31 July 2003 GST/HST Ruling 37807 - Whether Deemed "Provincially Licensed Practitioner"

Dear XXXXX:

This is in reply to your letter XXXXX with attachments, and our XXXXX telephone conversations XXXXX 2003, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the XXXXX facility, which is described as XXXXX for seniors.

XXXXX

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX.

2. XXXXX.

3. XXXXX.

4. XXXXX uses the facility to provide XXXXX living environment for seniors. It operates the facility XXXXX to provide accommodation, meals, and limited support services to seniors, but not skilled nursing care. XXXXX[.]

5. XXXXX.

6. XXXXX.

7. XXXXX.

8. The residential units XXXXX are private apartments consisting of studio, one bedroom and two bedroom apartments XXXXX[.] Each unit includes a four-piece bathroom, kitchenette containing a counter, sink, refrigerator and cabinets, and individually controlled heating and cooling systems.

9. XXXXX supplies basic accommodation, meals and services to the residents under an agreement XXXXX[.]

(a) XXXXX

(b) XXXXX

(c) XXXXX

(d) XXXXX

(e) XXXXX

(f) XXXXX

10. The initial term of the Agreement is based on a XXXXX-year tenancy. XXXXX the consideration for this supply is payable monthly and the fees are based on a daily amount. Utilities are included in the daily amount; however the resident is responsible for telephone and cable television hookup and fees. After the XXXXX year, the Agreement continues on a month-to-month basis. The resident may terminate the Agreement on one month's written notice to XXXXX for any reason. The Agreement may also be terminated where the resident has health care needs that cannot be addressed at the Centre or for other reasons set out in the Agreement.

11. The accommodation under the residency program provides the resident with the use of an apartment and the personal property of XXXXX located in the apartment, such as wall-to-wall carpeting, window coverings, a closet or wardrobe space, a small refrigerator and cabinet space.

12. The resident may furnish the apartment with his or her own furniture and use his or her own minor electrical appliances and special equipment, such as televisions and radios.

13. The resident is responsible for the cost of repairing, cleaning, or replacing the carpet in the resident's suite.

14. The resident may be allowed to keep a pet in his or her suite.

15. There is a limit to the care and services that XXXXX can provide. If the resident requires certain care or services that XXXXX is not able to provide pursuant to the current applicable local or provincial regulations, the resident may terminate the agreement with XXXXX.

16. Common areas available for use by residents of the Centre include a main dining room, a private dining room for guests, bistro lounge, television lounge, entertainment and activity room, living room, parlour, sunroom, library, sun porches, verandas, outdoor gardens and pathways, on-site hair salon and barber shop, laundry rooms and public restrooms. The Centre also includes areas for use by XXXXX staff in administering the facility.

17. All residents receive the following basic amenities:

(a) The use of common areas of the Centre, which are available for the common use and enjoyment of all residents. The common areas are hallways, walkways, meeting rooms, activity rooms, dining rooms, open common spaces located within the Centre, and other areas noted in Fact 16 above;

(b) The provision of restaurant-style dining services for three meals daily that are served in the dining room and availability of snacks 24-hours per day;

(c) Daily housekeeping services, such as making the bed, tidying up the room and removing the trash;

(d) Weekly housekeeping services, such as vacuuming and dusting, cleaning the bathroom and kitchenette, and changing the bed and bath linens;

(e) Weekly personal laundry, including pick-up and delivery, but not including dry-cleaning services;

(f) Transportation in the Centre's bus or other vehicle as scheduled by XXXXX for shopping and other community services and activities;

(g) A monthly wellness assessment by a licensed nurse, XXXXX[;]

(h) Regularly scheduled social, educational, religious, recreational and wellness programs;

(i) XXXXX[;]

(j) An emergency signalling device that may be activated from the bathroom and sleeping areas of each apartment. This device sends a message to a staff member who can request emergency services, such as 911 services, available in the area. The emergency medical services are not supplied by XXXXX and any costs related to these services are borne by the resident.

XXXXX

18. There are no assessment criteria for admittance to the Centre and therefore potential residents are not required to demonstrate their needs in advance of moving to the Centre. An individual's decision to move to the Centre is made at his or her discretion.

