21 June 2006 GST/HST Interpretation 81176 - Business claims for Visitor Rebates

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 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to massage therapy services.

Ruling Requested

You have requested that services of Registered Massage Therapists (RMTs) be included under exemptions from the GST/HST in the Excise Tax Act (ETA).

Ruling Given

There is no exemption in the ETA that applies to services of RMTs. Therefore, RMTs who are registered for the GST/HST must collect and remit the tax on the consideration for their services.

Effective July 1, 2006, the rate of the GST has been reduced from 7% to 6% and the rate of the HST from 15% to 14%. The new rates apply to supplies for which the GST/HST is paid on or after July 1, 2006, without having become payable before that date. Specific transitional rules apply to certain supplies, for example, real property.

For more information on the transitional rules for the reduction of the GST/HST rate, please refer to Reduction in the Rate of the GST/HST - Questions and Answers (http://www.cra-arc.gc.ca/agency/budget/2006/gstrateqa-e.html) on the CRA Web site.

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 the above issue is not 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

Section 5 of Part II of Schedule V to the ETA exempts a supply made by a medical practitioner of a consultative, diagnostic, treatment or other health care service rendered to an individual (other than a surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes).

"Medical practitioner" is defined in section 1 of Part II of Schedule V as a person who is entitled under the laws of a province to practice the profession of medicine or dentistry. An RMT is not a medical practitioner for purposes of the ETA.

Therefore, if a medical practitioner provides massage therapy services to an individual in the course of providing treatment to that individual, this service would be exempt of the GST/HST under section 5 of Part II of Schedule V. However, this exemption does not apply to services supplied by persons other than medical practitioners.

Section 7 of Part II of Schedule V provides exemptions from the GST/HST to the supply of an optometric, chiropractic, physiotherapy, chiropodic, podiatric, osteopathic, audiological, speech-language pathology, occupational or psychological service rendered to an individual when a practitioner provides the service. Massage therapy services are not included under this section.

Section 1 of Part II of Schedule V defines a "practitioner", in respect of a supply of optometric, chiropractic, physiotherapy, chiropodic, podiatric, osteopathic, audiological, speech-language pathology, occupational or psychological services, as a person who practises the profession of one of these services and who is licensed or otherwise certified to practice that profession if required in the province where the service is supplied, or who has qualifications needed to be licensed or certified in another province, if this is not required in the particular province where the service is supplied. As RMTs are not included in this definition, these individuals are not practitioners for purposes of the ETA.

Accordingly, section 7 of Part II of Schedule V does not exempt supplies of massage therapy services by RMTs.

Please note that the Canada Revenue Agency is responsible for administering the GST/HST legislation as enacted by Parliament. Any legislative amendment that would broaden the application of the exemptions in Part II of Schedule V is a matter of tax policy, which falls within the responsibility of the Department of Finance. Therefore, it is appropriate to have sent a copy of your letter to the Honourable Mr. Flaherty, Minister of Finance.

If you would like clarification about any of the issues discussed in this letter, please call me directly at (613) 952-9590.

Yours truly,

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

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