16 February 2004 GST/HST Interpretation 49975 - Proposed Section 7.2 of Part II of Schedule V to the Excise Tax Act

Please note that the following documents, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ces documents, bien qu'exacts au moment émis, peuvent ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

The purpose of my letter is to provide information with respect to proposed section 7.2 of Part II of Schedule V to the Excise Tax Act (ETA). The Department of Finance tabled a Notice of Ways and Means Motion on October 3, 2003. The Motion proposes several legislative amendments, including new section 7.2 of Part II of Schedule V to the ETA. Proposed section 7.2 would exempt supplies made after October 3, 2003, of certain health-related services rendered by social workers. As a result of the proposal, inquiries have been received regarding registration issues as well as the requirement to collect and remit the Goods and Services Tax / Harmonized Sales Tax (GST/HST).

Please note that proposed section 7.2 is not yet in force and, as a result, issues of deregistration cannot be addressed until such time as section 7.2 receives Royal Assent. Likewise, until section 7.2 receives Royal Assent, there is no legislation to exempt the supplies contemplated by proposed section 7.2. As a result, registrants should take the following information into account:

1. If the registrant decides not to collect and remit the GST/HST, and should proposed section 7.2 not come into force, the registrant would be liable for the GST/HST collectible on those supplies, and penalties and interest.

2. If the registrant decides to collect and remit the GST/HST, and should proposed section 7.2 later come into force, the amounts collected as GST/HST can be refunded to the recipients of the supplies in accordance with section 232 of the ETA. Alternatively, the recipients could apply for a rebate under section 261 of the ETA.

It is also important to note that proposed section 7.2 would not exempt all supplies by social workers. Proposed section 7.2 applies to a limited range of health-care services rendered in the practice of social work. If the service does not fall within proposed section 7.2, the supply of the service will continue to be a taxable supply.

Registrants are encouraged to contact their local Canada Revenue Agency office if they require additional information.

Yours truly,

Tim Krawchuk
Manager
Municipalities and Healthcare Services Unit
Public Service Bodies and Governments Division