3 May 2007 GST/HST Ruling 87247 - XXXXX

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, in which you requested confirmation of the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to Clinical Services that will be supplied by a professional corporation of a physician.

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

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Statement of Facts

On the basis of your letter, we understand the facts and the transaction in question as follows:

1. XXXXX, is a physician who will incorporate a Contracting Company.

2. The Contracting Company will hold a valid certificate of authorization issued by the XXXXX under the laws of that province to practise the profession of medicine.

3. The Contracting Company will enter into a Services Contract with Partnership D in respect of Clinical Services to be provided by the Contracting Company as an independent contractor.

4. The Contracting Company will employ the Named Partner to provide Clinical Services for the benefit of the Contracting Company, pursuant to a written employment agreement, with a view to fulfilling its obligations to Partnership D in accordance with its Services Contract with Partnership D.

5. The fees payable by Partnership D to the Contracting Company pursuant to the Services Contract will be negotiated on a case-by-case basis and will vary with the number and type of Clinical Services to be supplied by the Contracting Company. The fees will equal the fair market value of the Clinical Services supplied.

Ruling Requested

You are requesting confirmation that to the extent the Clinical Services supplied by the Contracting Company to Partnership D are consultative, diagnostic, treatment or other health care services rendered to individuals, other than surgical or dental services performed for cosmetic purposes and not for medical or reconstructive purposes, the Clinical Services will be exempt supplies described in section 5 of Part II of Schedule V.

Ruling Given

To the extent that the Clinical Services are supplies of consultative, diagnostic, treatment or other health care services rendered to an individual, other than surgical or dental services performed for cosmetic purposes and not for medical or reconstructive purposes, and these supplies are made by a "medical practitioner" as that term is defined in the ETA, these supplies will be exempt pursuant to section 5 of Part II of Schedule V.

For purposes of the ETA, a "medical practitioner" means a person who is entitled under the laws of a province to practise the profession of medicine or dentistry. It is our understanding that in the province XXXXX, all physicians must be members of the XXXXX in order to practise medicine in that province. The role and authority of the XXXXX are set out in the XXXXX and the XXXXX. Under the XXXXX, physicians who are members of the XXXXX are permitted to establish a professional corporation for the purpose of practising medicine. Physicians incorporate a professional corporation under the XXXXX. Following incorporation, the professional corporation must apply to the XXXXX for a certificate of authorization for a corporation to practise medicine. This certificate, which must be renewed annually, is issued under the XXXXX and without it the professional corporation is not permitted to practise the profession of medicine.

Accordingly, where a professional corporation holds a valid certificate of authorization to practise the profession of medicine issued under the XXXXX, that corporation will fall within the meaning of "medical practitioner" as defined in the ETA.

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.

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

2007/05/03 — RITS 87248 — [Application of the GST/HST to Clinical Services Supplied by a Medical Practitioner]