19. Before moving into the Centre, the individual must pay a one-time XXXXX XXXXX for the initial set-up and maintenance of the XXXXX package that applies to the residency program that was selected. This fee is non-refundable; however, if the agreement is terminated prior to the individual moving into the Centre or receiving any assisted living services, XXXXX will refund the fee paid.

20. The set-up of the care and services package involves a physical and mental assessment of the individual by a licensed registered nurse, who is an employee of XXXXX. The purpose of the assessment is to ensure that the Centre can appropriately meet the individual's needs and personal interests. This information is used to determine the level of supervision and assistance that the individual requires to ensure that the individual's needs are not outside the scope of what the Centre can provide. The assessment also assists XXXXX in tailoring meals and social programs to meet the individual's needs.

21. Following the initial assessment, the registered nurse develops a personalized care and services plan for the resident, which is provided to XXXXX and the resident's family members and physician. The registered nurse reviews and updates the services care plan on a monthly basis.

22. The duties of the registered nurse are limited to the periodic review of the care and services plan and supervision of the distribution and administration of medications. Residents who require regular nursing care have to obtain the services of a private nurse from other sources.

XXXXX

23. The XXXXX consists of the residential accommodation and the basic amenities described in Facts 10 through 17.

24. In addition to the accommodation and basic amenities, residents in this Program receive XXXXX up to half an hour per day of "hands-on" assistance with a basic activity of daily living, such as bathing, dressing, grooming, ambulating, orientation, including one hydro-tub bath per week if desired, as well as prompting, monitoring and supervision.

25. Residents in this Program have the option of acquiring, at their discretion, other supplies to assist them: the XXXXX

1. The XXXXX is a separate all-inclusive program designed for residents who have been diagnosed with Alzheimer's, dementia or other memory-related disorder, or where it has been determined that the program is in the best interests of the resident because of the higher levels of personal security and care available under the Program.

2. This Program consists of the residential accommodation and the basic amenities described in Facts 10 through 17.

3. In addition to the accommodation and basic amenities, residents in this Program receive a comprehensive care and services package entitling them to all the services of the XXXXX as well as the services offered under the XXXXX as well as higher levels of supervision and personal assistance for a single consideration.

4. The residents in this program are located in a separate area of the Centre that is specially designed and staffed with specially trained care providers. This program provides for monitoring of the resident's physical whereabouts and condition and additional levels of staffing and support.

XXXXX

26. This optional Program is available to residents registered in the XXXXX[.] For an additional fee, these residents may acquire up to an hour of the following personal care services per day from XXXXX[.]

(a) XXXXX

(b) XXXXX

(c) XXXXX

(d) XXXXX

(e) XXXXX

(f) XXXXX

(g) XXXXX

(h) XXXXX

(i) XXXXX

27. This optional Program is available to residents registered in XXXXX. For an additional fee, these residents may acquire from XXXXX services that relate to the distribution, administration, and supervision of their medications.

28. XXXXX

These activities are overseen by a licensed nurse, but not performed by a nurse.

Additional Goods and Services

29. XXXXX makes available, for an additional charge, various goods and services, which may be purchased individually at the discretion of the residents:

(a) Arrangements for additional direct care assistance with activities of daily living provided by a home help service company approved by XXXXX;

(b) Guest meals;

(c) Incontinence products;

(d) Arrangements for beauty parlour services in the on-site hair salon;

(e) Assistance with special maintenance projects, such as hanging pictures, furniture assembly, etc.;

(f) Housekeeping services in addition to those included as part of the XXXXX;

(g) Transportation for personal trips; and

(h) Other goods and services such as eyeglasses, dentures, podiatrist care, psychiatric consultation, speech therapy and occupational therapy may be available through XXXXX or arranged through XXXXX.

Provincial Regulation XXXXX

30. You advised that the Centre is not a nursing home and it is not subject to provincial regulation governing long-term care facilities.

31. You advised that XXXXX complies with the provisions of the XXXXX XXXXX because it operates a residential complex (i.e., the Centre) that is intended to be occupied by persons for the purpose of receiving care services, including assistance with the activities of daily living, as described in the statutory definition of "care home":

"care home means a residential complex that is occupied or intended to be occupied by persons for the purpose of receiving care services, whether or not receiving the services is the primary purpose of the occupancy;"

Rulings Requested

1. The Centre XXXXX is a "health care facility" for purposes of paragraph (c) of the definition in Part II of Schedule V to the ETA.

