11820-4
C.N.: 2620
January 23, 1996
Dear Mr. XXXXX
Thank you for your faxed letter of December 8, 1995 concerning the application of the Goods and Services Tax (GST) to the provision of clinical perfusion services and perfusion goods by XXXXX to hospitals. As agreed in your recent telephone conversations with Mr. Lance Dixon, we have included the additional information provided by you in the "Statement of Facts" and provided a ruling on all the issues. This ruling revokes the application ruling provided to you by the XXXXX District Excise Office on April 12, 1995.
Statement of Facts
1. XXXXX is a proposed for-profit company that intends to provide perfusion goods and clinical perfusionist services to hospitals.
2. Such goods and services are fully paid for by XXXXX when utilized during surgical procedures performed in hospitals.
3. The perfusion goods and clinical perfusion services would continue to be covered by the provincial health insurance plan should they be provided by XXXXX under contractual arrangements with a hospital.
Proposed Transactions
1. XXXXX will supply perfusion goods as required and clinical perfusion services on a cost per case basis to hospitals and will submit monthly invoices to the hospital for these goods and services. The invoices will itemize costs associated with goods provided and costs associated with services provided.
2. XXXXX will be invoiced by independent contracted clinical perfusionists on a cost per case basis for the clinical perfusion services supplied .
3. XXXXX will purchase required perfusion goods from commercial suppliers.
4. Individual patients will not be billed by either XXXXX or the contract clinical perfusionists.
Ruling Requested
Do the perfusion goods and clinical perfusionist services provided to a hospital authority which is part of a provincial government entity have any GST consequences? Is the supply of services provided by a clinical perfusionist to XXXXX taxable? Are the perfusion goods purchased by XXXXX from commercial suppliers subject to the GST?
Ruling Given
Based on the facts set out above, we rule that:
1. The supply of perfusion goods to the hospital are not subject to the GST by virtue of the hospitals being part of the XXXXX provincial entity.
2. The supply of clinical perfusionist services to the hospital are not subject to the GST by virtue of the hospitals being part of the XXXXX provincial entity.
3. The supply of services provided by the perfusionist to XXXXX are taxable at the rate of 7%.
4. Perfusion goods purchased by XXXXX from commercial suppliers are taxable at the rate of 7%.
This ruling is subject to the general limitations and qualifications outlined in the GST Memoranda Series Section 1.4. We are bound by this ruling provided that none of the above issues are presently under audit, objection or appeal, there are no relevant changes in the future of the Excise Tax Act, and provided that you have fully described all necessary facts and transaction for which you requested a ruling.
Explanation
Taxable purchases made by provincial governments are treated as though zero-rated. The province, in this case, XXXXX (e.g., a hospital) would not pay the GST on its purchases of clinical perfusion services or perfusion goods from XXXXX. However, if the hospital was not designated as part of the provincial entity, the supply of clinical perfusion services and goods would be taxable at the rate of 7%.
The supply of contracted perfusion services made to XXXXX are taxable at the rate of 7% as there are no provisions in the Excise Tax Act (ETA) to provide exempt GST status.
The supply of perfusion goods to XXXXX by commercial suppliers are taxable at the rate of 7 % as there are no provisions in the ETA to provide zero-rated GST status.
As you discussed with Mr. Lance Dixon, XXXXX will approach the Department of Finance in order to have clinical perfusionists added to the list of practitioners listed in section 7 of Part II of Schedule V to the ETA. If the Department of Finance agrees to this proposal and amends the ETA to include clinical perfusionist services in section 7 of Part II of Schedule V to the ETA, such services contracted to XXXXX would be exempt of the GST.
If a business only conducts exempt GST activities, it is not permitted to become a GST registrant. An unregistered business is not entitled to claim through any credit or refund mechanism the GST paid on its expenses. However, we have determined that, for purposes of the ETA, XXXXX is involved in making two separate taxable supplies to the hospital, one is the supply of medical and surgical goods and the other is the supply of clinical perfusionist services. Accordingly, XXXXX should register and once registered is entitled to claim input tax credits in respect of the GST paid on purchases which will be used in a commercial activity, which by definition excludes the making of exempt supplies.
If further assistance is required, please do not hesitate to contact either myself or Mr. Lance Dixon at (613) 952-9264.
Yours truly
J.A .Venne
Director
Special Sectors
GST Rulings and Interpretations
Policy and Legislation Branch
| c.c.: |
L. Dixon
E. Vermes
A. Venne |
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