May 24, 1996
Dear XXXXX
We are writing with reference to the case XXXXX which was discussed during the workshop held at the XXXXX office on December 14, 1994. We apologize for the delay in responding.
XXXXX provides a variety of health care and health management services to its clients which include individuals and companies who wish to provide such services to their employees. The services provided are divided into two main categories, firstly, "Diagnostic Services" and secondly, "Health Management Program".
The facts as we understand them are:
Diagnostic Services consist of providing annual medical examinations, periodic medical examinations and health assessments to individuals in a clinical environment; these services include some or all of the following:
1. Individual Diagnostic Services which include diagnostic services and the resultant written medical report of an individual.
2. Insurance Diagnostic Services which include medical examinations, assessments and/or reports.
3. Pre-Employment Diagnostic Services which include medical examinations, assessments and medical reports.
4. Corporate Diagnostic Services which include annual or bi-annual medical examinations, assessments and the resultant medical reports.
5. Professional Referral Service which include arranging medical assessments and medical reports by specialist medical practitioners.
Services 1 through 5 can be acquired separately.
Health Management Program is a program or package of services which provide an individual with all or part of the following services:
1. Annual medical examination, assessment and follow-up medical reports.
2. Professional Referral Service to specialist medical practitioners.
3. Maintaining individual medical records.
4. Access to 24-hour worldwide medical emergency phone assistance.
5. Group Health insurance coverage including full medical treatment provided by medical practitioners/hospitals based in XXXXX[.]
The above services are packaged as a group and cannot be acquired separately.
The issues to be resolved are as follows:
1. Are the services provided by XXXXX under the heading "Diagnostic Services" taxable or exempt supplies?
2. Are the elements provided by XXXXX within the category "Health Management Program" part of a single supply or do they constitute separate supplies?
The applicable exempting provision for the supply of health care services by a medical practitioner is 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 reasons and not for medical or reconstructive purposes)".
The applicable exempting provision for health care services covered under a provincial Health Insurance Act is section 9 of Part II of Schedule to the Excise Tax Act (ETA), which reads as follows:
"A supply (other than a zero-rated supply) of any property or service but only if, and to the extent that, the consideration for the supply is payable or reimbursed by the government of a province under a plan established under an Act of the legislature of the province to provide for health care services for all insured persons of the province".
The supply of other health care services is exempt of the GST under the Health Care Services (GST) Regulations issued pursuant to section 10 of Part II of Schedule V to the ETA.
In response to the first question regarding the GST status of the services listed in 1 through 4 under "Diagnostic Services", medical examinations, assessments, and medical reports of the findings of such services are exempt pursuant to section 5 of Part II of Schedule V to the ETA. In addition, supplies of diagnostic services payable or reimbursed through a provincial health insurance plan are exempt pursuant to section 9 of Part II of Schedule V to the ETA. Finally, the supply of other laboratory, radiological or other diagnostic services generally available in a health care facility are exempt pursuant to section 10 of Part II of Schedule V to the ETA.
There are no exempting provisions provided in the ETA for referral service as described in 5 of "Diagnostic Services", consequently the supply of such services are taxable at the rate of 7%. However, if such referral services are made by one medical practitioner to another medical practitioner they would be considered consultative in nature and exempt pursuant to section 5 of Part II of Schedule V to the ETA.
Regarding the second issue to be addressed , whether the supply of the Health Management Program made by XXXXX to one recipient for an all inclusive price for which a single consideration is paid, constitutes a single or multiple supply, we have used the factors described in P-077 "Single and Multiple Supplies".
It is our conclusion, based on the subscription agreement between XXXXX and its clients, that the elements provided by XXXXX under the Health Management Program are parts of a single supply. These services do not, however, constitute a single supply of a health insurance plan and therefore are not exempt financial services pursuant to Part VII of Schedule V to the ETA. Based on the facts set out and the absence of exempting provisions in the ETA for this type of service, the supply of the Health Management Program by XXXXX to its clients is taxable at seven percent for GST purposes.
If you require any further clarification or have any questions regarding this case please contact me at (613) 954-5127 or Lance Dixon at (613) 952-9264.
Yours truly,
Enikö Vermes
Manager
Health Care,
Goods and Services
Special Sectors
GST Rulings and Interpretations
c.c.: Enikö Vermes
XXXXX 11870-5 R 1641
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