15 April 2005 GST/HST Interpretation 56275 - Application of the GST/HST to supplies of beverages containing a blend of vegetable juice and fruit juice

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.

Dear XXXXX:

Thank you for your letter XXXXX, with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of a personal support worker ("PSW") made by XXXXX to your Client, the operator of the XXXXX (the "Hospital").

You expressed the view that the services of a PSW are similar to the services of a registered nurse or a registered practical nurse. We note that section 6 of Part II of Schedule V to the Excise Tax Act (the "ETA") sets out conditions under which a supply of a nursing service will be exempt for GST/HST purposes.

All legislative references are to the ETA and the regulations therein, unless otherwise specified.

Statement of Facts

Our understanding of the facts is as follows:

1. Your Client enters into contracts with various agencies for the provision of individuals to fulfill the staffing requirements of the Hospital. These individuals have certain professional qualifications and certification.

2. You provided a copy of a current contract between your Client and XXXXX for the supply of individuals who meet certain professional standards. The terms and conditions of this contract provide for, in part, the following:

(a) XXXXX agrees to provide supplementary staffing services to the XXXXX Hospital upon request, 24 hours per day, 365 days per year, for a period of XXXXX years with an option of XXXXX extension. The staffing categories identified in the contract include a PSW.

(b) XXXXX guarantees fixed pricing XXXXX. The consideration is calculated based on set hourly rates for each staffing category. The contract identifies the consideration for the PSW as subject to the GST/HST.

(c) Where XXXXX is unable to fulfill your Client's supplementary staffing requirements, your Client will use another agency.

(d) XXXXX agrees to coordinate all activities directly with the XXXXX Manager or an assigned delegate.

(e) XXXXX representatives abide by the Hospital's policies and procedures.

(f) XXXXX agrees to supply year-end financial summary reports detailing total hours worked and total dollars paid for each staffing category.

3. The contract is silent on the activities to be performed by any of the individuals: there is no description of the services to be rendered by these individuals.

4. In your letter, you advised that under the terms of the contract a PSW:

(a) Has a higher hourly charge out rate than an escort/companion/sitter ("ESC").

(b) Is required to have enhanced Mental Health Training, be certified in CPR with a current certificate, and have proof of required immunization for direct patient care.

(c) Is covered by a certificate of insurance for health care professional liability coverage issued by a qualified insurance company.

(d) Is covered under a certificate of accreditation from the Canadian Council on Health Services Accreditation.

(e) Maintains an annual certification/registration, validation and re-certifications as necessary.

5. You provided copies of invoices by XXXXX issued to your Client. These invoices do not identify any specific services rendered by the individuals in question:

(a) An invoice for PSW services, and the GST was calculated on the consideration charged.

(b) An invoice for both PSW and ESC services, and the GST was calculated on the consideration charged.

Ruling Requested

You would like to know whether the supply made to your Client of an individual who has the qualifications of a PSW as summarized in your letter (reproduced in Fact #4) is an exempt supply of a nursing service for purposes of the ETA.

Ruling Given

Based on the facts set out above, we rule that the supply of an individual who has the qualifications of an PSW is not an exempt supply of nursing services as described in section 6 of Part II of Schedule V. Generally, this supply is subject to the 7% GST/HST (or 15% where the supply is made in a participating province).

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Goods and Services Tax Rulings. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.

Explanation

As a transactional tax, the exemptions in the ETA apply on a "supply-by-supply" basis. The legislative provisions set out specific criteria that must be met in order for a particular supply to fall within the exemptions. Thus the tax status of a supply is determined on the factual context in which the supply is made. The factual context includes an analysis of the terms and conditions of the contract for the supply as well as any other documentation that further describes the supply.

The exemptions in Part II of Schedule V apply to a supply of a particular service rendered to an individual, which is generally on a fee-for-service basis. These exemptions identify particular services rendered to an individual where there is some legislated licensing or registration of the person supplying or rendering the service. The exemptions in section 6 of Part II of Schedule V are explicit in their limited application to a nursing service rendered by a person with certain licensing or registration qualifications and within specific circumstances.

Paragraph 6(a) of Part II of Schedule V exempts a 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, where the service is rendered to an individual in a health care facility or in the individual's place of residence. A 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, where the supply is made to a public sector body (which includes a hospital authority) is exempt pursuant to paragraph 6(c) of that Part.

Nursing services are understood to be the provision of care for and the treatment of the health conditions of a patient where the care and treatment services are performed by registered or licensed nurses. These are supportive, preventive, therapeutic, palliative and rehabilitative services to assist the patient in attaining or maintaining optimal function. For purposes of the ETA, we consider the scope of nursing to be the diagnosis and treatment of health problems, assessment of a patient's nursing needs, and the preparation of nursing care plans for the patient. Accordingly, a "nursing service" is the activity described as the skilled practice of nursing involving procedures, treatments, medication administration, and other interventions, performed on patients under a nursing care plan or on the order of a physician. A "registered nurse" is the person who meets certain prescribed standards of education, clinical competence and registration or other licensing requirements.

The exemption requires that the terms "nursing service" and "registered nurse" be read together such that a nursing service arises from the provision of treatment or care rendered to a patient by a registered nurse or other nurse professional identified in the ETA. An activity is not a nursing service solely on the basis that a registered nurse performed the activity. In addition, an activity performed by a person other than a registered nurse or other nurse professional is not a nursing service notwithstanding how the service is described or how the service may be compared.

On the basis of the information provided, an individual who meets certain standards required for a PSW is not required to be registered or licensed in a nursing profession identified in section 6 of Part II of Schedule V and does not in fact have such registration or licensing. The activities performed by an individual who is a PSW do not fall within the meaning of "nursing service" for purposes of the ETA and do not meet the conditions of the exemption.

Please note that although the supply made to your Client of individuals who are qualified as PSWs are not exempt under section 6 of Part II of Schedule V, other exemptions may apply based on the identity of the supplier. For instance, we note that there is a general exemption in section 1 of Part V.1 of Schedule V that covers most supplies of property and services made by a charity, and in section 2 of Part VI of Schedule V that covers most supplies of personal property and services made by a public institution. We have not evaluated whether XXXXX is a charity or a public institution as defined in the ETA.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-6761.

Yours truly,

Susan Eastman
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

2005/04/05 — RITS 58722 — Quick Method User Failed to Take 1% Rate Reduction