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.
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Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
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XXXXX
XXXXX
XXXXX
XXXXX
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XXXXX
XXXXX
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Case Number: 87870
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January 25, 2008
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Dear XXXXX:
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Subject:
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GST/HST RULING
Services provided by XXXXX
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Thank you for your letter XXXXX, with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to services supplied by XXXXX. Specifically, XXXXX supplies independent medical examination services and independent medical assessment services through its XXXXX. In your letter, you indicated that you were unclear whether these services were exempt or taxable, based on your review of GST/HST Policy Statement P-248, The Application of the GST/HST to the Supply of an Independent Medical Examination ("IME") and to Other Independent Assessments ("P-248"). We apologize for the delay in providing our response.
During our telephone conversation of XXXXX, I advised you that based on my preliminary review of the detailed descriptions you gave for each service, as set out in the scenarios described in Appendix I to VI of your letter, almost all of the services supplied by XXXXX to its customers were taxable. In all cases, the supply of the independent medical evaluations (IME) services by the Medical Practitioner and the independent assessment services by the Practitioner to XXXXX were exempt.
The advice given to you was based on the assumption that the IME services and independent assessment services in question have the same meaning as those described in the GST/HST policy referred to above. That is, an IME means the service of providing an expert opinion contained in a written report that is prepared by a medical practitioner acting in the course of the practice of medicine (physician). This expert opinion is supplied by the physician or by the operator of a health care facility. An independent assessment (IA) service means the service of providing an expert opinion contained in a written report that is prepared by a medical practitioner acting in the course of the practice of dentistry (dentist) or by a practitioner acting in the course of the practice of optometry, chiropractic, physiotherapy, chiropody, podiatry, osteopathy, audiology, speech-language pathology, occupational therapy, or psychology. This expert opinion is supplied by the dentist or by the other practitioner.
The advice given was also based on the assumption that the Medical Practitioner and Practitioner in each of the detailed descriptions reviewed met the definitions of "medical practitioner" and "practitioner" in section 1 of Part II of Schedule V to the Excise Tax Act.
To be consistent with the terms used in P-248, your reference to an IMA (independent medical assessment) in the appendices is referenced as an IA service for purposes of this letter.
All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.
Effective January 1, 2008, the rate of the GST has been reduced from 6% to 5% and the rate of HST from 14% to 13%. The new rates apply to supplies for which the GST/HST is paid on or after January 1, 2008, 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 GST/HST Notice 226, Proposed GST/HST Rate Reduction in 2008 on the CRA Web site at www.cra-arc.gc.ca/E/pub/gi/notice226/README.html.
Statement of Facts
We understand that:
1. XXXXX.
2. XXXXX offers independent medical examinations and other independent assessments to its client base, the majority of which are insurance companies.
3. XXXXX is a GST/HST registrant. It currently charges GST on the supply of its IME and IA services to its customers. Some customers are refusing to pay GST charged by XXXXX for the provision of its services. The appendices you submitted for our review provide a detailed description of the services, the types of professionals involved, as well as the place where the services are rendered. The information contained in these appendices has been restated, as written, below.
4. The variety of services are subcontracted and performed by either a medical practitioner (MD), as defined in section 1 of Part II of Schedule V or by a practitioner (Practitioner), as defined in section 1 of Part II of Schedule V. The evaluation or assessment services can be rendered at the XXXXX facilities, at the offices of the MD or Practitioner, and at a patient's home.
5. The XXXXX' offices located throughout XXXXX have facilities to interview and examine patients. Some of the XXXXX facilities only provide IME services. XXXXX does provide medical supplies in order for the MD or Practitioner to perform the examination (i.e., examination bed, gowns, stethoscopes, reflect hammers, etc.). XXXXX also has an office in XXXXX with the same facilities. The XXXXX and some of the XXXXX facilities also contain administrative offices.
Appendix I
1. XXXXX enters into a contract with a customer (typically an insurance company) to perform an IME service.
2. XXXXX subcontracts the service to a MD to perform the examination and prepare the assessment report. The examination is performed at the offices of the MD.
3. XXXXX prepares the consent form allowing for the examination by a physician and the disclosure of the findings to the customer. The MD has the individual sign the form.
4. The MD approves and signs the report and submits it back to XXXXX.
5. The report is reviewed for quality assurance purposes with an administrative team made of XXXXX' employees. There is no further MD involvement. The quality control and review process is performed at the XXXXX facilities.
6. The MD receives consideration from XXXXX for the services rendered above.
Appendix II
1. XXXXX enters into a contract with a customer (typically an insurance company) to perform an IME service.
2. XXXXX subcontracts to a MD to perform the examination and prepare the assessment report. The examination is performed at the XXXXX office.