2. XXXXX under the agreements with the residents, is making a single supply of an "institutional health care service" under section [1] of Part II of Schedule V to the ETA.

3. XXXXX under the agreement with the residents, is making a single supply of a personal care service that falls under section 2 of Part IV of Schedule V to the ETA.

As discussed in our telephone conversations, the Real Property Unit of the Financial Institutions and Real Property Division will respond to the three ruling requests concerning the ETA provisions that apply to real property (section 191, and sections 6 and 6.1 of Part I of Schedule V). For more information on these matters, please contact Costa Dimitrakopoulos at (613) 954-3772 and refer to Case Number 46713.

Rulings Given

1. The part of the Centre XXXXX operated by XXXXX to supply the XXXXX is not a "health care facility" as defined in paragraph (c) of Part II of Schedule V to the ETA.

The part of the Centre operated by XXXXX to supply the XXXXX falls within paragraph (c) of the definition of "health care facility" in Part II of Schedule V to the ETA.

2. The supply of the XXXXX to a resident, as described in Facts 27 to 30 inclusive, falls within section 2 of Part II of Schedule V to the ETA.

All other supplies, i.e., the XXXXX, and the additional goods and services, do not fall within section 2 of Part II of Schedule V to the ETA. As discussed in the "Explanation" below, these other supplies are taxable at the rate of 7% unless another exemption in the ETA applies.

3. XXXXX is not making a single supply of a personal care service that falls within section 2 of Part IV of Schedule V to the ETA.

These rulings are subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by these rulings provided that none of the above issues is currently under objection or appeal; that there are no relevant changes in the future to the ETA, or to our interpretative policy; and that you have fully described all necessary facts and transactions for which you requested a ruling.

Explanation

Ruling Request 1: Paragraph (c) of the definition "health care facility" in section 1 of Part II of Schedule V to the ETA (hereinafter referred to as "paragraph (c)")

Paragraph (c) defines a "health care facility" as follows:

"a facility, or a part thereof, operated for the purpose of providing residents of the facility who have limited physical or mental capacity for self-supervision and self-care with

(i) nursing and personal care under the direction or supervision of qualified medical and nursing care staff or other personal and supervisory care (other than domestic services of an ordinary household nature) according to the individual requirements of the residents,

(ii) assistance with the activities of daily living and social, recreational and other related services to meet the psycho-social needs of the residents, and

(iii) meals and accommodation."

To fall within paragraph (c) of the definition of "health care facility", the facility in question, or part of that facility, must be operated to meet the needs of residents who have limited physical or mental capacity for self-supervision and self-care. All of the underlying elements set out in this paragraph must be present in order for a facility, or part thereof, to be a health care facility for purposes of the ETA. This paragraph is describing a facility where the residents have demonstrated social and health needs due to, for example, chronic diseases or functional disabilities. Because the residents are limited mentally or physically in their capacity to care for themselves independently, they require care, such as nursing, supervisory and personal care, and assistance with the activities of daily living, social and recreational activities, meals, etc. Accordingly, a health care facility for purposes of the ETA is a facility operated for the purpose of attending to the social and health needs of residents with limited mental or physical capacity to care for themselves. Therefore, the primary purpose of occupancy in a health care facility is to receive care services that meet one's social and health needs because of a limited capacity to care for himself or herself.

In a health care facility, the provision of care would not be discretionary benefits that are available in addition to accommodation. It is our view that the greater the number of optional services available to the residents indicates a lesser need on the part of the residents for care and supervision. A living environment that is a lifestyle choice offering limited support services provided as discretionary benefits is not a health care facility for purposes of the ETA.

You suggested that the Centre's license as a "care home" under the XXXXX may provide support that the Centre is a health care facility. However, the definition of "care home" in the XXXXX contrasts with the definition of "health care facility" in the ETA. That is, you advised that a "care home" for purposes of the XXXXX is a residential complex that is occupied or intended to be occupied by persons for the purpose of receiving care services, whether or not receiving the services is the primary purpose of the occupancy. We note there is no requirement under the XXXXX or its regulations that a care home provides any care services. However, a health care facility for purposes of the ETA is not a residential complex but rather a facility operated for the purpose of providing care services. Because the XXXXX and ETA definitions are not comparable, whether a particular facility is a "care home" for purposes of the XXXXX is not indicative of that facility being a "health care facility" for purposes of the ETA. Therefore, the licensing of the Centre under the XXXXX does not serve as an indicator that it is a "health care facility" as defined in paragraph (c) of section 1 of Part II of Schedule V to the ETA.

