Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
GST/HST Rulings Directorate
Place de Ville, Tower A, 5th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 212114
Dear [Client]:
Subject: GST/HST INTERPRETATION
Supply of Services in a Long Term Residential Care Facility
Thank you for your correspondence of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to Supply of Services in a Long Term Residential Care Facility. We apologize for the delay in this response.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand the following:
1. […](the Corporation) operates a long-term residential care facility (the Facility) in British Columbia.
2. The Facility is licensed under the Community Care and Assisted Living Act SBC 2002, c. 75.
3. The residents of the Facility reside there because they are unable, due to age, infirmity or disability to perform some or all of the activities of daily living on their own.
Services provided by the Contractor
4. […](the Contractor) and the Corporation have concluded an agreement (the Service Agreement) where the Contractor agrees to provide housekeeping, laundry, and administrative/managerial services.
5. The services provided to the residents of the Facility are performed by employees of the Contractor under the supervision of other Contractor’s employees.
6. The housekeeping services include performing housekeeping services in the residents’ rooms as well as common areas, nursing stations and offices at the Facility (the “Housekeeping Services”)
7. The laundry services include collecting laundry from residents’ room, laundering and returning, and laundering linens used elsewhere in the Facility (the “Laundry Services”)
8. The Contractor also provides administrative and managerial services (the “Managerial Services”). The Managerial Services are a critical component of the Contractor’s services because they are directly related to and an integral part of the delivery of the Housekeeping Services and Laundry Services.
9. Under the Service Agreement the Contractor also provides dietary and meal related services which are not in issue in this ruling request as your question relates only to the Laundry and Housekeeping Services.
Funding by […](“[Regional] Health Authority”)
10. In British Columbia, the health authorities are authorized by the Minister of Health to enter into agreements with operators like the Corporation to deliver residential care and assisted living services under the BC “Continuing Care Program”. The agreements specifically stipulate that the operator is allowed to enter into a subcontract for the provision of services under the agreement.
11. The Corporation has a Residential Care Service Agreement with the [Regional] Health Authority that details the funding for the delivery of services at the Facility to residents who are admitted at the Facility by the [Regional] Health Authority (the “Operator Agreement”). All of the residents’ beds at the Facility are funded by the [Regional] Health Authority.
The Operator Agreement
12. […][Details of the Operator Agreement]
13. […]
Tax Court of Canada cases
14. You stated the services provided by the Contractor are analogous to those rendered by the third-party contracts in the Tax Court cases Cartier House Care Centre Ltd. v. The Queen (Footnote 1) and Courtyard Terrace Assisted Living Residence Ltd. (Footnote 2) (“the Tax Court cases”)
15. Among other elements:
- The Facility is identical in all material respects to those operated by the appellants in the Tax Court cases.
- As with the provision of services at the facilities in the Tax Court cases, the services provided by the Contractor to the residents are rendered by the Contractor employees.
- The services referred to in the Tax Court cases are identical in all material respects to the types of some services provided by the Contractor such as housekeeping, laundry, and administrative/managerial services.
16. You stated that although not explicitly referred to in the Tax Court cases, the equivalent of the Managerial Services were in issue and the Tax Court held that the same were exempt under section 13 of Part II of Schedule V.
RULING REQUESTED
You would like confirmation that the Laundry Services, Housekeeping Services, and Managerial Services supplied by the Contractor are exempt home care services under section 13 of Part II of Schedule V.
INTERPRETATION GIVEN
A ruling provides the Canada Revenue Agency's (CRA) position on specific provisions of the legislation as these relate to a clearly defined fact situation of a particular person, and where all of the relevant facts and supporting documentation have been presented in writing. The CRA reserves the right not to issue a ruling where it considers that one would not be appropriate. In this case, we are unable to issue a written ruling as the information provided is insufficient to provide a determination. Therefore, we are issuing an interpretation, which is a general explanation of the applicable provisions and how the legislation would apply.
Section 13 of Part II of Schedule V provides an exemption for
“A supply of a home care service that is rendered to an individual in the individual’s place of residence, whether the recipient of the supply is the individual or any other person, if
(a) the supplier is a government or municipality;
(b) a government, municipality or organization administering a government or municipal program in respect of home care services pays an amount
(i) to the supplier in respect of the supply, or
(ii) to any person for the purpose of the acquisition of the service; or
(c) another supply of a home care service rendered to the individual is made in the circumstances described in paragraph (a) or (b).”
