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.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 152141
Dear [Client]:
Subject: GST/HST INTERPRETATION
Application of GST/HST to occupational therapy services
Thank you for your letter of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the services you render while practising the profession of occupational therapy. We apologize for the delay in our response.
The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island and 15% in Nova Scotia. 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.
We understand that you are licenced with the College of Occupational Therapists of Ontario to practice as an occupational therapist (OT). As an individual practicing the profession of occupational therapy in Ontario you must be registered with the regulatory body, the College of Occupational Therapists of Ontario (COTO). Unless registered with the COTO, the title of “occupational therapist” cannot be used in Ontario.
The profession of occupational therapy is regulated in Ontario under the Regulated Health Professions Act S.O. 1991, Chapter 18 and the Occupational Therapy Act S.O. 1991, Chapter 33. The scope of occupational therapy practise is defined in section 3 of the Occupational Therapy Act. Section 3 states:
“The practice of occupational therapy is the assessment of function and adaptive behaviour and the treatment and prevention of disorders which affect function or adaptive behaviour to develop, maintain, rehabilitate or augment function or adaptive behaviour in the areas of self-care, productivity and leisure.”
You are an independent contractor and you contract your services to […] independent medical companies (the Companies). The Companies are hired by different insurance companies to assist with insurance claims. Your business primarily involves the completion of “Section 44 (Statutory Accident Benefits Schedule) Independent in Home Examinations in Motor Vehicle Accidents” (Section 44 assessment). In addition, you are also required to complete Paper File Reviews and Addendums. However, for some claims, you are the treating OT and work directly with individuals to assist them in recovering and maintaining their daily living and occupational skills.
Statutory accident benefits are provided to persons in Ontario injured by the use or operation of a motor vehicle. They are governed by the Statutory Accident Benefits Schedule, Ontario Regulation 34/10, under the Insurance Act of Ontario (the Regulations). These benefits provide assistance and compensation for expenses incurred to treat and provide care for an individual, and also to replace an individual’s income while recovering from an accident regardless of whom is at fault. The types of financial benefits include: income replacement, non-earner, disability, caregiver, housekeeping, attendant care, home maintenance, education, medical, rehabilitation and other expenses related to injuries an individual may sustain resulting from a motor vehicle accident. These benefits are provided by the individual’s insurance company.
According to your ruling request, you attend the individual’s home to perform the Section 44 assessment. The purpose of the home assessments is to “assess an individual’s current physical, functional, and cognitive/emotional capabilities” to determine, as a result of the motor vehicle accident, whether the individual requires any insurance benefits (listed above) and any medical devices or other equipment to facilitate the individual’s independence and maximize his or her safety.
Section 44 of the Regulations grants the insurer the authority to request the examination of an insured individual by one or more regulated health care professional or a person who has expertise in vocational rehabilitation to determine whether an insured individual is, or continues to be, entitled to benefits.
Completing a Paper File Review involves reviewing a Treatment and/or Assessment Plan for an insured individual prepared by the treating OT. You provide your clinical opinion on whether the plan is reasonable and consistent with the individual’s reported injuries. Completing a Paper File Addendum involves a second review of a file to consider any additional medical and clinical information you requested during a first review that has now been obtained. You are required to provide your opinion on whether the additional information affects your original decision on the reasonableness of the individual’s treatment/assessment plan and entitlement to ongoing non-earner benefits.
In some cases, you are required to directly treat insured individuals who have been involved in a motor vehicle accident. In these circumstances, you will perform an assessment of the individual for purposes of treatment and implementing an appropriate treatment plan. In cases where you are the treating OT, you are not permitted to complete a Section 44 assessment.
According to our phone call on [mm/dd/yyyy], you invoice the Companies following each service you provide. You invoice an hourly rate plus any mileage […]
[…]
RULING REQUESTED
You would like to know how the GST/HST applies to the following:
a) Completion of Section 44 assessments;
b) Paper File Reviews and Addendums;
c) Treatment; and
d) Gas/mileage charges.