XXXXX is a member of the XXXXX and XXXXX XXXXX private pay retirement residences that offer flexible lifestyle options for seniors who are active and independent and who want to make their own choices. However, this description by XXXXX of a retirement residence contrasts with the ETA definition of "health care facility". Thus, XXXXX membership in XXXXX does not serve as an indicator that the Centre is a "health care facility" as defined in paragraph (c) of section 1 of Part II of Schedule V to the ETA.

Please note that the provision of services alone would not bring a particular facility within the scope of paragraph (c) of the ETA definition of "health care facility". This definition is not a checklist nor does it set out a single criterion. It cannot be assumed that because of the availability of certain services, the facility is operated for the purpose of meeting the needs of residents who have limited physical or mental capacity for self-supervision and self-care. Rather, this purpose would generally be established by a prescribed evaluation process or other recognized assessment tool that demonstrates that the facility is operated to meet the needs of residents who have limited physical or mental capacity for self-supervision and self-care.

Based on the information provided, the XXXXX is for residents who are autonomous in their capacity to care for themselves. The description of the XXXXX indicates that its purpose is to facilitate an independent living environment for residents by providing residential accommodation with the availability of limited assistance with some activities of daily living, as well as prepared meals. The availability of assistance does not, in and of itself, demonstrate that the residents in this Program have limited physical or mental capacity for self-supervision and self-care. This information indicates that the XXXXX living environment offered by XXXXX in XXXXX is a lifestyle choice made by residents, where the limited support services are available as discretionary benefits.

In contrast, it is our view that the part of the Centre operated by XXXXX to supply the XXXXX falls within paragraph (c) of the definition of "health care facility" in Part II of Schedule V to the ETA. The requirement that the residents in this Program have been diagnosed with Alzheimer's, dementia or other memory-related disorder demonstrates that this Program is operated to meet the needs of residents who have limited mental capacity for self-supervision and self-care.

Ruling Request #2: Single Supply of an Institutional Health Care Service

As explained above, the part of the Centre operated by XXXXX to supply the XXXXX falls within paragraph (c) of the definition of "health care facility" in Part II of Schedule V to the ETA. According to the information provided, the XXXXX is a single composite supply made by XXXXX consisting of various components, such as meals and accommodation, and supervision and personal care services rendered by employees of XXXXX to the residents of the XXXXX. According to the XXXXX Agreement", the supply of the XXXXX is made for a single daily fee. On the basis of this information, it is our view that the various components of the XXXXX constitute a single composite supply of an "institutional health care service" provided in a "health care facility" as defined in the ETA. As such, the supply of the XXXXX to the residents falls within section 2 of Part II of Schedule V to the ETA.

The facts state that XXXXX the additional goods and services are separate supplies. As separate supplies, the XXXXX and the additional goods and services are not components of a single composite supply. Because the services that comprise these supplies are not specifically included on their own in the ETA definition of "institutional health care service", these separate supplies made by XXXXX do not fall within section 2 of Part II of Schedule V to the ETA.

With respect to residents who contract for the XXXXX, these supplies do not fall within the definition of "institutional health care service" because they are not provided within a "health care facility" as defined in the ETA. As such, neither of these supplies falls within section 2 of Part II of Schedule V to the ETA.

Additional comments concerning the XXXXX, and the supply of additional goods and services are provided below under "Additional Information".

Ruling Request #3: Personal Care Services

Section 2 of Part IV of Schedule V to the ETA exempts a supply of a service of providing care, supervision and a place of residence to children, underprivileged individuals or to individuals with a disability in an establishment operated by the supplier for this purpose. It is our view that needs and other conditions normally related to aging are not, in and of themselves, determinative factors that the individuals have a disability. In order for it to be said that a particular facility is operated for the purpose of providing a service to individuals with a disability, we would consider whether the facility is operated to meet the needs of individuals having a particular disability. As such, having a particular disability would be a condition of admittance to the facility.

Additional Information

XXXXX

The information provided demonstrates that the XXXXX is a separate supply that relates exclusively to the set-up and maintenance XXXXX. There is no exemption in Part II of Schedule V to the ETA that would apply to this supply.

