C.N.: 2692
File: 11865-17(lgd)
Dear Mr. XXXXX
This is to advise you of our revised policy regarding the application of the Goods and Services (GST) Tax to the supply of XXXXX services provided by medical practitioners to their patients in XXXXX clinics.
In a previous interpretation issued by this Department on May 31, 1991 we outlined the separate charges for various components of XXXXX services which were either exempt of the GST, zero-rated or taxable.
The policy regarding the application of the GST to the supply of XXXXX services has been reviewed and the following revised interpretation is provided based on the Excise Tax Act (ETA).
In our opinion, the main issues to be addressed are whether clinics providing XXXXX services meet the definition of a "health care facility" pursuant to paragraph 1(a) of Schedule V to the ETA, and if so, whether they provide a "institutional health care service".
The applicable exempting provision for the supply of "institutional health care service" is section 2 of Part II of Schedule V to the ETA, which reads as follows:
"A supply of an "institutional health care service" made by the operator of a "health care facility" to a patient or resident of the facility, but not including a service related to the provision of a surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes".
This statutory provision is broad enough in scope to include the services and supplies provided by the clinics involved in XXXXX services. Consequently, the supply of XXXXX services is considered a single supply of an "institutional health care service" made by the operator of a health care facility to a patient or resident and is exempt of the GST.
Since the supply of XXXXX is an exempt supply, clinics or medical practitioners will not be able to claim Input Tax Credits for the GST paid on the purchase of equipment or other costs related to the supply of XXXXX services.
Invoicing practices may result in the bill being split between the service charge of the medical practitioner performing the procedure and a charge for the use of the facility. Regardless of whether the bill is for a single amount or split between these two charges, the supply of XXXXX services is considered a single exempt supply.
For the period from January 1, 1991 up to and including December 31, 1995, the Department will interpret the legislation based on the interpretation provided on May 31, 1991. Consequently, the provision of the following supplies attract the GST:
1. Application Services,
2. Program Development,
3. Specimen handling, and
4. Washing and/or freezing XXXXX[.]
However, the use of the clinics, operating rooms, laboratory services and supplies are exempt of the GST pursuant to section 2 of Part II of Schedule V to the ETA.
As described previously, under the revised policy, the supply of XXXXX services is considered a single exempt supply of an "institutional health care service" made by the operator of a health care facility to a patient or resident of the facility. Consequently, no GST will be charged on these exempt supplies, no ITCs' may be claimed on any portion of expenses incurred in providing the exempt supplies and entities will be deregistered if they are not involved in any other commercial activity.
This change applies to supplies of XXXXX made after 1995. Effective January 1, 1996, the supply of XXXXX services provided to a patient will be exempt from the GST.
Please ensure that members of your association are made aware of this revision in policy.
If you have any questions or require further clarification regarding this issue please contact Ms Enikö Vermes at 954-5127 or Mr. Lance Dixon at 952-9263.
J.A. Venne
Director
Special Sectors
GST Ruling and Interpretations
Policy and Legislation Branch
| c.c.: |
Lance Dixon
Enikö Vermes
Adrien Venne
XXXXX |
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