GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Road
Vanier, Ontario
XXXXX K1A 0L5
|
XXXXX
|
Case: HQR0000600
Business Number: NA
|
|
Attention: XXXXX XXXXX
|
July 10, 1998
|
|
Subject:
|
GST/HST INTERPRETATION
Tax Status of Various Services provided by XXXXX
|
Dear XXXXX
Thank you for your letter of June 26, 1998 (with attachments) concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to your operations.
Interpretation Requested
1. There are no GST/HST implications for transactions between those entities listed in the Financial Administration Act (FAA) Part 1; Schedule 1, 1.1 and Federal Departments.
2. Services provided by XXXXX to Provincial Departments or listed entities are covered by reciprocal agreements and are outside the scope of the GST except for "participating provinces".
3. The majority of health care services which promote physical and mental health and protection against disease are exempt of the GST/HST.
4. The payment for witness fees to appear in court is subject to the GST/HST.
5. The payment for medico-legal reports is subject to the GST/HST.
6. The payment for independent medical reports from which an individual stands to gain financial or other benefits (e.g., disability or worker's compensation) is subject to the GST/HST.
7. Laboratory, radiological or other diagnostic services made on the order of a medical practitioner or practitioner are exempt of the GST/HST.
8. Medical services rendered to an individual by a medical practitioner are exempt of the GST/HST.
9. Psychologists employed by XXXXX must be registered in the Canadian Register of Health Services Provides in Psychology in order for their services to be exempt of the GST/HST.
10. Nursing services carried out on the order of a medical practitioner are exempt of the GST/HST.
11. Nursing services supplied to a public sector body are exempt of the GST/HST.
12. All "paramedical services" provided by nurses are subject to GST/HST.
13. Nursing services performed in XXXXX clinics by contracted nurses are subject to the GST/HST.
14. GST/HST exempt health care services retain their exempt status when billed to a third party.
Interpretaion Given
Based on the information provided ...
1. GST/HST does not apply to transactions that take place between entities named in Schedule I, I.1 or II of the Federal Financial Administration Act (FAA).
2. GST/HST does not apply to supplies made to any of the provincial or territorial entities listed in Schedule A to the Reciprocal Tax Agreement (RTA) between Canada and a province or territory with the exceptions of New Brunswick, Nova Scotia and Newfoundland which have agreed to pay the GST/HST. Nor does tax apply to supplies made to the Alberta provincial entities included in a list available from Revenue Canada.
3. 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 of the ETA.
4. The payment of witness fees to appear in court is subject to the GST/HST.
5. The payment for medico-legal reports is subject to the GST/HST.
6. The payment for independent medical reports from which an individual stands to gain financial or other benefits is subject to the GST/HST.
7. Laboratory, radiological or other diagnostic services made on the order of a medical practitioner or practitioner are exempt of the GST/HST pursuant to section 10 of Part II of Schedule V to the ETA.
8. Health care services rendered to an individual (other than a surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes) by a medical practitioner who, under the laws of a province are entitled to practice the profession of medicine or dentistry are exempt of the GST/HST pursuant to section 5 of Part II of Schedule V to the Excise Tax Act (ETA).
9. The supply of psychological services are exempt of the GST/HST if the psychological services are rendered to an individual by a person who meets the definition of a practitioner found in section 1 of Part II of Schedule V to the ETA and the practitioner of these services is registered in the Canadian Register of Health Service Providers in Psychology.
10. Nursing services which meet the provisions of section 6 of Part II of Schedule V to the ETA are exempt of the GST/HST whether supplied on the order of a medical practitioner or not.
11. Nursing services rendered by a registered nurse, a registered nursing assistant, a licensed or practical nurse, or a registered psychiatric nurse to a public sector body are exempt of the GST/HST.
