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: 165366
Dear [Client]:
Subject: GST/HST RULING
Application of GST/HST to dietetic services
Thank you for your fax of October 5, 2014, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to your services as a dietitian supplied to [the] […] (Organization) and the […] (Council).
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.
STATEMENT OF FACTS
Based on your fax of October 5, 2014, we understand the facts as follows:
1. You are a dietitian and are registered with the College of Dietitians of[…][Province X]. You are not registered or certified to practise dietetics in any other province in Canada.
2. You entered into an […] (Agreement) with the Organization to provide consultant services, effective [mm/dd/yyyy].
The Organization is a non-profit organization located in […][City 2, Province Y]. […].
3. Section […] of the Agreement indicates that the Contractor provide the Services for the Organization and deliver to the Organization the Deliverables set out in […][section of the Agreement].
4. […][Description of services and deliverables provided under the Agreement]
5. On [mm/dd/yyyy], you informed us that you were no longer providing services to the Organization and did not need a ruling in respect of these services.
6. You also entered into a Service Agreement with the Council to provide consultant nutrition services to the Council, effective [mm/dd/yyyy].
The Council is a registered charity within the meaning assigned by subsection 248(1) of the Income Tax Act (ITA). Therefore, the Council is a charity for GST/HST purposes (Footnote 1). The Council is located in […][City 1, Province X].
7. Section […] of the Service Agreement indicated that the responsibilities within the scope of the Service Agreement include: […]
8. […].
RULING REQUESTED
You would like to know whether the services you supply to the Council under the Service Agreement are exempt from GST/HST.
RULING GIVEN
Based on the facts set out above, we rule that the services you supply to the Council under the Service Agreement are exempt from GST/HST pursuant to section 7.1 of Part II of Schedule V.
EXPLANATION
Generally, most supplies of property and services made in Canada are subject to GST/HST, unless they are specifically exempt under Schedule V. Part II of Schedule V sets out the health care services that are exempt from GST/HST. Section 7.1 of Part II of Schedule V exempts a supply of a dietetic service rendered in certain circumstances. Section 7.1 states:
A supply of a dietetic service rendered by a practitioner of the service, if the service is rendered to an individual or the supply is made to a public sector body or to the operator of a health care facility.
Section 1 of Part II of Schedule V defines a “practitioner” to mean:
in respect of a supply of optometric, chiropractic, physiotherapy, chiropodic, podiatric, osteopathic, audiological, speech-language pathology, occupational therapy, psychological, midwifery, dietetic, acupuncture or naturopathic services, means a person who
(a) practises the profession of optometry, chiropractic, physiotherapy, chiropody, podiatry, osteopathy, audiology, speech-language pathology, occupational therapy, psychology, midwifery, dietetics, acupuncture or naturopathy as a naturopathic doctor, 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.
Subsection 123(1) defines the term “public sector body” to mean a government or a public service body. Subsection 123(1) defines the term “public service body” to mean a non-profit organization, a charity, a municipality, a school authority, a hospital authority, a public college or university.
In addition, if a supply falls within an exemption under Part II of Schedule V, it is necessary to determine if the supply is excluded from the exemption because the supply is a cosmetic service supply or because the supply is not a qualifying health care supply pursuant to sections 1.1 and 1.2 of Part II of Schedule V.
Section 7.1 of Part II of Schedule V
The GST/HST exemption in section 7.1 of Part II of Schedule V applies to a supply of a dietetic service rendered by a practitioner of the service, if the services is rendered to an individual or the supply is made to a public sector body or to the operator of a health care facility.
It is our view that the services supplied to the Council under the Service Agreement are dietetic services. For GST/HST purposes, a “practitioner” means a person practising the profession of dietetics who is licensed or otherwise certified to practise in the province where the service is supplied. Where the person is not required to be licensed or otherwise certified in that province, the person still qualifies as a practitioner if he or she has the qualifications equivalent to those required for licensing or certification in another province. In order to ascertain which rule applies, it must be determined in which province the dietetic services are supplied.
