XXXXX
Dear sir:
This refers to your letter of May 4, 1993, to Don Dawson of my staff, concerning rebates to nursing homes. We regret the delay in responding.
You are concerned that the Excise Tax Act, as amended June 10, 1993, may contain a narrower definition of who qualifies for rebates than what was indicated in the press release of March 27, 1991. You have specifically referred to the requirement that the facility be operated for the purpose of providing services to residents of the facility who have limited physical or mental capacity for self-supervision and self-care.
Page 128 of the Technical Notes to Bill C-62 stated that all non-profit nursing homes qualify for the 50 percent rebate for charities. The original wording of subsection 259(1) of the Act stated that, in section 259, "charity" included a non-profit organization that operates a facility, or a part thereof, for the purpose of providing nursing home intermediate care service or residential care service, within the meaning of those expressions in the Canada Health Act.
The definition of health care facility in section 1 of Part II of Schedule V to the Act also referred to nursing home intermediate care service or residential care service within the meaning of the Canada Health Act. However, since the Canada Health Act did not define nursing home intermediate care service or residential care service, both subsection 259(1) and section 1 of Part II of Schedule V were amended effective December 17, 1990, with the legislation receiving Royal Assent on June 10, 1993.
The proposed change to the definition of "health care facility" was first mentioned in the Department of Finance press release of March 27, 1991. It stated that the definition of "health care facility" would be defined in part as providing assistance with the activities of daily living and social, recreational and other related services to meet the psycho-social needs of residents.
However, the press release did not say anything about the residents having limited physical or mental capacity for self-supervision or self-care.
The draft legislation issued on September 30, 1992 contained a revised definition of "health care facility" that was intended to implement the proposal outlined in the press release of March 27, 1991. The revised section 1 of Part II of Schedule V to the Act defines a health care facility as a facility, or part thereof, operated for the purpose of providing residents of the facility who have limited physical or mental capacity for self-supervision and self-care with
(i) nursing and personal care under the direction or supervision of qualified medical and nursing care staff or other personal and supervisory care (other than domestic services of an ordinary household nature) according to the individual requirements of the residents,
(ii) assistance with the activities of daily living and social, recreational and other related services to meet the psycho-social needs of the residents, and
(iii) meals and accommodation.
The wording of the amended legislation does not clearly state whether all or only some of the residents of a nursing home must have limited physical or mental capacity for self-supervision and self-care in order for the nursing home to qualify as a health care facility. However, the reference to limited capacity seems to be central to the definition, and the term "health care facility" can refer to either a facility or to only part of a facility. Therefore, it would appear that if only part of the residents of a facility have limited physical or mental capacity for self-supervision and self-care, only part of the facility would be a health care facility.
The revised wording of section 259 states that, for purposes of section 259, "charity" includes a non-profit organization that operates, otherwise than for profit, a health care facility within the meaning of paragraph (c) of the definition of that expression in section 1 of Part II of Schedule V. Neither the amendment to subsection 259(1) nor the restriction in paragraph (c) of the definition of health care facility were specifically referred to in any press release prior to the issuing of the draft legislation.
Therefore, not withstanding the fact that the changes are effective December 17, 1990, we will not penalize anyone who claimed a rebate of GST under the original provisions prior to September 30, 1992. The eligibility of nursing homes for rebates became dependent of the wording of paragraph (c) of the definition of "health care facility" in section 1 of Part II of Schedule V to the Act. This wording would seem to limit rebates to nursing homes or parts of nursing homes whose residents have limited mental or physical capacity for self-supervision or self-care.
Since the amendment to subsection 259(1) was not specifically referred to in any press release prior to the issuing of the draft legislation on September 30, 1992, all nursing homes would be entitled to the fifty percent rebate available to charities until that date. However, once the draft legislation was released, the expanded definition of charity for purposes of section 259 of the Act would include only those nursing homes or parts of nursing homes whose residents have limited physical or mental capacity for self-supervision and self-care.
The Department will be developing a policy concerning the circumstances in which it is appropriate to assess a rebate claimant concerning rebates paid in error. We will notify you when the policy has been finalized.
We hope that the information provided is of assistance to you. If you have any questions regarding this letter, please do not hesitate to contact Mr. Don Dawson at (613) 954-4393 here in Ottawa.
Sincerely
J.A. Venne
Director
Tax Policy - Special Sectors
Policy and Legislation
Excise/GST
| c.c.: |
J.A. Venne
J. Houlahan
D. Dawson |
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