12. Paramedical services carried out by nurses operating as independent agents (i.e., under contractual agreements with entities) are subject to the GST/HST. Prior to April 1, 1998 all paramedical services are considered to be tax exempt supplies. Effective April 1, 1998, charges made for paramedical services are taxable at either 7 or 15 percent for GST/HST purposes.
13. Nursing services provided by nursing personnel who are employees of or under contractual arrangements with XXXXX are exempt of the GST/HST pursuant to subsection 6(c) of Part II of Schedule V to the ETA.
14. Health care services which are exempt under Part II of Schedule V retain their exempt status regardless of the billing methodology.
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%.
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.
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 Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate
| c.c.: |
E. Vermes
D. Wladyka
D. Harding
L. Dixon |
Legislative References: Sections 4, 5, 7, and 10 to Part II of Schedule V to the ETA
| NCS Subject Code(s): |
11865-1, 11865-3, 11865-4, 11865-5, 11865-21 |
Issue
Tax status of various services provided by XXXXX XXXXX to other entities.
Statement of Facts
The XXXXX has elected to become XXXXX. It is likely that full XXXXX status will be granted on the basis that services to be offered to its clients are optional and fully cost recovered.
XXXXX is responsible for delivery of the following four service areas:
XXXXX
XXXXX
XXXXX
Analysis
Services provided to entities listed in the FAA Part 1; Schedule 1, 1.1 and Federal Departments:
1. All organizations included in the definition of "department" in the FAA comprise a single person for GST/HST purposes. (Department is defined to be any of the entities named in Schedule I, I.1 or II of the FAA). In order to be "a supply" as defined in the Excise Tax Act (ETA), a property or service must be provided from one person to another. Transactions which take place within a person are therefore not supplies for GST/HST purposes and are not subject to the tax.
Services provided by XXXXX to Provincial departments or listed entities are covered by reciprocal agreements and are outside the scope of the GST except in "participating provinces":
2. Under the Canadian, constitution, property or land of a province (or territory) is not liable to taxation. In order to simplify the administration of specified taxes and to ensure consistent treatment of similar bodies, Canada entered into RTAs with most of the provinces and both territories. Among other things, an RTA lists those provincial entities which will exercise their constitutional immunity from tax (i.e., not pay GST/HST). All unlisted government entities agree to pay tax. As there is no RTA between Alberta and Canada, the list of Alberta entities which do not pay tax is provided by the province. The entities on any of these lists are subject to change.
Please note, that as a result of an agreement to implement the HST, New Brunswick, Nova Scotia and Newfoundland have agreed to pay both GST and HST.
Exempt health care services:
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 of the ETA.
Witness fees:
There are no exempting provisions in Part II of Schedule V to exempt fees paid to a witness in a court of law.
Medico-legal and medical reports:
The term medico-legal is defined in law dictionaries generally as relating to the law concerning medical questions. This type of report is only requested by third parties for purposes of ongoing or potential legal action. It is a statement of fact of the physical/mental condition of an individual pertaining to a past incident or occurrence (e.g., an accident). Consequently, the exempting provisions of section 5 of Part II of Schedule V to the ETA do not apply, and as such, the supply of a medico-legal report is subject to the GST/HST.
Independent medical examinationsreports:
Generally this term is used to describe information requested by insurance companies to evaluate the physicalmental condition of an individual who is the subject of an existing or potential accident or disability insurance claim. Other terms used to describe such supplies include: disability examinationreport, independent medical examination or independent medical assessment. As there is no intent to render health care to an individual it does not meet any exempting provisions of Part II of Schedule V to the ETA. Consequently, independent medical reports are subject to the GST/HST.
Laboratory, radiological or other diagnostic services:
Section 10 of Part II of Schedule V to the ETA exempts the supply of a prescribed diagnostic, treatment or other health care service, when made on the order of a medical practitioner or practitioner. For purposes of the ETA the word prescribed means prescribed by regulation or determined in accordance with rules prescribed by regulation. The Health Care Services (GST) Regulations have prescribed laboratory, radiological and other diagnostic services generally available in a health care facility. Consequently, if a physician or other practitioner orders these diagnostic services, any consideration charged for these diagnostic testing procedures are exempt of the GST/HST pursuant to section 10 of Part II of Schedule V to the ETA.