INTERPRETATION GIVEN
Chapter 1.4 of the GST/HST Memoranda Series, Excise and GST/HST Rulings and Interpretations Service, describes the circumstances in which the CRA will issue a ruling or an interpretation. A ruling is a written statement the CRA provides to a taxpayer that sets out the CRA’s position on how the relevant provisions of the legislation apply to a clearly defined fact situation of the taxpayer. An interpretation is a written statement which sets out the CRA’s view on how the ETA applies to a generic fact situation. The CRA will issue a ruling only when all of the relevant facts, contracts and other documentation pertaining to a particular transaction or series of transactions are provided. Therefore, we are providing you with an interpretation in respect of your ruling request.
The ETA provides an exemption for services rendered by a licensed OT. Paragraph 7(i) of Part II of Schedule V exempts a supply of occupational therapy services when rendered to an individual, where the supply is made by a practitioner of the service.
Supplies made before March 22, 2013
For purposes of this provision, section 1 of Part II of Schedule V provides a definition of “practitioner”. A “practitioner”, in respect of a supply of optometric, chiropractic, physiotherapy, chiropodic, podiatric, osteopathic, audiological, speech-language pathology, occupational therapy, psychological, midwifery or dietetic services, means a person who
(a) practises the profession of optometry, chiropractic, physiotherapy, chiropody, podiatry, osteopathy, audiology, speech-language pathology, occupational therapy, psychology, midwifery or dietetics, as the case may be,
(b) where the person is required to be licensed or otherwise certified to practise the profession in the province in which the service is supplied, is so licensed or certified, and
(c) where the person is not required to be licensed or otherwise certified to practise the profession in that province, has the qualifications equivalent to those necessary to be so licensed or otherwise certified in another province.
Any supply of services made on or before March 21, 2013 as a registered OT practising in Ontario that fell within the scope of practise in section 3 of the Occupational Therapy Act was exempt from GST/HST pursuant to paragraph 7(i) of Part II of Schedule V.
Where a supply is a cosmetic service supply or a supply in respect of a cosmetic service supply, that is not made for medical or reconstructive purposes, the supply is deemed under section 1.1 of Part II of Schedule V not to be included in Part II of Schedule V (Footnote 1) and is therefore not exempt under paragraph 7(i) of Part II of Schedule V. 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.
Supplies made after March 21, 2013
General information
Budget 2013 introduced amendments to the ETA that impact the GST/HST exemptions available for services rendered by certain regulated health care professionals under Part II of Schedule V and section 2 of Part VI of Schedule V. Bill C-60, the Economic Action Plan 2013 Act, No. 1 received Royal Assent on June 26, 2013. However, the amendments to the ETA apply to supplies made after March 21, 2013. (Footnote 2)
Prior to the amendments, a supply was exempt from GST/HST if it met the requirements of an exempting provision in Schedule V of the ETA and it was not a cosmetic service supply or a supply in respect of a cosmetic service supply. Budget 2013 introduced section 1.2 of Part II of Schedule V which imposes an additional requirement that must be met for supplies made after March 21, 2013 to be exempt from GST/HST under sections 2, 3, 4, 5, 6, 7, 7.1, 7.2, 7.3, 8 or 10 of Part II of Schedule V and section 2 of Part VI of Schedule V. Section 1.2 of Part II of Schedule V states:
For the purposes of this Part, 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.
The term “qualifying health care supply” was also added to section 1 of Part II of Schedule V. This term means:
“a supply of property or a 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.”
Section 1.2 of Part II of Schedule V excludes a supply from exemption under sections 2, 3, 4, 5, 6, 7, 7.1, 7.2, 7.3, 8 or 10 by deeming the supply not to be included in Part II of Schedule V if the supply is not a qualifying health care supply. Therefore, following the amendments, a supply must meet the requirements of an exemption in one of the above-noted sections and must also be a qualifying health care supply and not a cosmetic service supply or a supply in respect of a cosmetic service supply to be exempt from GST/HST under Part II of Schedule V (Footnote 3) .
As a result of the amendments, services performed by health care professionals may be taxable or exempt depending on their purpose. For example, a supply made after March 21, 2013 that was previously exempt under section 2, 3, 4, 5, 6, 7, 7.1, 7.2, 7.3, 8 or 10 of Part II of Schedule V will now be subject to GST/HST if the supply is not made for one of the purposes included in the definition of a qualifying health care supply. (Footnote 4) , (Footnote 5) This will affect supplies rendered by occupational therapists.
