6 May 1999 GST/HST Interpretation HQR0001746 - Tax Status of Massage Therapy

Dear XXXXX

Thank you for your letter of March 25, 1999, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to massage therapy.

Interpretation Requested

In XXXXX the services of a massage therapist, when referred by a physician, is a health care service benefit that is covered by the XXXXX[.] In your letter you state that the XXXXX will only cover the cost of massage therapy up to a predetermined amount. You are asking that where only a portion of the amount is covered, will the entire amount charged for the massage therapy service be considered exempt pursuant to section 9 of Part II of Schedule V to the Excise Tax Act ("ETA").

Interpretation Given

Generally, supplies made by massage therapists are taxable supplies subject to the GST at 7% or where the supply is made in a participating province (Newfoundland, Nova Scotia, or New Brunswick), such supplies are subject to the HST at 15%. However, section 9 of Part II of Schedule V to the ETA exempts a supply of any property or service, other than a zero-rated supply, but only if, and to the extent that, the consideration for the supply is payable or reimbursed by the government of a province under a plan established under the Act of the legislature of a province to provide for health care services for all insured persons of the province.

Massage therapy services that are insured by the XXXXX are exempt to the extent that the amount charged for the service is paid or reimbursed by the XXXXX[.] Accordingly, where a portion of an amount charged for the service is either paid or reimbursed by the XXXXX that portion charged for the service is in respect of an exempt supply pursuant to section 9 of Part II of Schedule V. However, the amount not covered by the XXXXX is in respect of a taxable supply and is subject to the GST at 7%.

Please note that there is no restriction as to the person who is paid or reimbursed by the XXXXX section 9 of Part II of Schedule V. Therefore, a supply of massage therapy services may be exempt whether the amount charged is reimbursed directly to the massage therapist or to the insured person at a later date.

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.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-6761.

Yours truly,

Susan Eastman
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division