Whether a supply made in Canada is made in a participating province or non-participating province is determined by section 144.1 and Schedule IX, and where applicable, the New Harmonized Value-added Tax System Regulations (the Regulations). Section 144.1 provides that a supply is deemed to be made in a province if it is made in Canada and is, under the rules set out in Schedule IX, made in the province. Further, a supply made in Canada that is not made in any participating province is deemed to be made in a non-participating province.
Pursuant to section 3 of Part IX of Schedule IX, a supply of property or a service is made in a province if the supply is prescribed to be made in the province.
Generally, pursuant to subsection 13(1) of the Regulations, a supply of a service is made in a province if in the ordinary course of its business the supplier obtains an address in the province that is:
a) if the supplier obtains only one address that is a home or business address in Canada of the recipient, the home or business address in Canada obtained by the supplier,
b) if the supplier obtains more than one such address, the home or business address in Canada of the recipient that is most closely connected with the supply, or
c) in any other case, the address in Canada of the recipient that is most closely connected with the supply.
Therefore, the province in which the supply of the services is made would be determined by these rules. For example, where in the ordinary course of your business you obtain an address in Canada of the recipient (e.g., the Council), the fee for the supply of your services is subject to the rate of GST/HST of the province in which the address is located.
For information regarding the place of supply rules, please refer to GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province.
Contract with the Council
Section […] of the Service Agreement provides, in part, that any notice or other communication to the Council shall be delivered or sent to:[…][Contact information of the Council]. In addition, the Council is located in [Province X] at the same address. Based on the information you provided, there are no other addresses obtained for the Council. Under the rules outlined above, the place of supply of the services supplied under the Service Agreement is [Province X].
To be a “practitioner” for purposes of the exemption in section 7.1 of Part II of Schedule V, paragraph (b) of the definition of “practitioner” provides that you must be registered with the regulatory body or professional college for dietitians practising in the province in which the service is supplied. The Province of [X] requires that a person who practices the profession of dietetics in [Province X] be licensed or otherwise certified to practise the profession in [Province X]. You are licensed or otherwise certified to practise the profession of dietetics in [Province X]. Thus, for GST/HST purposes, you are a practitioner of dietetics for services rendered under the Service Agreement.
In addition, as the Council is a charity, the recipient of the dietetic services that you supply is a public sector body. Therefore, the services you supply under the Service Agreement fall within the GST/HST exemption set out in section 7.1 of Part II of Schedule V.
Sections 1.1 and 1.2 of Part II of Schedule V
As indicated above, if a supply falls within an exemption under Part II of Schedule V, it is necessary to determine if the supply is excluded from the exemption because the supply is a cosmetic service supply or because the supply is not a qualifying health care supply pursuant to sections 1.1 and 1.2 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 2) and is therefore not exempt under section 7.1 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.”
In addition, section 1.2 of Part II of Schedule V must also be considered. Section 1.2 provides that for the purposes of Part II of Schedule V to the ETA, other than sections 9 and 11 to 14 (Footnote 3), a supply that is not a “qualifying health care supply” is deemed not to be included in Part II of that Schedule. Generally, supplies deemed not to be included in Part II of Schedule V would be taxable at the applicable rate of GST/HST.
The expression “qualifying health care supply” has been added to section 1 of Part II of Schedule V to the ETA and is defined to mean
“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.”
It is our view that the services you supply to the Council under the Service Agreement are not a cosmetic service supply and are a qualifying health care supply. Therefore, supplies of these services are exempt from GST/HST pursuant to section 7.1 of Part II of Schedule V.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
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 the 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 As the Council is not a school authority, a public college, a university, a hospital authority, or a determined municipality, it is not a public institution.
2 Section 1.1 is not applicable to section 9 of Part II of Schedule V.
3 Section 9 of Part II of Schedule V exempts supplies of properties and services covered by provincial health insurance plans, section 11 exempts supplies of food and beverages to a health care facility, section 13 exempts supplies of subsidized home care services and section 14 exempts supplies of various training services. Please see those sections for the conditions placed on the supply in order for it to be exempt.
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