In addition, the amendments will also affect most supplies of property and services made by a public institution (i.e., a hospital authority that is a charity). Section 2 of Part VI of Schedule V was also amended by adding paragraph (q). Paragraph (q) excludes supplies of any property or service that is not a qualifying health care supply from the general exemption for supplies of property and services made by a public institution (Footnote 6) .
General principles
Prior to the amendments, a supply was exempt under Part II of Schedule V based on the type of health care professional making the supply (e.g., doctor, nurse, social worker) and the nature of the services rendered if the supply was not a cosmetic service supply. However, given the additional requirement that a supply must also be a qualifying health care supply to be exempt under Part II of Schedule V, it is necessary to also consider why the supply is being made. The fact that property or a service is supplied by a regulated health care professional (e.g., diagnosing of a disease for purposes of commencing or continuing treatment) does not mean that the purpose of the supply is one included in the definition of a qualifying health care supply.
In determining the purpose of the supply a distinction must be made between why the supply was made and the benefits resulting from the supply. For example, an assessment of an individual performed by a physician and completion of a disability certificate as required by an insurance company would be taxable. Although the insured individual may receive medical or rehabilitation benefits from the insurance policy in the event of an injury or disability, the purpose of the assessment and certificate is to assist the insurance company, in part, in determining whether the individual is eligible for benefits under an insurance policy. The fact that an individual receives a benefit which may be a health care supply as a result of the assessment and signed certificate does not mean that the service performed is a qualifying health care supply.
In addition, it is necessary to consider the purpose of the supply at the time the supply is actually made. If an additional purpose subsequently arises, it is not relevant for determining whether the supply is a qualifying health care supply and exempt from GST/HST. For example, if an insured individual was in an automobile collision and the treating physician ordered an x-ray and a CT scan to determine the extent of the individual’s injuries and whether the individual required surgery, these tests are exempt from GST/HST as a qualifying health care supply. If the results from these tests were later used by the individual’s insurance company or in a legal proceeding, the tests remain exempt from GST/HST as the purpose of the tests was for the diagnosis and treatment of an injury.
In circumstances where a supply is made for more than one purpose, the supply will be a qualifying health care supply if one of the purposes for which the supply is made meets a purpose included in paragraph (a) to (e) of the definition of qualifying health care supply. For example, where a supply is made for a purpose relating to financial assistance and for a purpose of preventing disease, the service would be a qualifying health care supply pursuant to paragraph (e) of the definition of qualifying health care supply. For each supply of property or service, the onus is on the supplier to determine the purpose for which the supply is made.
In cases where a health care service, such as an examination or assessment, is supplied together with a report or certificate it is necessary to determine if the supplier has made single or multiple supplies. If the health care service and a report or certificate constitute a single supply; the purpose of that single supply would include all of the purposes of the elements of the supply. Where the health care service and the report or certificate constitute multiple supplies the purpose of each supply would be considered separately when determining if either of the supplies is a qualifying health care supply.
For more information on single and multiple supplies, please see GST/HST Policy Statement P-077R2 Single and Multiple Supplies.
Additional supplies
Supplies of property and services made in respect of a medical examination, report or certificate that are subject to GST/HST would also be subject to GST/HST if the supplies are made after March 21, 2013. For example, if an individual requires an x-ray or other laboratory test to be taken as part of a medical examination or assessment performed strictly for legal or insurance purposes (e.g., to determine if an individual is entitled to additional benefits), the charge for these tests would generally be subject to GST/HST (Footnote 7) . However, if the x-ray and laboratory tests were performed at the request of a physician to determine the extent of an individual’s injuries and a course of treatment, the supply of the x-ray and laboratory tests would remain exempt, even if the results of these tests were subsequently used as part of a legal proceeding.
General comments
A Section 44 Assessment is completed to determine if an insured individual is, or continues to be, entitled to benefits. A Paper Review/Addendum is generally completed to determine if an insured individual’s treatment plan prepared by the treating OT is reasonable and consistent with the insured individual’s reported injuries. While both these services relate to treating, relieving, remediating or assisting an individual in coping with an injury, illness or disability these services are completed for purposes of administering an insurance claim which is not for a purpose included in paragraphs (a) to (e) of the definition of a qualified health care supply. These supplies would be subject to GST/HST unless the supply can be exempt under sections 9 and 11 to 14 of Part II of Schedule V or an exempting provision in another Part of Schedule V.
