26 February 2007 GST/HST Ruling 79576 - Application of GST/HST to supplies of emu fat, and emu oil for topical purposes

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 is in response to your letter XXXXX concerning the Canada Revenue Agency's ("CRA") interpretation of "a supply of a dietetic service" for purposes of section 7.1 of Part II of Schedule V to the Excise Tax Act (the "ETA"). In particular, your submission involves the application of this exempting provision to supplies of consultation and facilitation services for project collaboration on multi-disciplinary research teams provided to government agencies and national associations.

XXXXX.

Note that dietetic services were not added to the list of exempt supplies until January 1, 1997. As of that date, these services became exempt when supplied by a "practitioner" as defined in the ETA if the service was rendered to an individual or if the recipient of the supply was a "public sector body" or the operator of a "health care facility", also defined in the ETA. XXXXX. Anyone engaged in the activity of supplying dietetic services would have been making taxable supplies and would have been a GST/HST registrant prior to 1997 if the total value of the consideration for these supplies exceeded the $30,000 small supplier threshold.

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

Interpretation Requested

You would like the CRA to consider project consultation and facilitation services supplied to governments, national associations, regional health authorities, and health centres to fall within the meaning of 'dietetic service' for purposes of section 7.1 of Part II of Schedule V. We understand that it is your view that the scope of practice of dietetics is sufficiently broad to include these services and is not limited to particular acts or services. Dietetic services encompass any area in which a dietitian has been called upon to participate, from high-level strategic planning at a national level to administering nutrition to individual patients in a clinical setting at the community level.

You provided a summary of three projects to illustrate the services in question. In addition, we were provided with contracts between XXXXX describing other projects. XXXXX. Briefly, the activities involved consultations and literature review, evaluating existing programs and research to determine the most effective strategies and policies, and planning and implementing programs. Specific tasks undertaken by your client included conducting and facilitating group consultations and collaboration among multi-disciplinary teams of health professionals, community agencies and other stakeholders, developing and recommending on-going program evaluation tools, interviewing stakeholders, and drafting resource materials that translate past experience and new knowledge into models of effective practices for governments, professional associations, regional health authorities, and health centres. These tasks were generally undertaken in collaboration with senior consultants with specialized knowledge in their disciplines. Some tasks involved leadership roles in strategic planning and policy and program evaluation.

We understand that the services in question were supplied in the province of XXXXX. The provincial regulatory body governing the practice of dietetics is the XXXXX, which became the legal authority for the regulation of dietitians in that province XXXXX. You advised that the XXXXX made under the XXXXX sets out regulations for the practice of dietetics and defines "dietetics" as follows:

XXXXX.

We understand that it is your view that the phrase XXXXX in the definition above encompasses all that can be considered to be involved in the practice of the science of food and human nutrition, which includes the making use of, or employing, the specialized body of knowledge concerned with food and human nutrition. You explained that there are certain XXXXX identified in the XXXXX that involve the design, compounding or dispensing of therapeutic diets and the administering of substances to individuals. The XXXXX represent a subset of the scope of practice of dietetics. Not all dietitians provide services that involve XXXXX and dietitians do not require authorization to provide these other services. The services in question do not involve XXXXX.

Interpretation Given

Section 7.1 of Part II of Schedule V exempts the following:

A supply of a dietetic service made by a practitioner of the service where the service is rendered to an individual or the supply is made to a public sector body or to the operator of a health care facility.

For purposes of the exempting provision, a "practitioner of the service" is defined in the ETA as:

"Practitioner" in respect of a supply of ... dietetic services, means a person who

(a) practises the profession of ... dietetics ...

(b) where the person is required to be licensed or otherwise certified to practise the profession in the province in which the service is supplied, is so licensed or certified, and

(c) where the person is not required to be licensed or otherwise certified to practise the profession in that province has the qualifications equivalent to those necessary to be so licensed or otherwise certified in another province.

As you noted, the GST/HST legislation has the same meaning in all areas of the country. However, the ETA does not regulate or define health care services; rather it incorporates the qualifications necessary to practise particular health professions in the provinces in order to determine whether a person is a "practitioner" for purposes of the ETA. Generally speaking, the jurisdiction to regulate health professions, including the practice of dietetics, is provincial and there are a number of enactments for that purpose. The provinces have delegated authority to specific regulatory bodies for the regulation and registration of those who are qualified to practise certain health care professions.

Accordingly, it is appropriate to consider provincial legislation regarding the meaning of dietetic service and to determine the weight to give the inferences to be drawn to identify what services fall within the scope of practice of dietetics. This approach also flows from the tax policy expressed by the Department of Finance in the Explanatory Notes for the GST/HST legislation to determine which services supplied by which health care practitioners are intended to be exempt. For example, if a profession is regulated as a health profession by at least five provinces, the services of that profession will be exempt. In addition, a service covered by the public health insurance plan of two or more provinces will be exempt. As such, the exempting provisions are positioned on the provincial regulation of health care professions and the provincial health insurance coverage of health care services.

Since the services in question are supplied in XXXXX, we considered the manner in which dietetic services are defined by the legislation and regulations of that province XXXXX. Further, for dietitians who practise in XXXXX, the XXXXX is the regulatory body XXXXX. For the period January 1, 1997 (when the exemption for dietetic services came into effect) to XXXXX, in order for a supply of a dietetic service made in XXXXX to be exempt, the supplier must have the qualifications equivalent to those necessary to be licensed or otherwise certified as a dietitian in another province.

