File 11865-5/6
C.N.: 4867
Dear XXXXX
I am writing you to confirm the application of the Goods and Services Tax (GST) with respect to supplies of medical and other health care services when made to an insurer.
It is my understanding insurers contract companies to provide paramedical services to the insurance industry. These contracted companies arrange for medical and paramedical examinations and subsequent reports when required. They also retain the services of medical practitioners, registered nurses and other health care professionals who may, among other things, gather personal health information, collect blood and other samples, take physical measurements, perform limited paramedical tests, arrange for x-rays and laboratory testing and obtain attending physician's statements. These services are provided at the individual's place of residence, place of work or elsewhere.
You will recall, in a response to your letter of April 22, 1991, the XXXXX Excise Office in XXXXX provided a series of interpretations to your association. In each of these interpretations the services in question were either performed for and billed by a "medical practitioner" (i.e. a person who is entitled under the laws of a province to practice the profession of medicine or dentistry) to an insurer or performed by a medical practitioner who is remunerated by a private medical services clinic which in turn bills the insurer for the services. As you are aware, those interpretations only addressed services provided by a "medical practitioner".
Health care services rendered by all medical practitioners are exempt of the GST pursuant to section 5 of Part II of Schedule V to the Excise Tax Act (ETA) which reads as follows:
"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)".
The exemption applies without regard to whom the service is billed. Therefore, the health care services outlined in the section will be exempt (even when billed to an insurance company or other third party).
With respect to the GST status of "independent insurance medical examinations/reports" the following is provided for your information. Generally, this term is used to describe information requested by insurance companies to evaluate the physical/mental condition of an individual who is the subject of an existing or potential accident or disability insurance claim. Other terms used to describe such supplies include: disability examination reports, independent medical examinations or independent medical assessments. This type of report is one of the factors used in determining the policy holder's degree of entitlement to claim compensation under an existing policy (i.e., a disability/accident insurance policy). An example would be the assessment by any medical practitioner of an accident victim's ability to live a normal life. The supply of such a report is not exempted from the GST under the provisions quoted above and is therefore taxable at 7%. However, a report prepared by a medical practitioner for purposes of underwriting a life insurance policy is an exempt supply pursuant to section 5 of Part II of Schedule V to the ETA. Enclosed please find a synopsis of the Department's policy regarding "medical reports".
With respect to the services provided by your client companies, section 6 of Part II of Schedule V to the ETA exempts the supply of a nursing service rendered by a registered nurse, a registered nursing assistant or a licensed practical nurse, where
"(a) the service is rendered to an individual in a health care facility or in the individual's place of residence;
(b) the service is a private-duty nursing service; or
(c) the supply is made to a public sector body."
The term "nursing service" is not defined in the ETA. The Department's policy is that only those services traditionally recognized as nursing services qualify as exempt services pursuant to section 6 of Part II of the Schedule V to the ETA. Consequently, a recognized nursing service is a patient care service that pertains to the curative, restorative and preventative aspects of nursing. This service includes personal care, the administration of drugs and other medications, physician prescribed medical/surgical treatments, the assessment of patient needs and requirements, and the preparation of nursing care plans for the individual patient.
For purposes of the ETA, nursing services do not include functions such as completing questionnaires or health assessments, collection of body fluids for the purpose of obtaining life insurance or processing insurance claims, taking physical measurements, performing limited paramedical examinations or obtaining attending physician's statements, to name a few. Hence, the supply of "paramedical" services by a registered nurse, registered nursing assistant or a licensed practical nurse to clients is taxable at 7% as this service is not considered a nursing service for purposes of section 6.
In addition, this exemption is also contingent upon the nursing service being rendered to an individual (i.e. a natural person) in either a health care facility or in the individual's place of residence or is a private duty nursing service or is made to a public sector body. Where the services are supplied, in this case to an insurer, and not to an individual, a public sector body nor is it a private duty nursing service, the exempting provisions have not been met.
In summary, paramedical services being supplied by registered nurses, registered nursing assistant and licensed practical nurses to your client companies do not meet the exempting provisions of section 6 of Part II of Schedule V to the ETA. I must confirm that the supply of these services is taxable at 7%. I further wish to advise you this is not a change in Departmental policy but rather, confirmation of the existing policy which has been in effect since the implementation of the GST.
The forgoing comments represent our general views with respect to this issue. Proposed or future amendments to the legislation may result in changes to our interpretation. These comments are not rulings and, in accordance with the guidelines set out in GST Memoranda Series Section 1.4, do not bind the Department with respect to a particular situation.
I would appreciate if you would advise your member companies.
If you would like to discuss this matter further, please do not hesitate to contact me at (613) 954-7656 or Lance Dixon at (613) 952-9264.
Yours truly,
J.A. Venne
Director
Special Sectors
GST Rulings and Interpretations
Policy and Legislation Branch
Attachment: 1
c.c.: E. Vermes
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