In contrast, where you provide direct treatment to an insured individual, which may include an examination or assessment of an individual to establish a treatment or assessment plan for that individual, these services are for a purpose included in paragraph (a) to (e) of the definition of a qualifying health care supply. Therefore, the supplies of services you make in these circumstances are a qualifying health care supply and would likely be exempt under paragraph 7(i) of Part II of Schedule V.
For more information, refer to Examples No. 2, 5, 11-13, 22 and 23 in GST/HST Notice No. 286, Draft GST/HST Policy Statement, Qualifying Health Care Supplies and the Application of Section 1.2 of Part II of Schedule V to the Excise Tax Act to the Supply of Medical Examinations, Reports and Certificates.
With regards to the application of GST/HST to the charges for gas/mileage, GST/HST would be applicable to these charges where they relate to the taxable supplies you make. The charge for gas/mileage is an input to the service you provide to the Companies and reimbursement for the gas/mileage forms part of the overall consideration for the supply of occupational therapy services. The part of the consideration relating to the gas/mileage is subject to the GST/HST where the supply of occupational therapy service you make is subject to GST/HST.
ADDITONAL INFORMATION
Registration
Generally, under subsection 240(1), every person who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada is required to be registered for GST/HST purposes, unless the person is a “small supplier”.
A person is a “small supplier” if his or her total revenues from taxable supplies (other than supplies of financial services, sales of capital property and goodwill attributable to the sale of a business) in the previous four consecutive calendar quarters, or in a particular calendar quarter, and those of associated persons, does not exceed $30,000 (or $50,000 for a public service body). Therefore, a person is required to register for GST/HST at the time the taxable supply is made that exceeds the $30,000 threshold in the circumstances above.
Recovery of GST/HST
A GST/HST registrant is entitled to recover the GST/HST paid or payable on purchases and expenses related to his or her commercial activities by claiming an input tax credit (ITC). A “registrant” is defined in subsection 123(1) as a person who is registered, or who is required to be registered.
Generally, under section 169, where a person acquires or imports a property or service or brings it into a participating province during a reporting period of the person during which the person is a registrant and the GST/HST in respect of the property or service becomes payable by the person or is paid by the person without having become payable, the person will be eligible to claim an ITC in respect of the tax to the extent that the property or service is acquired, imported or brought in for consumption, use or supply in the course of the person’s commercial activities.
The definition of commercial activity excludes the making of exempt supplies. A person is not entitled to claim the GST/HST paid on its purchases or expenses as ITCs to the extent that these purchases or expenses were acquired for consumption, use or supply otherwise than in the course of commercial activities. Where a person is involved in activities which include the making of both taxable supplies and exempt supplies, the inputs to the activities must be attributed accordingly.
For more information, please refer to our guide RC4022, General Information for GST/HST Registrants, on our website at www.cra-arc.gc.ca/E/pub/gp/rc4022/README.html.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-7952. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Alison Jones
Health Care Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
FOOTNOTES
1 Section 1.1 is not applicable to section 9 of Part II of Schedule V.
2 Supplies made after March 21, 2013 that are made under an agreement entered into before March 22, 2013 are subject to the rules as they existed prior to the amendments.
3 Supplies of services covered by a provincial health insurance plan, catering services to a health care facility, home care services, or training services are not affected by the amendment and it is not necessary to determine the purpose for which these supplies are made.
4 The supply could still be exempt if it also meets the requirements in section 9 or 11 to 14 of Part II of Schedule V or another exemption in Schedule V to the ETA.
5 For supplies of property or services that were taxable on or before March 21, 2013, these supplies remain taxable. Budget 2013 does not change the requirement for a supply to meet the conditions in an exempting provision in Part II of Schedule V.
6 Public institution is defined in subsection 123(1) to mean a registered charity (within the meaning assigned by subsection 248(1) of the Income Tax Act) that is a school authority, a public college, a university, a hospital authority or a local authority determined under paragraph (b) of the definition “municipality” to be a municipality.
7 These supplies would be subject to GST/HST unless the supply can be exempt under sections 9 and 11 to 14 of Part II of Schedule V or an exempting provision in another Part of the ETA.
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