File: 11865-2(lgd)
11865-3/GL/94316
March 31, 1995
XXXXX
This is in response to your telephone conversations with Lance Dixon and your correspondence of November 3, 1994, concerning the application of the GST to the XXXXX apologize for the delay in responding.
You requested our comments with respect to the application of the GST to the XXXXX and in particular, if XXXXX [m]eets the definition of a "health care facility" pursuant to paragraph 1(a) of Part II of Schedule V to the Excise Tax Act (ETA), and if so, are they providing "institutional health care services".
In our opinion the first issue to be addressed is whether the supply of a package known as the XXXXX made by one supplier to one recipient for an all inclusive price for which a single consideration is paid, constitutes a single or multiple supply.
Our understanding of the facts provided by you are as follows:
1. XXXXX The program consists of the following three component parts.
• physician services and laboratory testing , which are covered under XXXXX .
• XXXXX a low-calorie nutritional product.
• XXXXX a variety of goods and services.
analysis - Single or Multiple Supply
To make this determination, we have used the factors discussed in the policy on single and multiple supplies.
The three questions one must ask under the single/multiple supply policy are:
1. If the client did not receive all of the elements (i.e. the remaining two) would each, in itself, be in the context of this transaction, of any use to the client? [if yes, likely multiple supplies, if no, a single supply]
No. The stated purpose of the XXXXX stresses a multidisciplinary approach to weight loss. The program as described, includes a protein-sparing fast, behavior modification, nutrition education, exercise and psychological support. If the client only received XXXXX would be of little use to the client. Similarly, if the client only received the XXXXX without the benefit of the XXXXX would be of little use to the client.
Given that none of the elements has a separate use, the answer to this question indicates that the elements that comprise the program constitute a single supply.
2. Is the provision of a particular element contingent on the provision of another element? [if yes, likely a single supply, if no, multiple supplies]
Yes. Based on the elements of the program it is reasonable to conclude neither the food supplement nor the XXXXX would be offered separately as each element is contingent on the other to be effective. This indicates a single supply.
3. Is the client made aware of the specific elements (in detail) that are part of the package? [if yes, likely multiple supplies, if no, single supply]
No. At the time a client agrees to become involved in the program they are provided with a program summary which explains in general terms whether or not the XXXXX is the appropriate regime for the individual. The clients are not advised of the details of specific laboratory testing, content of interviews, activities of group meetings etc. The answer to this question indicates that all the elements constitute a single supply.
In summary, based on the answers to the three above questions, the supply of the XXXXX constitutes a single supply.
Analysis - Health Care Services
Based on the information provided, XXXXX does not meet the exempting provisions of paragraph (b) or (c) of the definition of "health care facility" under section 1 of Part II of Schedule V to the Excise Tax Act (ETA).
For purposes of paragraph 1(a) of the same provision, the Department has maintained the position that "medical care" refers to those services provided by or ordered by a physician, with the care given by other professionals (such as nursing care, rehabilitation, and the like) excluded from the definition.
In order to meet the provisions of paragraph 1(a) of Part II of Schedule V to the ETA, XXXXX must be operated for the purpose of providing medical or hospital care, including acute, chronic or rehabilitative care. The inclusion of the terms "acute", "chronic" and "rehabilitative care" are included as examples of medical or hospital care. They do not stand on their own. XXXXX will meet the definition of "health care facility" only if they provide medical care as described above. Conversely, if XXXXX does not provide such medical care, they do not meet the definition of a "health care facility" and consequently will not be considered to provide "institutional health care service" pursuant to section 2 of Part II of Schedule V of the ETA. Based on the information provided and commonly accepted definitions of "medical care" neither medical nor hospital care is being provided by XXXXX accordingly, the supply of the XXXXX is a taxable supply.
It should be noted that the supply of physician services and laboratory testing, which are not part of the overall program fee and are covered by XXXXX are exempt of the GST pursuant to section 9 of Part II of Schedule V.
As stated in the correspondence received, the fact that XXXXX operates on a for profit basis is not relevant in determining the GST status of the XXXXX[.]
XXXXX is correct in its observation that if this same program were offered by a "hospital authority" (e.g. a public hospital) the GST component would be less than when the program is offered by entities who do not meet the definition of a "hospital authority". Since hospital authorities meet the definition of a health care facility, they can avail themselves of the applicable provisions of Part II, Schedule V, as well, they are eligible to a rebate of 83% of the GST paid on their purchases.
In conclusion, the supply of the XXXXX is a taxable supply subject to the GST at the rate of 7%.
I believe that this answers all of the questions raised by XXXXX in their letter of November 3, 1994 to your office. I would appreciate the opportunity to review your response to the XXXXX before it is sent to the organization. If you have any further questions regarding this matter, please contact me at (613) 954-5127 or Lance Dixon at (613) 952-9264.
Yours truly,
Enikö Vermes
A/Manager
Goods and Health Care
Tax Policy - Special Sectors
GST Rulings and Interpretations
| c.c.: |
Lance Dixon
Taxing Provisions Unit |
Email this Content