9 July 2007 GST/HST Interpretation 94487 - Interpretation on GST Filing: ABC Management Partnership

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:

This in response to your XXXXX message XXXXX and further to our telephone conversation XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the services of personal care workers.

All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.

We understand that you had contracted with XXXXX, a private agency, for the provision of 'nursing services' rendered by a personal care worker. These services consisted of personal care and catheter care and were provided to you in your home for a specific time period. You required these services following an acute matter involving surgery. A portion of the cost of these services is an eligible expense under a private health insurance policy that provides for healthcare benefits and private duty nursing care. The services in question are not covered by a provincial health insurance plan.

You advised that a registered nurse would have normally provided the catheter care. However, you were able to have this care provided by a personal care worker who was trained by a registered nurse. You chose this option because the fee was considerably less than the fee that would have been charged for the services of a registered nurse and the healthcare benefits and coverage for private duty nursing care under the private health insurance policy are limited to a specific dollar amount.

Interpretation Requested

You would like to know why the fee charged for nursing services rendered by a registered nurse is not subject to the GST/HST, whereas the fee charged for nursing services rendered by a personal care worker is subject to the GST/HST. Given the similarities of services and the fact that your private health insurance policy pays healthcare benefits for personal care and nursing services rendered by a personal care worker, you would like an explanation of why the services of personal care workers are taxable and whether the wording of the exemption for nursing services could be interpreted to include these services when rendered by personal care workers.

You explained that in some situations individuals are able to choose a less expensive delivery of the same health care services that would otherwise be rendered by a registered nurse, which may be necessary because of financial reasons. It is your view that personal care and nursing services rendered by personal care workers should have the same exempt status as when registered nurses render these services and you would like your view brought to the attention of officials at the Department of Finance.

Interpretation Given

The general rule under the ETA in section 165 is that all supplies of goods and services made in Canada are subject to the GST/HST at the rate of 6% or 14%. There are exceptions for health care services that are specifically identified as being exempt from the GST/HST. These exceptions, such as a nursing service, may also require that specific conditions be met in order for the service to be exempt. Accordingly, the tax always applies unless there is a specific exemption for a particular service. If a service is not included in the list of exemptions in Schedule V, then the supply of the service falls under the general rule under the ETA and the result is that the fee charged for the service is subject to the GST/HST at the rate of 6% or 14%.

Section 6 of Part II of Schedule V exempts a supply of a nursing service, but only when the service is rendered by a registered nurse, a registered nursing assistant, a licensed or registered practical nurse or a registered psychiatric nurse and is supplied in the following circumstances:

(a) When the nursing service is rendered to an individual in a health care facility or in the individual's place of residence;

(b) When the nursing service is a private-duty nursing service; or

(c) When the nursing service is supplied to a public sector body, such as a hospital authority, municipality, school authority or a charity.

Generally speaking, the tax policy behind the exempting provisions in Part II of Schedule V for health care services flows from the provincial health insurance coverage of health care services and the provincial regulation of health care professions. The tax policy regarding which services supplied by which health care practitioners are intended to be exempt was initially expressed by the Department of Finance in the Goods and Services Tax Technical Paper issued in August 1989 and further in the Explanatory Notes for the GST/HST legislation issued on April 23, 1996. This tax policy was again expressed in a Department of Finance News Release issued on December 28, 2006, concerning a GST/HST exemption for midwifery services. Services that do not meet these policy criteria are intended to be taxable.

The policy criteria are as follows: First, if a service is covered by the public health insurance plan of a given province, the service is exempt in that province. If a service is covered by the public health insurance plan of two or more provinces, it is intended that the service be exempt in all provinces. Finally, if a service is not covered by a public health insurance plan of a province, but is rendered in the practice of a profession that is regulated as a health care profession in at least five provinces, it is intended that the services of that profession be exempt. As the extent to which the cost of health care services are covered by public health insurance plans and the manner in which professions are regulated as health care professions evolve, the latter two policy criteria may require amendments to the ETA to include a particular service with the exempting provisions.

With respect to the exemption for nursing services, section 6 of Part II of Schedule V identifies the supply of nursing services where there is legislated licensing or registration of the person rendering the service. This section is explicit in its limited application to a nursing service rendered by a person with certain licensing or registration qualifications and within specific circumstances. Thus, the wording of this section does not allow an interpretation that would include therein services rendered by personal care workers.

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, the scope of nursing is considered 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 terms "nursing service" and "registered nurse" are 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. A service rendered by a person other than a registered nurse or other nurse professional is not an exempt supply of a nursing service notwithstanding that the service may be described as, or compared to, a nursing service. An individual who meets certain standards required for a personal care worker is not required to be registered or licensed in a nursing profession identified in section 6 of Part II of Schedule V. Therefore, this section cannot apply to services rendered by a personal care worker. Further, as services rendered by personal care workers are not specifically included in the exempting provisions, these services are generally taxable.

Although nursing and other health care services rendered by personal care workers 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, there is a general exemption in section 1 of Part V.1 of Schedule V that covers most services supplied by charities and in section 2 of Part VI of Schedule V that covers most services supplied by public institutions. We have not evaluated whether XXXXX is a "charity" or a "public institution", as those suppliers are defined in the ETA.

The Canada Revenue Agency is responsible for issuing interpretations and rulings to clients, including individuals, businesses, and tax professionals, on the application of the ETA and its Regulations, as passed by Parliament. An amendment to the ETA would be required to treat the personal care and nursing services rendered by personal care workers as exempt. Legislative amendments are a matter of tax policy, which falls within the responsibility of the Department of Finance. As we discussed on the telephone, we advised officials of that Department of your concerns. They confirmed that it is the government's policy to look to the provinces and territories, given their major role in the regulation of their respective health care systems, when determining which health care services should be exempt.

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, Excise and GST/HST Rulings and Interpretations Service, do not bind the Canada Revenue Agency 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, you may contact the XXXXX GST/HST Rulings Centre at 1-800-959-8287.

Yours truly,

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

2007/07/11 — RITS 94608 — Application of GST/HST to the XXXXX Levy