With respect to the tax status of the supplies in general, as you know, the GST/HST is a transactional tax and for each transaction, the supplier must determine whether the tax is applicable. The tax always applies unless there is a specific exemption for the particular transaction. The definition of "practitioner" means that only those suppliers that are licensed or certified (or qualified to be licensed or certified) by a provincial regulatory body in respect of their particular profession may make exempt supplies included in Part II of Schedule V. However, having a certificate or licence does not mean that the supplier does not have to charge GST/HST on services that are not identified in the ETA as exempt supplies; i.e., a supply is not a dietetic service solely because the supplier is a dietitian.

On the basis of our review of the activities that are authorized and described by the applicable provincial law as constituting dietetic services, we consider a dietetic service to involve one-on-one nutrition counselling, individual or institutional dietary planning, designing therapeutic diets and administering substances to individuals. Dietetic services could also include developing and implementing nutrition programs and evaluating and reporting on the results of nutrition programs. In addition, as you noted, the practice of dietetics includes advisory services. However, to be characterized as dietetic services, the advisory services have to specifically involve dietary planning, such as advising individuals with respect to their personal nutritional health, advising a health care facility operator on the food and human nutrition needs of the patients or residents of the facility, and advising a public sector body (e.g., municipality, hospital authority, or government) on food and human nutrition issues affecting a particular community, group or population. Only when the dietetic service is rendered to an individual or when the supply is made to the operator of a health care facility or to a public sector body will the supply be exempt for purposes of the ETA. As such, it is our view that dietetic services would be limited to particular acts and services and would not encompass any service for which a registered dietitian is engaged to provide.

We understand that the dietetics profession might not set bounds on how, and in what settings, the branch of knowledge that is dietetics must be applied by registered dietitians, and research and project activities may be promoted by the provincial XXXXX as well as XXXXX as areas where dietitians may work. However, the recognition of areas where certain skills and knowledge can contribute is not determinative that participation in such areas is a dietetic service. A practitioner of dietetics may be engaged in a variety of activities for which his or her particular knowledge and qualifications may be relevant to the recipient of his or her supplies. The fact that a dietitian's education and experience enables him or her to participate in project activities does not in turn equate his or her participation in these activities as a dietetic service where there is nothing intrinsic in these activities that would characterize them as dietetic services.

With respect to the services in question, it is our view that the context in which they were provided demonstrates that these services are general project consultation and facilitation services rather than dietetic services. These services were provided within the context of general policy and program development by government agencies, regional health authorities and national associations seeking to explore multi-disciplinary partnerships and promote the efficient use of resources. You advised that the services in question involved rationalizing resources, planning, evaluating and implementing government programs, conducting research, developing and recommending on-going program tools, interviewing stakeholders and drafting resource materials, collaborating with professionals from other disciplines in multi-disciplinary projects, as well as facilitating the collaboration among various professionals with respect to all aspects of population health at the community and regional levels. We understand that a registered dietitian's particular background and credentials may have been of value to the project work; however, these services are not dietetic services for purposes of the ETA.

XXXXX.

XXXXX. In addition, we are unable to comment on whether XXXXX would fall within the meaning of "public sector body" and whether it would have been a "non-profit organization" as those phrases are defined in the ETA. For instance, if the XXXXX were not a public sector body, then irrespective of the nature of the services provided, they would not have been exempt under section 7.1 of Part II of Schedule V.

XXXXX. In addition, we do not have sufficient information to comment on whether this facility would have come within the meaning of "health care facility" or "public sector body" as those phrases are defined in the ETA. The status of the facility and the operator for ETA purposes is also relevant because if the facility was not a health care facility or if the operator was not a public sector body, then irrespective of the nature of the services provided, these services would not have been exempt under section 7.1 of Part II of Schedule V.

XXXXX.

In summary, the words in the ETA do not lend support to applying a broad meaning to dietetic service to include generic project consultation and facilitation services for governments, national associations, and regional health authorities. Section 7.1 of Part II of Schedule V restricts the exemption to a particular set of circumstances; i.e., where the dietetic service is rendered to an individual or the supply is made to a public sector body or to the operator of a health care facility. We understand that in XXXXX a person is required to be registered with the XXXXX in order to use the title "dietitian" and is expected to observe the standards set by the XXXXX. However, as explained above, the GST/HST legislation is a transaction-based tax and as such, it is the supply that is exempt, not the supplier. For purposes of the ETA, each supply (each contract) must be evaluated to determine if it is a dietetic service.

And finally, we note that provincial and territorial governments, which include departments and ministries and certain of their Crown corporations, boards, commissions, and agencies, are immune from the payment of tax by virtue of section 125 of the Constitution Act, 1867. The GST/HST is not charged on taxable supplies made to these recipients if an authorized official provides evidence that the recipient is a provincial or territorial government. Such evidence could include a certification clause signed by an authorized official of a provincial or territorial government. This is a statement on provincial or territorial purchase documents that certifies that a provincial or territorial government is purchasing the goods or services with Crown funds. The supplier must keep the purchase documents with the certification clause for audit purposes. Note that employees of a provincial or territorial government who make official business purchases in their own name have to pay GST/HST.

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 Healthcare Services Unit
Public Service Bodies and Governments Division

2007/02/07 — RITS 79891 — Employee Benefits