3. XXXXX prepares the consent form allowing for the examination by a physician and the disclosure of the findings to the customer. The MD has the individual sign the form.
4. The MD approves and signs the report and submits it back to XXXXX.
5. The report is reviewed for quality assurance purposes with an administrative team made up of XXXXX' employees. There is no further MD involvement. The quality review process is also performed at the XXXXX facilities.
6. XXXXX keeps a copy of the signed report and medical brief. A copy of the signed report is given to the MD.
7. The MD receives consideration from XXXXX for the services rendered above.
Appendix III
1. XXXXX enters into a contract with a customer (typically an insurance company) to perform an IA service.
2. XXXXX subcontracts the service to a Practitioner to perform the assessment and prepare the report. The assessment is performed at the offices of the Practitioner.
3. XXXXX prepares the consent form allowing for the examination by a physician and the disclosure of the finding to the customer. The Practitioner has the individual sign the form.
4. The Practitioner approves and signs the report and submits it back to XXXXX to provide to the customer. XXXXX keeps a copy of the medical brief and the report copy.
5. The report is reviewed for quality assurance purposes with an administrative team made up of XXXXX' employees. The team does not include a MD. The quality review process is performed at the XXXXX facilities.
6. XXXXX keeps a copy of the signed report and medical brief. A copy of the signed report is given to the Practitioner.
7. The Practitioner receives consideration from XXXXX for the services rendered above.
Appendix IV
1. XXXXX enters into a contract with a customer (typically an insurance company) to perform an IA service.
2. XXXXX subcontracts the service to a Practitioner to perform the assessment and prepare the report. The examination is performed at the offices of XXXXX.
3. XXXXX prepares the consent form allowing for the examination by a physician and the disclosure of the findings to the customer. The Practitioner has the individual sign the form.
4. The Practitioner approves and signs the report and submits it back to XXXXX to provide to the customer. XXXXX keeps a copy of the medical brief and the report copy.
5. The report is reviewed for quality assurance purposes with an administrative team made up of XXXXX' employees. The team does not include a MD. The quality review process is performed at the XXXXX facilities.
6. XXXXX keeps a copy of the signed report and medical brief. A copy of the signed report is given to the Practitioner.
7. The Practitioner receives consideration from XXXXX for the services rendered above.
Appendix V
1. XXXXX enters into a contract with a customer (typically an insurance company) to perform an IA service.
2. XXXXX subcontracts to a Practitioner to perform the assessment and prepare the report. The examination is performed at either a patient's home or at a hospital.
3. XXXXX prepares the consent form allowing for the examination by a physician and the disclosure of the findings to the customer. The Practitioner has the individual sign the form.
4. The Practitioner approves and signs the report and submits it back to XXXXX to provide to the customer. XXXXX keeps a copy of the medical brief and the report copy.
5. The report is reviewed for quality assurance purposes with an administrative team made up of XXXXX'employees. The team does not include a MD. The quality review process is performed at the XXXXX facilities.
6. XXXXX keeps a copy of the signed report and medical brief. A copy of the signed report is given to the Practitioner.
7. The Practitioner receives consideration from XXXXX for the services rendered above.
Appendix VI
Same fact pattern as described in Appendix I to V but with the following additional review:
1. In the XXXXX office of XXXXX, there is an MD who is involved in the quality control and review process. This service is performed on a selected basis and not on every file.
Ruling Requested
You would like to know whether the supply of the IME service by a MD and the IA service by a Practitioner to XXXXX, in the scenarios described in Appendix I to Appendix V are exempt pursuant to section 5 of Part II of Schedule V and section 7 of Part II of Schedule V respectively.
You would also like to know whether the supply of the service by XXXXX to its customer, in the scenarios described in Appendix I to Appendix VI is exempt pursuant to section 2 of Part II of Schedule V.
Ruling Given
Appendix I
Based on the facts set out above, we rule that the supply of the IME service by a MD to XXXXX is exempt pursuant to section 5 of Part II of Schedule V. The supply of the service by XXXXX to its customer is taxable as no exempting provisions within Schedule V apply.
Appendix II
Based on the facts set out above, we rule that the supply of the IME service by a MD to XXXXX is exempt pursuant to section 5 of Part II of Schedule V. The supply of the service by XXXXX to its customer is exempt pursuant to section 2 of Part II of Schedule V.
