GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, ON K1A 0L5
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Subject:
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GST/HST APPLICATION RULING
Medical Clinic
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Dear Madam:
Thank you for your letter of October 9, 1997 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction(s) described below.
Statement of Facts
Our understanding of the facts, the transaction(s), and the purpose of the transaction(s), based on the above-mentioned letter and a telephone conversation of September 1, 1998, is as follows:
1. Your client (the Medical Clinic) is a Canadian corporation.
2. Remuneration of the physicians who are associated with the Medical Clinic is on a fee-for-service basis, with claims being submitted by the Medical Clinic to XXXXX on the physician's behalf.
3. Payment is made by XXXXX to the physician, who in turn remits to the Medical Clinic an overhead charge calculated at an hourly rate set by the directors of the Medical Clinic.
Transaction(s)
Physicians associated with the Medical Clinic pay the Medical Clinic an overhead charge or management fee.
Ruling Requested
GST/HST will not apply to the overhead charge paid by the physicians to the Medical Clinic.
Ruling Given
Based on the facts set out above, we rule that GST/HST does apply to the overhead charge paid by the physicians to the Medical Clinic.
This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.
Explanation
The Medical Clinic is a management corporation. The Department's administrative position regarding management corporations and health care services is set out in GST Memorandum 300-2 at paragraph 27. Management corporations must register for purposes of the GST if their annual revenues exceed $30,000. Their charges to physicians for accommodation, administration, etc. are taxable, and the corporation is entitled to input tax credits for the GST/HST paid for business expenses to provide these services. For your convenience I enclose a copy of the relevant portions of GST Memorandum 300-2.
Should you have any further questions or require clarification on the above matter, please do not hesitate to contact Enikö Vermes, Manager at (613) 954-5127 or me at (613) 952-0370.
Yours truly,
Joyce M. Crago, LL.B.
Public Service Bodies & Governments Division
GST/HST Rulings and Interpretations Directorate
| c.c.: |
Paule Labbé
E. Vermes
P. Bertrand |
Encl.:
| Legislative References: |
Sections 5 and 7 of Part II of Schedule V to the ETA |
| NCS Subject Code(s): |
R-11865-3 |
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