 2007 (Case # 95842), in which we concluded that [the Society] is not a facility operator making facility supplies and is therefore not entitled to claim an 83% PSB rebate of the GST and the federal part of the HST under section 259 of the Excise Tax Act (ETA) with respect to its operation of the Home. We apologize for the delay in responding to your enquiry.
In your October 16, 2008 letter, you indicate that you furnished ample information to us in support of your contention that you provide a medically necessary process of health care for the purpose of maintaining resident health and providing palliative health care, and that this information was reflected in our December 18, 2007 Ruling. You also offer additional information to support the premise that the Home is "hospital-like". In that regard, you describe the changes that have taken place at the Home [...] and suggest that the Home now "looks and feels like a hospital rather than a Home for its residents".
After carefully considering the information you presented in your letter, as well as the information submitted previously, our position remains the same and we hereby confirm that [the Society] is not entitled to claim an 83% PSB rebate of the GST and the federal part of the HST with respect to its operation of the Home.
However, as a charity, [the Society] is entitled to claim a 50% PSB rebate of the GST and the federal part of the HST on qualifying purchases, and, effective July 1, 2010, as a charity resident only in Ontario, an 82% PSB rebate of the provincial part of the HST on qualifying purchases.
In your letter of October 16, 2008, you also express your concerns that certain hospitals in your area receive an 83% PSB rebate of the GST and the federal part of the HST, and that a significant portion of your business is the same as that of these hospitals. While we cannot comment on a particular client's situation, we offer the following comments regarding the entitlement of a hospital authority to this PSB rebate.
Generally speaking, an organization that is designated as a hospital authority by the Minister of National Revenue will be entitled to claim an 83% PSB rebate of the GST and the federal part of the HST for non-creditable tax charged in respect of property or services to the extent that the property or services are for consumption, use or supply in activities engaged in by the hospital authority in the course of operating a public hospital and in carrying on certain other activities.
In addition, effective July 1, 2010, a hospital authority that is resident only in Ontario is also entitled to claim an 87% PSB rebate of the provincial part of the HST on qualifying purchases.
GST/HST Policy Statement, P-245 - Determination of "...activities engaged in by the person in the course of operating a public hospital" for purposes of the 83% public service body rebate for hospital authorities (Policy P-245), available on the CRA website, describes the criteria the CRA considers in order to determine whether a particular facility is a public hospital for GST/HST purposes. In accordance with Policy P-245, a facility must have all of the following characteristics in order to be considered a public hospital:
• The services of medical practitioners, nursing staff and allied health professionals are available at all times to carry out the examination and diagnosis of patients and the provision of treatment and care.
• The services of health care personnel and health care equipment are utilized for the provision of health care services to the general public. This includes accommodation for laboratory, radiological and other diagnostic services, the administration of drugs, the use of operating rooms, case rooms, medical or surgical supplies and equipment.
• Inpatient beds and services are provided. Patients are assigned a bed in order to receive diagnostic services, medical treatment and care. Inpatient services are also provided in the public hospital to ensure the patient's necessities of life and comfort, such as nursing services on a 24-hour basis, food services and laundry services.
• Operational and capital funding is received from provincial or territorial governments for the provision of publicly insured inpatient and outpatient hospital services.
• The hospital authority operates the public hospital under the laws of provincial or territorial governments respecting hospitals.
A facility that does not have all of the above characteristics is not a public hospital for GST/HST purposes. The Home, a long-term care facility, is not a public hospital for GST/HST purposes as it does not meet all of the criteria described in P-245.
You indicate that, in some cases, hospital beds are occupied by patients who would ordinarily be in long-term care facilities but remain in hospital due to the lack of available long-term care beds (you refer to these patients as "bed blockers"). You suggest that this is demonstrative that a long-term care facility is providing care that is similar to that of a hospital. We note that the Department of Finance has stated, in the 2003 and 2005 Federal Budget documents (iFootnote 1) , that the expansion of the 83% PSB rebate of the GST and the federal part of the HST was intended to apply to qualifying facilities and entities that provide a high level of care similar to that which has traditionally been provided in hospitals and that the legislative amendments to section 259 were designed to address the restructuring of health care delivery that resulted in certain health care functions (i.e., services traditionally provided in hospitals) being moved outside hospitals. In other words, the fact that a certain portion of hospital beds are currently occupied by "bed blockers" who would otherwise be moved to a long-term care facility does not necessarily demonstrate that long-term care facilities are providing a level of care that is similar to that which has been traditionally provided in hospitals as contemplated by the legislative amendments to section 259. Rather, this is more indicative of the fact that certain hospitals are, due to circumstances beyond their control, providing services that are similar to those that have been traditionally provided in nursing homes and other long-term care facilities.
In your letter, you note that a municipality may be entitled to a 100% PSB rebate of the GST and the federal part of the HST with respect to its operation of a long-term care facility and suggest that this "gives an unfair advantage" to a municipally run long-term care facility over both [the Society's] charitable non-profit home and a hospital. With respect to this matter, we note that the Canada Revenue Agency is responsible for administering the GST/HST legislation as passed by Parliament. Your concern respecting the availability of a 100% PSB rebate of the GST and the federal part of the HST for municipalities is a matter of tax policy, which falls under the responsibility of the Department of Finance Canada.
We trust that our comments above are of assistance. If you require further clarification with respect to any of the issues discussed in this letter, please contact Chantal Desrosiers, Manager, Municipalities and Health Care Services Unit at 613-941-3268.
Yours truly,
Philippe Nault
Director
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
i 1. 2003 Budget Plan; 2005 Budget Plan - Annex 8 Tax Measures: Supplementary Information; 2005 Explanatory Notes to section 259.
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UNCLASSIFIED
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