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
5th floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 245855
Dear [Client]:
Subject: GST/HST Interpretation
Nurse placement agencies
Thank you for your correspondence of […][mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to supplies made by a nurse placement agency.
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.
INTERPRETATION REQUESTED
You would like to know the Canada Revenue Agency position concerning the application of the GST/HST to the supply, by a placement agency, of nursing personnel to nursing homes and hospitals (the health care facilities) further to the decision A-Supreme Nursing & Home Care Services Inc. v. His Majesty The King, 2023 TCC 39 (the A-Supreme decision).
It is our understanding that your question relates to the determination of whether section 6 of Part II of Schedule V applies to the supply of nursing personnel by an agency.
Section 6 reads as follow:
A supply of a nursing service rendered to an individual by a registered nurse, a registered nursing assistant, a licensed or registered practical nurse or a registered psychiatric nurse, if the service is rendered within a nurse-patient relationship.
INTERPRETATION GIVEN
Institutions such as hospitals, nursing homes, long term care facilities and other health care facilities are often faced with staffing needs. To address the situation, health care facilities enter into agreements with agencies to provide personnel.
A supply made by an agency to a health care facility will be exempt under section 6 of Part II of Schedule V, only if it meets all the following conditions:
1. It is a supply of a nursing service rendered to an individual by a registered nurse, a registered nursing assistant, a licensed or registered practical nurse, or a registered psychiatric nurse and the service is rendered within a nurse-patient relationship.
2. The nursing service is not a cosmetic service supply or a supply, in respect of a cosmetic service supply.(Footnote 1) However, where the supply of nursing service is a cosmetic service supply or a supply, in respect of a cosmetic service supply, that is made for medical or reconstructive purposes, this condition is met. A cosmetic service supply is defined in section 1 of Part II of Schedule V to mean a supply of property or a service that is made for cosmetic purposes and not for medical or reconstructive purposes.
3. The nursing service is a qualifying health care supply as defined in section 1 of Part II of Schedule V(Footnote 2). Qualifying health care supply means a supply of property or service that is made for the purpose of:
(a) maintaining health,
(b) preventing disease,
(c) treating, relieving or remediating an injury, illness, disorder or disability,
(d) assisting (other than financially) an individual in coping with an injury, illness, disorder or disability, or
(e) providing palliative health care.
The characterization of arrangements involving staffing agencies varies depending on the obligations and responsibilities agreed to by the parties. Depending on the agreement the supply made by the agency may be a supply of personnel or the supply may be characterized as a nursing service. As a result, the tax status of the supply made by the agency will vary depending on the particular circumstances of each situation.
This is demonstrated by the Federal Court of Appeal decision in Santa Cabrini Hospital v. Her Majesty The Queen 2016 FCA 207 and by the Tax Court of Canada A-Supreme decision. In the Santa Cabrini Hospital decision, the Federal Court of Appeal concluded that the object of the agreement between the parties is the supply of nurses and that the agency provided a taxable placement service. On the other hand, in the A-Supreme case, the Tax Court of Canada determined that the supply provided by the agency was the exempt supply of nursing services.
In determining whether an agency is making a supply of a nursing service or a supply of a placement service, the following criteria must be considered:
1. The object and nature of the agreement between the agency and the health care facility.
- Is the objective of the agreement the supply of nursing staff or is the objective the supply of nursing services?
2. The responsibilities and obligations of the parties under the agreement.
- Is the mission and functions of the agency the supply of nursing staff or is it to provide health care services?
- Is the agency responsible for maintaining general liability insurance for the nurses?
- Is the agency responsible for orienting the nurses on its own code of conduct and on the health care facility policies?
- Is the agency responsible for the training of the nurses?
3. The legal settings regulating the delivery of health care services by the health care facility.
- Is the health care facility required, by law, to provide health care services to its patients or residents?
- Can the facility delegate this responsibility to a subcontractor?
4. The degree to which the parties maintain management, direction and control over the nurses.
- Does the agency have control over the work of the nurses placed at the facility or is their management, direction and control entirely under the facility responsibility?
- Do the nurses affected to a facility require supervision in conducting their work? If yes, who assumes the responsibility – the agency or the health care facility?
- Are the nurses completely responsible over their work at the facility or are they integrated in teams where their work is subject to direction and control by the health care facility?
- If issues arise at the facility does the nurse report to the agency or to the facility?
5. The mission of the agency.
- Is the agency organized in such a way that it provides exempt nursing services in circumstances other than by lending personnel to health care facilities?
6. Assuming that the supply made by the agency has characteristics of both a supply of a nursing service and a supply of personnel, what is the predominant element of the supply?
No factor in and on itself is determinative of the nature of the supply being made, however, in a situation where:
- there is no indication in the agreement between the parties that the agency is providing nursing services,
- the nurses are under the exclusive control, management and direction of the health care facility,
- no agency personnel is on site or available to provide direction to the nurses,
- the agency has no access to patient files,
- the statutes regulating the health care services being rendered to patients of the facility provides that the health care must be under the control of the health care facility,
these factors would strongly indicate that the agency is not supplying nursing services but is supplying a taxable service of placement of personnel.
On the other hand, in cases where:
- the agreement between the parties clearly indicate that the supply is a supply of nursing services,
- the supply of the services is under the control and direction of the agency and/or the nurse is fully in charge while at the facility,
- the legislative context allows the facility to hire agencies to provide health care services to its patients or residents,
- the agency is responsible for contracting a liability insurance in relation to the nursing personnel and for the training and orientation of the nurses,
these factors would indicate that the agency is supplying an exempt nursing service under section 6 of Part II of Schedule V (provided that the supply is not excluded by sections 1.1 or 1.2 of Part II of Schedule V).
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 438-304-4971.
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 or by fax to 1-418-566-0319.
Sincerely,
Robert Demers
Industry Sector Specialist
Health Care Sectors Unit
Public Service Bodies and Governments Division
GST/HST Rulings Directorate
FOOTNOTES
1 Section 1.1 of Part II of Schedule V provides that for purposes of Part II, other than paragraph 9, a cosmetic service supply or a supply, in respect of a cosmetic service supply, that is not made for medical or reconstructive purposes are deemed not to be included in this Part.
2 Section 1.2 of Part II of Schedule V provides that for purposes of Part II of Schedule V, other than sections 9 and 11 to 14, a supply that is not a qualifying health care supply is deemed not to be included in this Part.
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