The expression “home care service” is defined in section 1 of Part II of Schedule V to mean “a household or personal care service, such as bathing, feeding, assistance with dressing or medication, cleaning, laundering, meal preparation and child care, if the service is rendered to an individual who, due to age, infirmity or disability, requires assistance;”.
Single and Multiple supplies
Where an agreement provides for the provision of a combination of services and/or property, it must first be determined whether a single supply or multiple supplies are being provided under the agreement. This distinction is important in cases where a combination of services and/or property is supplied by a person under an agreement, some of which would be taxable and some of which would be exempt if supplied separately. Whether services provided under agreements are considered to be a single supply or multiple supplies is a question of fact. GST/HST Policy Statement P-077R2, Single and Multiple Supplies (P-077) provides guidance in determining whether a single supply or multiple supplies are being provided, including the following principles.
1. Every supply should be regarded as distinct and independent.
2. A supply that is a single supply from an economic point of view should not be artificially split.
3. There is a single supply where one or more elements constitute the supply and any remaining elements serve only to enhance the supply.
Considering we do not have all the facts to conclude on whether the services provided by the Contractor to the Corporation constitute a single supply of a service or multiple supplies of services, our interpretation is based on the assumption that the Laundry Services and the Housekeeping Services are separate supplies from the dietary and meals services.
Our interpretation takes into consideration two scenarios. The first scenario considers that the Laundry Services and the Housekeeping Services are separate supplies and that each of the portion of the Managerial Services associated to these are respectively part of the single supply of either the Laundry Services or the Housekeeping Services. The second scenario addresses the possibility that the supply of the Laundry Services and the Housekeeping Services (including the portion of the Managerial services associated with the Laundry and Housekeeping services) constitute a single supply.
Laundry Services and Housekeeping Services as separate supplies
The first situation addressed is where the supply of the Laundry Services and the supply of the Housekeeping Services (each including a portion of the Managerial services associated to these) constitute separate supplies.
The Laundry Services are services described in the definition of “home care service” in section 1 of Part II of Schedule V. The Laundry Services are rendered to individuals in their place of residence. The recipient of the Laundry Services is the Corporation as provided under the Service Agreement. The [Regional] Health Authority administers the BC Continuing Care Program to deliver residential care and assisted living services. The [Regional] Health Authority has concluded, with the Corporation, the Operator Agreement under which it funds in whole or in part various services provided by the Contractor to the residents including the Laundry Services. This funding by the Regional Health Authority would meet the conditions of subparagraph 13(b)(ii) of Part II of Schedule V
The supply of the Laundry Services would therefore be exempt under Section 13 of Part II of Schedule V.
Regarding the Housekeeping Services, we have no indication that they are funded by the [Regional] Health Authority and would therefore meet the condition provided under subparagraph 13(b). However, the supply of the Housekeeping Services would also be exempt under section 13 as it meets the condition provided by subparagraph 13(c) of Part II of Schedule V.
Laundry Services and Housekeeping Services as a single supply
The second situation addressed is where the supply of the Laundry Services and Housekeeping services (including the portion of the Managerial services associated to their supply) constitute a single supply of homecare services. The Operator Agreement between the [Regional] Health Authority and the Corporation provides funding for various services provided by the Contractor to the residents including the Laundry Services.
In the event that the supply of the Laundry and Housekeeping Services constitute a single supply, the single supply would be an exempt supply of a home care service which, under subparagraph 13(b)(ii) of Part II of Schedule V, is paid in part by the [Regional] Health Authority to any person (the Corporation) for the purpose of the acquisition of the service.
DISCLAIMER
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the ETA, regulations, or the CRA's interpretative policy could affect the interpretation(s) or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 343-552-3865. Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Sincerely,
Robert Demers
Industry Sector Specialist
Health Care Sectors Unit
Public Services Bodies and Governments Division
GST/HST Rulings Directorate
FOOTNOTES
1 2015 TCC 278 – 2011-3420(GST)G
2 2015 TCC 278 – 2011-3419(GST)G
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