Appendix III
Based on the facts set out above, we rule that the supply of the IA service by a Practitioner to XXXXX is exempt pursuant to section 7 of Part II of Schedule V. The supply of the service by XXXXX to its customer is taxable as no exempting provisions within Schedule V apply.
Appendix IV
Based on the facts set out above, we rule that the supply of the IA service by a Practitioner to XXXXX is exempt pursuant to section 7 of Part II of Schedule V. The supply of the service by XXXXX to its customer is taxable as no exempting provisions within Schedule V apply.
Appendix V
Based on the facts set out above, we rule that the supply of the IA service by a Practitioner to XXXXX is exempt pursuant to section 7 of Part II of Schedule V. The supply of the service by XXXXX to its customer is taxable as no exemption provisions within Schedule V apply.
Appendix VI
Based on the facts set out above, we rule that the supply of the service by XXXXX to its customer is taxable in the case of Appendix I, Appendix III, Appendix IV and Appendix V as no exempting provisions within Schedule V apply.
As noted above, the supply of the service by XXXXX to its customer is exempt in the case of Appendix II pursuant to section 2 of Part II of Schedule V.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are 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
The Policy Statement P-248 describes the circumstances when the service of supplying an IME and other independent assessments is an exempt supply under sections 2, 5 or 7 of Part II of Schedule V.
The following definitions are relevant for purposes of applying P-248 to the facts presented in Appendix I to Appendix VI, as set out above.
Institution health care service
Section 2 of Part II of Schedule V exempts a supply of an "institution health care service" made by the operator of a health care facility if the service is rendered to a patient or resident of the facility, but not including a supply of a service related to the provision of a surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes.
An "institutional health care service" is defined in section 1 of Part II of Schedule V as meaning any of the following when provided in a health care facility:
(a) laboratory, radiological or other diagnostic services,
(b) drugs, biologicals or related preparations when administered, or a medical or surgical prosthesis when installed, in the facility in conjunction with the supply of a service included in any of paragraphs (a) and (c) to (g),
(c) the use of operating rooms, case rooms or anaesthetic facilities, including necessary equipment or supplies,
(d) medical or surgical equipment or supplies
(i) used by the operator of the facility in providing a service included in any of paragraphs (a) to (c) and (e) to (g), or
(ii) supplied to a patient or resident of the facility otherwise than by way of sale,
(e) the use of radiotherapy, physiotherapy or occupational therapy facilities,
(f) accommodation,
(g) meals (other than meals served in a restaurant, cafeteria or similar eating establishment), and
(h) services rendered by persons who receive remuneration therefore from the operator of the facility.
Health care facility
A "health care facility" is defined, in part in section 1 of Part II of Schedule V as meaning a facility, or a part thereof, operated for the purpose of providing medical or hospital care, including acute, rehabilitative or chronic care.
Medical practitioner
Section 5 of Part II of Schedule V 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). A "medical practitioner" is defined in section 1 of Part II of Schedule V as meaning a person who is entitled under the laws of a province to practise the profession of medicine or dentistry.
Practitioner
Section 7 of Part II of Schedule V exempts "A supply of any of the following services when rendered to an individual, where the supply is made by a practitioner of the service:
(a) optometric services;
(b) chiropractic services;
(c) physiotherapy services;
(d) chiropodic services;
(e) podiatric services;
(f) osteopathic services;
(g) audiological services;
(h) speech-language pathology services;
(i) occupational therapy services;
(j) psychological services; and
(k) midwifery services.
For purposes of this provision, section 1 of Part II of Schedule V provides a definition of "practitioner". A "practitioner", in respect of a supply of optometric, chiropractic, physiotherapy, chiropodic, podiatric, osteopathic, audiological, speech-language pathology, occupational therapy, psychological, midwifery or dietetic services, means a person who
(a) practises the profession of optometry, chiropractic, physiotherapy, chiropody, podiatry, osteopathy, audiology, speech-language pathology, occupational therapy, psychology, midwifery or dietetics, as the case may be,
(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.
Appendix I
The supply of the IME service by a MD of examining an individual and preparing the assessment report is exempt pursuant to section 5 of Part II of Schedule V. The fact that the MD receives consideration from XXXXX for the supply does not change the tax status of the service rendered by the MD to the individual.
The supply of the service by XXXXX to its customer is taxable. This is because it is not rendered to a patient of a health care facility operated by XXXXX, as required by section 2 of Part II of Schedule V. The exempt supply of the IME service by the MD to XXXXX is rendered to the individual in the office of the MD. As the supply of the IME service by the MD to XXXXX is not a component part of an "institutional health care service", the supply of the service by XXXXX to its customer is taxable as neither section 2 of Part II of Schedule V or any other exempting provision within Schedule V applies.