XXXXX

Household and personal care services rendered to an individual who, due to age, infirmity or disability, requires assistance are homemaker services as defined in the ETA. There is no exemption in the ETA that applies to homemaker services in general and therefore, the supply of homemaker services would generally be subject to the GST/HST at the rate of 7% or 15%.

However, the ETA provides that a particular supply of homemaker services may be exempt under section 13 of Part II of Schedule V where the service is rendered to an individual in the individual's place of residence and the homemaker service is publicly funded. For example, if the person who acquires homemaker services receives funding from a government or municipality for the specific purpose of acquiring homemaker services, then homemaker services supplied to that particular person would be exempt.

Whether the personal care services rendered to residents of the Centre under the XXXXX fall within the definition of "homemaker service" is a question of fact. We note that you advised that XXXXX does not receive public funds for its operations. However, no information was provided to indicate whether any of the residents receive public funds to acquire homemaker services.

XXXXX

Section 6 of Part II of Schedule V to the ETA exempts the supply of a nursing service rendered by a registered nurse, a registered nursing assistant, a licensed or registered practical nurse or a registered psychiatric nurse to an individual in the individual's place of residence.

We note that the information provided indicates that medications are not administered by a registered nurse but by other staff XXXXX, and that the role of the licensed nurse is to oversee this activity. Therefore, the supply of the XXXXX by XXXXX to the residents at the Centre does not fall within section 6 of Part II of Schedule V to the ETA. As no other exemption applies, the supply of the XXXXX is subject to the GST/HST at the rate of 7%.

Additional goods and services

There are no exemptions in Part II of Schedule V to the ETA that apply to the goods and services enumerated in Fact 33 that XXXXX makes available to the residents for an additional charge. Therefore, the supply of these additional goods and services, e.g., guest meals, beauty parlour services, special maintenance products, etc., is subject to the GST/HST at the rate of 7%.

Incontinence products

The supply made by XXXXX of incontinence products may be zero-rated under section 37 of Part II of Schedule VI to the ETA where the products are specially designed for use by an individual with a disability. To fall within this provision, the product must be an incontinence product. That is, a product will not be zero-rated under section 37 if it has been designed for other applications and may be used for conditions other than incontinence. In addition, the product must have been specially designed to be used by an individual with a disability and not by someone else, such as a health care practitioner. We consider a product to be specially designed for use by an individual with a disability where the product is designed for use by an individual with a long-term impairment as opposed to experiencing a temporary restriction. There must be evidence that the product was designed to be used by the individual with the disability.

Types of products that fall under this section include disposable and reusable briefs, pads, adult diapers and liners that are specially designed to assist an individual in coping with incontinence, as well as products specially designed for use by an individual with a disability in treating incontinence.

The types of products that would not fall under section 37 include catheters used by persons to cope with temporary incontinence as a result of a surgical procedure, since such temporary incontinence does not meet the "disability" requirement of section 37.

Other health-related services

Based on the information provided, whether XXXXX is the supplier of other health related goods and services that may be available to the residents, such as eyeglasses, dentures, podiatrist care, psychiatric consultation, speech therapy and occupational therapy, is unknown. In the event that XXXXX is the supplier of these goods and services, they would constitute taxable supplies because no exemptions would apply to XXXXX as the supplier.

In the case of goods, we note that the supply of eyeglasses to a consumer would be zero-rated under section 9 of Part II of Schedule VI to the ETA where the eyeglasses are supplied on the written order of a provincially licensed eye-care professional for the treatment or correction of a defect of vision of a consumer named in the order. Dentures that constitute the supply of artificial teeth are zero-rated supplies under section 11 of Part II of Schedule VI to the ETA. However, from the information provided, we are unable to ascertain whether XXXXX itself supplies these goods or simply refers residents to a supplier of these goods.

The supply of podiatrist care, psychiatric consultation, speech therapy or occupational therapy would be exempt under section 7 of Part II of Schedule V to the ETA, but only when a provincially licensed practitioner of the service makes the supply. It is our understanding that XXXXX would not qualify as a provincially licensed practitioner and therefore, if XXXXX supplied these services itself, these services would constitute taxable supplies subject to the GST/HST at the rate of 7%.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-6761.

Yours truly,

Susan Eastman
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division