May 28, 1996
Dear XXXXX:
I am writing in response to your letter of October 31, 1995 and acknowledge receipt of the correspondence forwarded by you to this office by FEDEX. As well, I understand you have had several telephone conversations with Mr. Lance Dixon regarding the application of the Goods and Services Tax (GST) to the supply of services provided by clients of your company to the insurance industry. I apologize for the delay in responding.
It is my understanding your client companies provide paramedical services to the insurance industry. As a third party they arrange for medical and paramedical examinations and subsequent reports when required. These companies 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.
A review of the correspondence forwarded to this office did not reveal any rulings or interpretations indicating the services described above and performed by registered nurses are exempt of the GST. However, in response to a letter of April 22, 1991 from the XXXXX, the Regional Excise Office in XXXXX provided XXXXX interpretations to XXXXX cases involving two scenarios each. In each of these cases and scenarios 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 the 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, these interpretations only addressed services provided by a "medical practitioner".
Health care services rendered by contracted 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)".
Hence, the health care service described in the above quoted section provided by licensed physicians or dentists, other than services meant for cosmetic purposes fall within this exempting provision. The exemption would apply without regard to whom the service is billed. Therefore, the health care services outlined in the quoted section will be exempt even when billed to other than the individual, (e.g., 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 service provided by registered nurses retained 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 to clients is taxable at 7% as this service is not considered a nursing service.
In addition, this exempting provision is also contingent upon the conditions that a nursing service be 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. The service being supplied is provided to a company and not to an individual, a public sector body nor is it a private duty nursing service.
Based on the information provided, we have determined that the paramedical services being supplied by registered 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%.
The forgoing comments represent our general views with respect to the subject matter of your letter. 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.
We will advise the XXXXX of the application of the GST to the supply of paramedical services by registered nurses to the insurance industry and request they advise their members[.]
If you would like to discuss this matter further, please do not hesitate to contact Lance Dixon at (613) 952-9264.
Yours truly,
J.A. Venne
Director
Special Sectors
GST Rulings and Interpretations
Policy and Legislation Branch
c.c.: E. Vermes
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11285-8(PM)
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