Appendix II
The supply of the IME service by a MD of examining an individual and preparing the assessment report is exempt pursuant to section 5 of Part II of Schedule V. The fact that the MD receives consideration from XXXXX for the supply does not change the tax status of the service rendered by the MD to the individual.
The supply of the service by XXXXX to its customer is exempt. This is because the exempt supply of the IME service by the MD to XXXXX is a component part of an "institutional health care service". That is, the IME service by the MD is rendered to a patient of a health care facility operated by XXXXX. The facility, or a part thereof, operated by XXXXX is a "health care facility" for purposes of P-248 because XXXXX contracts with a MD to provide medical care to a patient of the XXXXX facility, or a part thereof; the MD provides medical care in the XXXXX facility, or a part thereof; and consultation and examination rooms and all necessary equipment and supplies (e.g., examination bed, gowns, stethoscopes, reflex hammers) to support the provision of medical care are in the XXXXX facility or a part thereof. Accordingly, the supply of the service by XXXXX to its customer is an exempt institutional health care service under section 2 of Part II of Schedule V.
Appendix III
The supply of the IA service by a Practitioner of assessing an individual and preparing the assessment report is exempt pursuant to section 7 of Part II of Schedule V. The fact that the Practitioner receives consideration from XXXXX for the supply does not change the tax status of the service rendered by the Practitioner to the individual.
The supply of the service by XXXXX to its customer is taxable. This is because the supply of the IA service by the Practitioner to XXXXX is not a component part of an "institutional health care service". That is, the IA service by the Practitioner – whether rendered to an individual at the XXXXX facility or at the offices of the Practitioner – is not medical care. Therefore, the part of the facility operated by XXXXX that relates to the provision of care by a Practitioner is not a "health care facility" as defined in the ETA. Medical care, for purposes of P-248 means all types of services provided by physicians acting in the course of the practice of medicine. As the supply of the IA service by the Practitioner to XXXXX is not a component part of an institutional health care service, the supply of the service by XXXXX to its customer is taxable as neither section 2 of Part II of Schedule V or any other exempting provision within Schedule V applies.
Appendix IV
The supply of the IA service by a Practitioner of assessing an individual and preparing the assessment report is exempt pursuant to section 7 of Part II of Schedule V. The fact that the Practitioner receives consideration from XXXXX for the supply does not change the tax status of the service rendered by the Practitioner to the individual.
The supply of the service by XXXXX to its customer is taxable. This is because the supply of the IA service by the Practitioner to XXXXX is not a component part of an "institutional health care service". That is, the IA service by a Practitioner – whether rendered to an individual at the XXXXX facility or at the offices of the Practitioner – is not medical care. Therefore, the part of the facility operated by XXXXX that relates to the provision of care by a Practitioner is not a "health care facility" as defined in the ETA. As the supply of the IA service by a Practitioner to XXXXX is not a component part of an institutional health care service, the supply of the service by XXXXX to its customer is taxable as neither section 2 of Part II of Schedule V or any other exempting provision within Schedule V applies.
Appendix V
The supply of the IA service by a Practitioner of assessing an individual and preparing the assessment report is exempt pursuant to section 7 of Part II of Schedule V. The fact that the Practitioner receives consideration from XXXXX for the supply does not change the tax status of the rendered by the Practitioner to the individual.
The supply of the service by XXXXX to its customer is taxable. For the same reasons as explained for purposes of Appendix III, the supply of the IA service by the Practitioner to XXXXX is not a component part of an "institutional health care service" and therefore neither section 2 of Part II of Schedule V or any other exempting provision within Schedule V applies.
Appendix VI
In the case of Appendix I, Appendix III, Appendix IV and Appendix V, the supply of the service by XXXXX to its customer, where the quality control and review process includes the services of a MD in the XXXXX office of XXXXX is taxable. This is because the exempt supply of the IA service by the Practitioner to XXXXX, as described in these appendices, is not a component part of an exempt "institutional health care service" (i.e., not medical care rendered to a patient or resident of a health care facility). The involvement of a MD in the quality control and review process does not alter the nature of this supply. Accordingly, the supply of the service by XXXXX to its customer remains taxable as neither section 2 of Part II of Schedule V or any other exempting provision within Schedule V applies.
In the case of Appendix II, the supply of the service by XXXXX to its customer is exempt. This is because the exempt supply of the IME service by the MD, as described in this Appendix is a component part of an exempt "institutional health care service". The involvement of a MD in the quality control and review process does not alter the nature of the supply.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-4395. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Lynn F. Renner
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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