13 July 1998 GST/HST Interpretation HQR0001243 - Tax Status of Attending Physician Statement (APS)/Attending Physician Report (APR)

Dear XXXXX

This is in response to your letter of June 22, 1998, (with attachments) and your conversations with me concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to attending physicians statements (APSs'), also known as attending physician's reports (APRs') used in the underwriting process to confirm or ascertain the medical status of an individual for life insurance purposes.

Our understanding of the facts is as follows:

1. Life and health insurance policies may be issued on a "non-medical basis" based on information obtained from a questionnaire completed by a sales agent and the applicant at the time the policy is applied for.

2. In other cases, additional medical information is required to determine the health status of an individual applying for life and health insurance. In these situations, the insurer may request the attending physician of the applicant to provide either an APS or APR.

Interpretation Requested

You ask that that the following statement be confirmed:

A report prepared by a physician (who is the client's primary caregiver) for purposes of determining eligibility for insurance is exempt of the GST/HST under section 5 of Part II of Schedule V to the ETA.

Interpretation Given

Based on the information provided ...

Medical reports prepared by a medical practitioner with whom an individual has a physicianpatient relationship (whether or not the individual is examined), for the purposes of determining eligibility for life insurance but excluding medico-legal reports and independent insurance medical examinations/reports (i.e. an examination or report relating to claims, benefits or settlements) are exempt of the GST/HST pursuant to section 5 of Part II of schedule V to the ETA.

Analysis

Billing practices have no impact on the tax status of exempt health care services. The key criterion in determining the tax status of any health care service is the type of service being provided by a medical practitioner or practitioner. The consideration for exempt medical reports whether billed to an insurance company, other entity or third party maintains its exempt status throughout the billing process. Conversely, consideration for taxable reports such as, medico-legal reports and independent insurance medical examinationreports whether billed to an insurance company, layer or other third party incur the GST/HST.

Attached, please find a discussion paper on the application of the GST to the supply of various kinds of medical reports and a copy of policy statement P-080, "Medico-Legal Reports" which discusses the tax status of these reports.

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%. to the extent that they are taxable supplies (which are not zero-rated), tax must be collected at the harmonized rate.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Department with respect to a particular situation.

For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series.

It is our understanding you will provide the Department with a list of addresses and or Fax numbers of your mutual companies so that we may advise them of the tax status of medico-legal and medical reports.

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

Yours truly,

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

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