25 September 2006 GST/HST Ruling 54717 - Tax status of memberships

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:

The purpose of this letter is to advise you that the Canada Revenue Agency has just released Policy Statement P-248, The application of the GST/HST to the supply of an independent medical examination ("IME") and to other independent assessments, and to respond to your letter XXXXX regarding the application of the Goods and Services Tax ("GST")/Harmonized Sales Tax ("HST") to supplies made by the XXXXX, of medical assessments of accident victims performed by physicians for the XXXXX and for private insurance companies.

The policy statement can be found under the GST/HST Policy Statements link at (http://www.cra-arc.gc.ca/menu/GTPP_200-e.html) on the Canada Revenue Agency ("CRA") Web site. A copy is also enclosed for your reference. Please note that the policy represents a change in the CRA's position with respect to the application of the GST/HST to sections 5 and 7 of Part II of Schedule V to the Excise Tax Act (the "ETA") and it describes the circumstances under which IMEs and other independent assessments will be exempt from the GST/HST under these provisions as well as section 2 of that Part.

The effective date of the policy is June 8, 2001, which is the date the Tax Court of Canada issued its decision regarding Riverfront Medical Evaluations Ltd. v. Canada ("Riverfront"). The policy is based on careful consideration of the Tax Court of Canada and Federal Court of Appeal decisions in Riverfront, the exemptions in the ETA that apply to supplies made by medical practitioners and practitioners, as well as the information provided by stakeholders on the issue.

In situations where the CRA has issued specific interpretations that differ from this policy, the policy should be applied to the affected person(s) on the earlier of the day the CRA has made the public aware of this policy or informs the person(s) in writing of the application of the tax to their transaction(s). However, the CRA may apply the policy retroactively, where this would be beneficial to a person and the person asks that the policy be applied retroactively.

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

Interpretation Requested

You advised that XXXXX that conducts specific types of independent assessments the fees for which are determined by the XXXXX. We understand that XXXXX for insurance companies and claimants to use when they need a neutral opinion about a claimant's injuries and the accident benefits that apply to those injuries. You had inquired as to whether XXXXX is required to charge the GST/HST on its supplies of medical assessments of accident victims.

Please note that GST/HST rulings are provided on specific provisions of the ETA as these relate to a clearly defined fact situation of a particular person. Since we were not provided with sufficient facts to issue a ruling, we can offer the following interpretation.

Interpretation Given

Section 2 of Part II of Schedule exempts a supply of an "institutional health care service" rendered to a patient or resident of a "health care facility" where the operator of that facility supplies these services to them within its facility. A "health care facility" is defined in paragraph 1(a) of Part II of Schedule V as a facility, or part thereof, operated for the purpose of providing medical or hospital care. The CRA considers medical care to mean care rendered by physicians; i.e., care provided to patients by medical practitioners entitled under the laws of a province to practise the profession of medicine, and would consider the following factors to determine the purpose for which a facility is operated:

•   The operator contracts with physicians to provide medical care to patients of the facility;

•   Physicians provide medical care in the operator's facility; and

•   The facility has consultation and examination rooms and equipment and supplies to support the provision of medical care.

In a multi-disciplinary facility, only the part of that facility's operations where medical care is provided to patients or care that is related to, or in support of, medical care falls within the definition of "health care facility". Services provided by other practitioners, such as dentists, physiotherapists, chiropodists, chiropractors, occupational therapists, and psychologists, are not included within the meaning of medical care. Thus, the part of a multi-disciplinary facility operated to provide care by other practitioners is not a health care facility for ETA purposes.

The definition of "institutional health care service" includes services rendered by a person that are provided in a health care facility where the operator of that facility remunerates the person for these services. When the operator of the health care facility supplies an institutional health care service, this supply will fall within the exemption in section 2 of Part II of Schedule V if the service is rendered to a patient of the operator's facility.

Please refer to the enclosed Policy Statement P-248 for additional information and guidance on whether the facility, or part thereof, operated by XXXXX is a "health care facility" for purposes of the ETA. If XXXXX operates a health care facility as described above and in the policy, then its supplies of medical assessments performed by physicians would fall within the exemption in section 2 of Part II of Schedule V.

In addition, please note that Sections 5 and 7 of Part II of Schedule V to the ETA exempt from GST/HST certain supplies made by a "medical practitioner" and a "practitioner", as those suppliers are defined in section 1 of that Part. In particular, section 5 exempts a supply made by a medical practitioner of a consultative, diagnostic, treatment or other health care service rendered to an individual. Policy Statement P-248 explains the application of the exempting provisions relevant to supplies of IMEs and other independent assessments when made by a medical practitioner or by a practitioner.

The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Goods and Services Tax Rulings, do not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.

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

2006/09/25 — RITS 60209 — Independent Medical Examinations and Other Independent Assessments