15 February 2007 GST/HST Ruling 86383 - XXXXX Baked Chips

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:

I am writing further to your letter XXXXX and to our letter XXXXX which concluded that XXXXX did not qualify for designation as a hospital authority for purposes of the Excise Tax Act (the "ETA"). We indicated in that letter and in our telephone conversation XXXXX that we would provide a ruling as to whether XXXXX would qualify for the 83% rebate available under the ETA to facility operators for activities carried on in the course of operating XXXXX.

All legislative references are to the ETA and the regulations therein, unless otherwise specified. For the purposes of this ruling, references to the Goods and Service Tax (GST)/Harmonized Sales Tax (HST) will be to the GST.

An organization that meets the definition of a facility operator under the ETA will be able to claim a 83% rebate of its non-creditable tax charged to the extent that it intends to consume, use or supply property or services in the course of operating a qualifying facility for use in making facility supplies, or for making facility supplies in another facility operator's qualifying facility or public hospital. This rebate is available for claim periods ending on or after January 1, 2005.

A facility operator may also be entitled to claim an 83% rebate for the GST incurred in the course of making ancillary supplies and home medical supplies as these terms are defined in the ETA. This ruling will focus on whether XXXXX is entitled to claim the 83% rebate available to facility operators for the GST incurred in the course of making facility supplies in a qualifying facility.

A facility operator is defined as a charity, a public institution or a qualifying non-profit organization (other than a hospital authority) that operates a qualifying facility.

A facility, not including a public hospital, will be a qualifying facility for a fiscal year or part of a fiscal year if:

•   it makes facility supplies;

•   an amount, other than a nominal amount, is paid or payable to the operator as qualifying funding in respect of the facility or part; and

•   an accreditation, licence or other authorization that is recognized or provided for under a law of Canada or a province in respect of facilities for the provision of health care services applies to the facility or part during that fiscal year or part.

Therefore, the first requirement of this definition is that the operator of a facility must make facility supplies.

Facility supply means:

•   an exempt property or service provided to an individual as part of a medically necessary process of health care for the individual to maintain health, prevent disease, diagnose or treat an injury, illness, or disability, or for palliative care;

•   this process must take place in whole or in part in a public hospital or qualifying facility under the active direction or supervision, or with the active involvement of a physician, a nurse practitioner if a physician is not readily available in the geographic area, or a midwife.

•   If chronic care is provided and the individual must stay overnight at the public hospital or qualifying facility:

–   a registered nurse must be present at all times;

–   a physician must be on call, or a nurse practitioner if a physician is not available in the geographic area;

–   medical management and therapeutic health care services, including registered nursing care, must be provided throughout the process; and

–   therapeutic health care services must be provided to the individual for more than 10% of each day.

•   If the person making the facility supply does not operate the facility, it must also receive medical funding.

Statement of Facts

XXXXX is a registered charity under the Income Tax Act and is a charity for purposes of the GST/HST.

The XXXXX offers XXXXX beds which provide assistance and support to individuals in need of ongoing nursing care and personal assistance XXXXX.

XXXXX facilities XXXXX provide care for individuals who have been assessed as being no longer able to live independently as they need ongoing medical support and assistance with the activities of daily living. Residents in these facilities have heavy, multiple, complex health care needs.

XXXXX.

XXXXX.

XXXXX
XXXXX.

XXXXX has enacted Bylaws of Medical Staff and Rules and Regulations of Medical Staff to oversee the care of residents admitted to the care centres XXXXX.

XXXXX.

Physicians with active privileges issue and review diagnostic, therapeutic and maintenance orders for residents and complete and maintain a comprehensive medical record. They set up treatment plans to address the individual's needs involving nursing management, clinical dieticians and therapy to be provided XXXXX. They perform a number of procedures in the care centres XXXXX.

XXXXX.

Members of the nursing staff (registered nurses, psychiatric nurses, licensed practical nurses and health care aides) are on duty in these facilities 24 hours a day. XXXXX.

Rulings Requested

You would like to know whether XXXXX is entitled to claim an 83% rebate for the GST incurred in operating its facilities.

Rulings Given

Based on the facts set out above, we rule that XXXXX meets the definition of a facility operator as defined in subsection 259(1) of the ETA.

XXXXX each meet the definition of a qualifying facility under subsection 259(2.1) of the ETA.

As a facility operator, XXXXX is entitled to claim an 83% rebate for its non-creditable tax charged to the extent that it makes facility supplies in these facilities.

It will be entitled to the 50% rebate available to charities for the non-creditable tax charged in the course of making supplies other than facility supplies as described above.

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.

XXXXX.

If you require clarification with respect to 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

2007/01/11 — RITS 56378 — [Application of the GST/HST to Zero-rated Medical or Surgical Prosthesis]