29 June 1998 GST/HST Ruling HQR0001124 - Tax Status of Phlebotomy Services

                                                                        GST/HST Rulings and Interpretations
  Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, ON K1A 0L5

Dear XXXXX

Thank you for your letter of March 30, 1998 (with attachments), 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) is as follows:

1. XXXXX engages the services of registered phlebotomists who are registered nurses (RNs') to perform phlebotomy services (i.e. paramedical services).

2. Phlebotomy services are performed on the order of qualified medical practitioners.

3. The phlebotomists may be employees of XXXXX independent contractors or employees of other health care providers with whom XXXXX has subcontracted.

4. Phlebotomy services may either be a stand-alone procedure or a component of a complete laboratory diagnostic service.

5. Phlebotomy services may be performed in a medical practitioner's office, a XXXXX laboratory or an XXXXX specimen collection facility.

Transaction(s)

1. Medical practitioner's or their employees perform phlebotomy services for XXXXX and invoice XXXXX for this service.

2. Independent phlebotomists perform phlebotomy services for XXXXX and invoice XXXXX for their service.

Ruling Requested

1. What is the tax status of phlebotomy services provided by medical practitioners or their employees to XXXXX which are a component of a laboratory diagnostic service performed at an XXXXX laboratory facility?

3. What is the tax status of phlebotomy services performed for XXXXX by an independent phlebolomist?

Ruling Given

Based on the facts set out above, we rule that

1. Phlebotomy services performed by a medical practitioner or employees of a medical practitioner are exempt of the GST/HST pursuant to section 5 of Part II of Schedule V to the Excise Tax Act (ETA).

2. Phlebotomy services performed as part of a laboratory diagnostic services are exempt of the GST/HST pursuant to section 10 of Part II of Schedule V to the ETA.

3. Phlebotomy service (i.e. paramedical services) along with any related functions (e.g., pick-up and delivery of samples) performed by registered nurses or other health care professionals operating as independent agent (i.e. under contractual agreements with XXXXX conducted for any reason are taxable at either 7 or 15 percent.

On April 1, 1997, the harmonized sales tax (HST) replaced the goods and services tax (GST) and the provincial sales tax (PST) in the three participating provinces of Nova Scotia, New Brunswick and Newfoundland with a harmonized tax rate of 15%. Goods or services that are delivered or made available in a participating province are subject to the HST. to the extent that they are taxable supplies (which are not zero-rated), tax must be collected at the harmonized rate.

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

In general terms, most health care services are exempt of the GST/HST. While the exempting categories are quite wide-ranging, they are still very specific. If a particular service does not fall within the listed exemptions found in Part II of Schedule V to the ETA, it is taxable unless provided by a small supplier, or exempt under some other provisions in the ETA.

There are no provisions found in the ETA to exempt the supply of paramedical services by any of the nursing professions listed in section 6 of Part II of Schedule V to the ETA. Consequently, the supply of paramedical services by a nurse (i.e., registered nurse, registered nursing assistant, a licensed or practical nurse or a registered psychiatric nurse) to XXXXX is a taxable supply for GST/HST purposes at 7 or 15 percent. In addition, paramedical services provided by other health care professionals such as self-employed phlebotomists and laboratory technologists are also subject to the GST/HST.

In view of the apparent confusion in the industry regarding the tax status of paramedical services and in the interest of fairness and national consistency, the Department is implementing the following policy:

Prior to April 1, 1998, all paramedical services will be treated as tax exempt supplies. Effective April 1, 1998, charges made for paramedical services, including phlebotomy, are be taxable at either 7 or 15 percent for GST/HST purposes.

Notwithstanding the above policy, registrants have the option of treating their supplies of paramedical services as taxable services for prior years. If the registrant chooses this option, they are required to remit the applicable GST/HST and they are entitled to claim an input tax credit (ITC) for GST/HST paid on related purchases.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9264.

Yours truly,

Lance G. Dixon, MHA., CHE
Municipalities and Health Care Services Unit
Public Sector Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate