8 June 2000 GST/HST Interpretation 8235/HQR0001841r - Status of Services of a Personal Care Home

On July 15, 1999, we sent a response to you regarding the status of supplies made by XXXXX[.] The reason for this memo is to point out that it appears the exemption provided under section 2 of Part II of Schedule V also appears to apply to these supplies. Since this additional information would not change the tax status of the supply, we are not suggesting that the ruling issued to the Home need be revoked or revised. We are writing only because we neglected to point out this information in our previous response.

As you are aware, XXXXX is licensed to operate a personal care home in XXXXX as regulated by XXXXX (i.e., the Act) and XXXXX i.e., the Regulations) to the Act. Pursuant to that Act, a "personal care home" means a facility that provides accommodation, meals, and supervision or assistance with personal care to an adult who is not a relative of the person who operates the facility. The Regulations define "personal care" to mean direct assistance to, or supervision of, a resident in performing activities of daily living, but does not include specialized care. The same Regulations set out that activities of daily living include, but are not limited to, the following: eating, bathing, dressing, grooming, participating in social and recreational activities.

Article 1 of a sample admission agreement between the Home and a resident lists the supplies provided by the Home. They include accommodation, meals, certain basic services and care provided by qualified on-site staff on a 24 hour basis (e.g. laundry, supervision of grooming, bathing, dressing, nail care, medication storage, and home based recreational and social activities). Additional services provided to residents for an additional fee include telephone and cable service, pick up of toiletries and prescriptions, transportation to medical or hairdresser/barber appointments, shopping malls, church, or recreational/social activities, and hair dressing and barber services.

The Home employs two staff members, pays a registered nurse for services related to distribution of medication to residents, and is operated by XXXXX XXXXX from her residence.

Six elderly individuals who currently reside in the Home are classified as Level "I" or "II" under the guidelines set in the province of XXXXX.

On the basis of the above information, a ruling was provided to XXXXX XXXXX stating that the Home provides an exempt supply under section 2 of Part IV of Schedule V to the Excise Tax Act (i.e., the ETA). That is, it supplies a service of providing care, supervision and a place of residence to individuals with a disability in an establishment operated by the supplier for the purpose of providing such a service.

Since the issuance of that response we have further reconsidered whether supplies of accommodation, meals, certain basic services and the additional services made by the Home would also be exempt under section 2 of Part II of Schedule V as a supply of an "institutional health care service" made by an operator of a "health care facility". Those terms are defined in section 1 of the same Part for purposes of Part II of Schedule V.

An "institutional health care service" is defined in section 1 to include (in part) supplies of accommodation, meals (other than meals served in a restaurant, cafeteria or similar eating establishment), and "services rendered by persons who receive remuneration therefor from the operator of the facility" when those supplies are provided in a health care facility.

As defined in section 1 of Part II, "health care facility" is defined, in part, as

(c) a facility, or a part thereof, operated for the purpose of providing residents of the facility who have limited physical or mental capacity for self-supervision and self-care with ...

i. personal and supervisory care (other than domestic services of an ordinary household nature) according to the individual requirements of the residents,

ii. assistance with the activities of daily living and social recreational and other related services to meet the psycho-social needs of the residents, and

iii. meals and accommodation.

It is our view that supplies made by the Home would be exempt under section 2 of Part II (as well as section 2 of Part IV) because the supplies are among those enumerated within the definition of "institutional health care service" and the Home qualifies as a "health care facility" as it is operated for the purpose of providing its residents, inclusively:

•   personal and supervisory care according to the individual requirements of the residents;

•   assistance with the activities of daily living and social, recreational and other related services to meet the psycho-social needs of residents; and

•   meals and accommodation.

We wish to point out that for purposes of section 259 of the ETA, "charity" is defined to include a non-profit organization that operates, otherwise than for profit, a health care facility within the meaning of paragraph (c) of the definition described in part above. Such non-profit organizations are entitled (subject to certain restrictions) to a 50% public service body (PSB) rebate in respect of their not-for-profit health care facilities. However, it is unlikely that the Home is operated otherwise than for profit.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-0420.

Yours truly,

Lorrie Grannary
Charities and Non-profit Organizations Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate