Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
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XXXXX
XXXXX
XXXXX
XXXXX
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Case Number: 52982
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XXXXX
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April 22, 2005
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Subject:
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GST/HST INTERPRETATION
GST Treatment of Personal Care Services
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Dear XXXXX:
Thank you for your letter XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to personal care services.
As outlined in your letter, XXXXX (Agencies) in XXXXX supply the services of their employees to operators of residences for infirm or disabled individuals. The employees of the Agencies may be resident care attendants, registered nurses, licensed practical nurses or activity aides. The services rendered by employees of the Agencies may include assisting residents in daily living activities, ensuring they have adequate nutrition, and performing nursing procedures. The Agencies invoice the operators of the residences.
Interpretation Requested
You requested our opinion on the application of the exemption from the GST under sections 2 and 3 of Part IV of Schedule V to the Excise Tax Act (ETA) for personal care services provided by Agencies to operators of residential care facilities in the province of XXXXX.
Interpretation Given
In the absence of specific contracts or information about the Agencies and the supplies, we are unable to issue you a ruling with respect to your enquiry as rulings can only be issued with regard to a clearly defined fact situation of a particular person. However, we are pleased to provide you with the following interpretation of the relevant provisions of the ETA.
In order for a supply of a service to be exempt of the GST under section 3 of Part IV of Schedule V to the ETA, the supply must be a service of providing care and supervision; it must be made to an individual with limited physical or mental capacity for self-supervision and self-care due to an infirmity or disability; and it must be rendered principally at an establishment of the supplier.
Pursuant to the above noted provision, you suggest the expression "at an establishment of the supplier" would include a situation where the supplier does not own or control the establishment where the services are rendered.
The Canada Revenue Agency (CRA) views the expression "at an establishment of the supplier" in section 3 of Part IV of Schedule V to the ETA as referring to the premises of the supplier of the service. In other words, the supplier must render the service in a place where they are in control of the day-to-day operations. Factors considered in making a determination as to control of the establishment would include: authority over making operational decisions in the establishment; presence; routine; type of activities carried on; operating agreements; relevant provincial legislation, etc.
The other exempting provision you refer to is section 2 of Part IV of Schedule V to the ETA:
"A supply of a service of providing care, supervision and a place of residence to children, underprivileged individuals or individuals with a disability in an establishment operated by the supplier for the purpose of providing such service".
For purposes of section 2 of Part IV of Schedule V to the ETA, the location criterion is that the service be provided in an establishment operated by the supplier of the service for that purpose. It is a question of fact as to who operates the establishment and the purpose for which it is operated. As well, there is a requirement under this section that the supply provided be a service of care, supervision and a place of residence.
With the foregoing in mind, the exempting provisions of section 2 and 3 of Part IV of Schedule V to the ETA would not generally include a situation where supplies of personal care services are provided by an Agency's employees in another operator's establishment. Depending on the nature of the services being rendered, there may be other exempting provisions in the ETA, which should be considered in determining the application of the GST/HST to the supplies.
As you indicated, it is only recently, with changes to the provincial legislation in XXXXX, that operators of residential care facilities have been permitted to contract out functions that were originally provided using their own employees. You believe "... the cost benefits offered by the ability to contract out care services are lost if Agencies are required to charge GST on their fees since the tax is not recoverable by the operators". There are mechanisms within the ETA legislation such as in section 259 [xxvii]1, where the operators of care facilities may be entitled to certain rebates of the GST paid on eligible purchases and expenses. However, your concerns will be forwarded to the Department of Finance for their consideration.
The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the ETA, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the CRA with respect to a particular situation.
Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at 613-952-0420.
Yours truly,
Debra Murphy
Charities, NPO & Educational Services Unit
Public Service Bodies & Governments Division
Excise and GST/HST Rulings Directorate
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