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TO:
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XXXXX
XXXXX
XXXXX
XXXXX
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FROM:
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Lorrie Grannary
Charities and Non-Profit Organizations Unit
Public Service Bodies and Governments
Division
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File HQR0001841
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DATE:
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June 30, 1999
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Thank you for your letter of June 9, 1999 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies made by XXXXX[.]
Statement of Facts
Our understanding of the facts is as follows:
1. XXXXX[.]
2. Pursuant to paragraph 2(e) of the Act:
"personal care home" means a facility that provides:
• accommodation and meals; and
• supervision or assistance with personal care;
to an adult who is not a relative of the person who operates the facility, ...
3. Pursuant to section 2 of the Regulations:
(b) "activities of daily living" includes, but is not limited to, the following activities:
(i) eating;
(ii) bathing;
(iii) dressing;
(iv) grooming;
(v) participating in social and recreational activities; ...
(r) "personal care" means direct assistance to, or supervision of, a resident in performing activities of daily living, but does not include specialized care;
(v) "specialized care" means health care services provided by health care professionals that are required by a resident, but does not include personal care;
4. The XXXXX[.]
5. Elderly individuals reside in the Home.
6. XXXXX[.]
1.1 Accommodation
The Licensee agrees to provide the Resident with ... accommodation in the Home ...
1.2 Meals
The Licensee agrees to provide the Resident with three nutritionally balanced meals each day ....
1.3 Services and Care Provided
(a) Basic Services and Supervision with Care:
The Licensee agrees to ensure the following services and care are provided to the Resident by qualified staff on-site supervision on a 24 hour basis: laundry, supervision of grooming bathing, dressing and nail care, safe place to store medications, home based recreational and social activities that include emotional, spiritual, physical and cognitive stimulation;
(b) Additional Services (Check all that apply):
Pick up prescriptions and arrange for refills;
Provide toiletries of the Licensee's choice;
Provide transportation for medical appointments, shopping, recreational/social activities, hairdresser/barber, church;
Recognize special occasions (birthdays, holidays);
Provide hairdressing/barbering services;
Other.
7. XXXXX are charged a fee (based on a monthly, weekly or daily rate) for 24 hour accommodation, laundry, distribution of medication (if required), and in accordance with the interpretation of "activities of daily living" set out in paragraph 2(b) of the Regulations, meals, grooming (including nail care), bathing, dressing, and home-based recreational/social activities.
8. Residents are charged a separate fee in respect of purchases of dry cleaning services, delivery of prescriptions, private telephone and cable TV services, certain personal items/supplies and transportation services to medical appointments, shopping centres, or church services, etc.
Opinions Requested
1. What is the tax status of the accommodation, meals, and services (described in #7 above) provided to residents of the Home for which a fee based on a monthly, weekly or daily rate is charged?
2. What is the tax status of the additional services (e.g. dry cleaning, delivery of prescriptions, etc.) described in #8 above provided to residents of the Home for which a separate fee is charged?
Opinions Given
Based on the facts set out above, we rule that:
1. There is insufficient information for us to determine if the supply of accommodation, meals, and services described in #7 above are exempt supplies pursuant to section 2 of Part IV of Schedule V to the Excise Tax Act (i.e., the ETA).
2. The additional services described in #8 above will have the same tax status as the supplies referred to under #1 above.
Explanation
1. There is insufficient information for us to determine if the supply of accommodation, meals, and services described in #7 above are exempt supplies pursuant to section 2 of Part IV of Schedule V to the Excise Tax Act (i.e., the ETA).
Pursuant to section 2 of Part IV of Schedule V to the ETA, a supply of a service of providing care, supervision and a place of residence to children, underprivileged individuals or individuals with a disability in an establishment operated by the supplier for the purpose of providing such a service is exempt.
The information on hand indicates that the Home provides accommodation, meals, and supervision or assistance with personal care, to adults who require such assistance with activities of daily life (e.g., bathing, grooming, etc.). It is apparent that these supplies are not made to "children" or "underprivileged individuals" but it is less clear as to whether these supplies are made to "individuals with a disability." If it could be demonstrated that the recipients require "assistance with the activities of daily life" because of a mental or physical disability, and that providing supplies to such individuals was the purpose of the Home, than the supply would fall under the exemption of section 2. For example, if it is demonstrated that the Home is meant to house elderly individuals who require assistance because of the physical or mental effects of aging (e.g., arthritis, rheumatism, senility), than it is apparent that the supply would be exempt.
2. The additional services described in #8 above will have the same tax status as the supplies referred to under #1 above.
It is our view that the Home is making a single supply of a package consisting of the following elements: meals, accommodation, basic services as described in #7 above and additional services described in #8 above.
Our conclusion that the additional services described under #8 above are part of a single supply is based on the following factors which are set out under Policy Statement P-077R Single and Multiple Supplies.
i. The terms of the contract between The Home and its residents indicate that the Basic Services and Supervision With Care (elements included in #7 above) and the Additional Services (elements included in #8 above) are integral elements to the composite activity outlined under section 1.3 Services and Care Provided of the sample Admission Agreement (i.e., even though the additional services are optional, they are inputs into the composite supply of care and accommodation).
ii. The fact that there is one supplier and one recipient indicates that a single supply is being provided by the Home.
iii. If the recipient did not receive all of the services, each service, in itself, and in the context of the transaction between the Home and its residents, would not be of any use to the residents. For example the service of private telephone or cable TV service would not be of use to residents unless the residents had purchased accommodation from the Home.
iv. The provision of any particular service is contingent on the provision of the other elements. For example, residents could not receive the service of delivery of medications unless they were recipients of the supply of accommodation.
v. Although the recipient is made aware of the specific elements in the Admission Agreement, there is no emphasis placed on the Additional Services. Moreover, the services in #7 and #8 above are not particularly distinctive in their quantity, their physical characteristics, or the steps to be followed in providing them.
Therefore, it is our view that the Additional Services are part of a single supply which will be exempt if the requirements of section 2 of Part IV of Schedule V are met, as described under #1 above.
We trust that our comments may assist you in determining what additional information is required. Should you have any further questions or require further clarification, please do not hesitate to contact me at (613) 952-0420.
| c.c.: |
J.M. Place
L. Grannary |
| Legislative References: |
s. 2/IV/V |
| NCS Subject Code(s): |
11940-1 |
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