Health care services rendered to an individual by a medical practitioner:
Virtually all health care services provided by medical practitioners who, under the laws of a province, are entitled to practice the professions of medicine or dentistry are exempt of the GST/HST pursuant to section 5 of Part II of Schedule V to the Act. Revenue Canada considers a wide range of health care services to be exempt health care service when performed by a "medical practitioner" as defined under section 1 of Part II of Schedule V to the ETA.
Psychological services provided by a psychologist who is registered in the Canadian register of Health Service Providers in Psychology:
Section 7 of Part II of Schedule V to the ETA, in part, exempts the supply of psychological services rendered to an individual by a practitioner. A "practitioner" is defined in section 1 of the same Part II to include, in respect of a supply of psychological services, a person who[:]
(a) practices the profession of psychology,
(b) where the person is required to be licensed or otherwise certified to practice the profession in the province in which the service is supplied, is so licensed or certified,
(c) where the person is not required to be licensed or otherwise certified to practice the profession in that province, has the qualifications equivalent to those necessary to be so licensed or otherwise certified in another province, and
(d) in respect of the supply of psychological services, is registered in the Canadian Register of Health Service Providers in Psychology.
Psychological services provided by employed by XXXXX who meet the above conditions are exempt of the GST/HST.
Nursing services:
"The term "nursing service" is not defined in the Excise Tax Act (ETA). In light of this fact, the Department has maintained the position that only those services that have been traditionally viewed as a nursing service will qualify as exempt pursuant to section 6 of Part II of Schedule V to the ETA. Accordingly, nursing services are viewed as patient care services that pertains to the curative, restorative and preventative aspects of nursing, rendered by a registered nurse, registered nursing assistant or a licensed practical nurse to an individual in a health care facility or in the individual's place of residence, is private-duty nursing or the supply is made to a public sector body. Nursing services include personal care, administration of drugs and other medications and treatments, assessment of patient's needs and requirements and the preparation of care plans for the individual patient.
For the purposes of the ETA, nursing service does not include functions such as completing questionnaires, health assessments, collection of body fluids for the purpose of obtaining life insurance and/or processing insurance claims, counseling services with respect to stress, diet, lactation, pre-post natal, weight control, psychological, occupational, to name a few. Consequently, the supply of "paramedical" services by a registered nurse to clients is a taxable supply as this service is not considered to be a nursing service.
However, nursing services rendered to individuals in a medical practitioner's office (i.e., a health care facility) qualify as tax exempt services pursuant to section 6 of Part II of Schedule V to the ETA.
Prior to April 1, 1998, all paramedical services will be treated as tax exempt supplies. Effective April 1, 1998, charges made for paramedical services as described above are taxable at either 7 or 15 percent.
Nursing services supplied to a public sector body:
Subsection 6(c) exempts the supply of a nursing service made to a public sector body. A public sector body is defined in the ETA to include a government. Consequently, a supply of a nursing service rendered by a registered nurse, a registered nursing assistant, a licensed or registered practical nurse or a registered psychiatric nurse to a public sector is exempt of the GST/HST.
Paramedical services provided by nurses:
Paramedical services carried out by nurses operating as independent agents (i.e., under contractual agreements with an entity) are subject to the GST/HST as there are no exempting provisions to exempt such supplies under Part II of Schedule V to the ETA.
Nursing services provided by nurses under contract with XXXXX[.]
Nursing services provided by nurses under contract pursuant to section 6 of Part II of schedule V to the ETA are exempt of the GST/HST.
Health services billed to a third part:
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 any of the health care professions found in Part II of Schedule V to the ETA.
Email this Content