30 July 2019 GST/HST Ruling 184362 - […][83% Public Service Body rebate eligibility]

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, 11th floor
320 Queen Street
Ottawa ON K1A 0L5

[Addressee]

Case Number: 184362

Dear [Client]:

Subject: GST/HST RULING
[…][83% Public Service Body rebate eligibility]

Thank you for your letter of May 9, 2017, concerning […] (the “Corporation”) eligibility to claim the 83% public service body (PSB) rebate of the goods and services tax (GST) and the federal part of the harmonized sales tax (HST) in respect of its activities.

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

Based on the agreements provided […][and other information], we understand the following to be an accurate summation of the facts:

1. The Corporation […] offers palliative and […][other] programs and services […].

2. The Corporation is a registered charity within the meaning assigned to that expression by subsection 248(1) of the Income Tax Act, and is a charity for purposes of Part IX of the ETA.

3. The Corporation is not registered for the GST/HST.

4. […][Information about the Corporation and its objectives]

5. […][Information about the Corporation’s operations and services]

6. All of the Corporation’s programs and services are provided at no charge.

7. […][Information about referrals]

8. Individuals must be referred to the residential end-of-care program by a health care professional. […]. Clients need to meet certain criteria. Once a physician has established the need, a bed offer is made.

9. […][Describes the criteria which patients must meet to be eligible for admission to the program]

10. […][Information from a document that] describes what is expected of the physician and the Corporation for its palliative care program[…]

11. The standard […][admission document] for the Facilities contains the terms of care including: […]

12. […][Information about care on admission]

13. […]

14. […][Information about treatment decisions]

15. […]

16. […][Information about available equipment and treatment procedures]

17. […]

18. The Corporation’s patients receive care from physicians, nurses […], personal support workers, […][and other health care professionals].

19. Patients are followed by physicians who take responsibility for coverage of their own patients 24/7. […]. The Corporation employs a Medical Director […].

20. Registered Nurses trained in pain/symptom management are present 24 hours per day, seven days a week. […].

21. Official rounds are performed weekly by a physician. […].

22. The physician's duties include assessing new patients […], documenting their findings, writing orders, collaborating with […][other health care professionals] who were caring for the patient […], and meeting with families to provide information and support. Physicians determine if medication levels need increasing.

23. […].

24. The physicians are responsible for providing all orders for the care the patients are to receive […], by documenting in the clinical record their assessment as well as the plans for the care of the patient while they are there. […].

25. […].

26. All treatment performed by nursing staff is ordered by a physician. […].

27. […][Information about other treatments].

28. The Corporation receives a portion of its operating funding from government but rely mainly on […] donations […]

29. The Corporation entered into an Accountability Agreement […]

30. Funding is received from a Local Health Integration Network (LHIN) […]. The Corporation signed the Service Accountability Agreement with the […] LHIN effective [mm/dd/yyyy] to help fund caregiver support and hospice services. […].

Prior to the Agreement with the […] LHIN, the Corporation entered into similar annual service-funding agreements with the […] CCAC (Footnote 1) . The Corporation formerly received the majority of its funding from the Ministry of Health and Long-Term Care (MOHLTC), through the […] CCAC.

31. There is no accreditation nor license to operate, nor a requirement for one.

RULING REQUESTED

You would like to know whether the Corporation is entitled to claim an 83% public service body (PSB) rebate of the GST and the federal part of the HST and, as a person resident in Ontario, an 87% rebate of the provincial part of the HST, as a facility operator.

RULING GIVEN

Based on the facts set out above, we rule that the Corporation is a facility operator making facility supplies at a qualifying facility, that is, at the Facilities.

As such, the Corporation is eligible to claim an 83% PSB rebate of the GST and the federal part of the HST for non-creditable tax charged (Footnote 2) in respect of property or services to the extent that the property or services are for consumption, use or supply in activities engaged in by the Corporation in the course of operating the Facilities for use in making facility supplies, or in the course of making facility supplies, ancillary supplies, and home medical supplies.

In addition, the Corporation, as a facility operator resident only in Ontario, is also eligible to claim an 87% PSB rebate of the provincial part of the HST for non-creditable tax charged in respect of property or services to the extent that the property or services are for consumption, use or supply in activities engaged in by the Corporation in Ontario in the course of operating the Facilities for use in making facility supplies, or in the course of making facility supplies, ancillary supplies, and home medical supplies.

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.

EXPLANATION

To be eligible for an 83% PSB rebate of the GST and the federal part of the HST, and in the case of a person resident in Ontario, an 87% PSB rebate of the provincial part of the HST (hereafter these two rebates will be referred to as the “83% (and 87%) PSB rebate”), the person must be a “hospital authority”, a “facility operator” or an “external supplier”.

Hospital Authority

A “hospital authority” is defined in subsection 123(1) as “an organization that operates a public hospital and that is designated by the Minister [of National Revenue] as a hospital authority” for GST/HST purposes.

As the Corporation does not operate a public hospital and it is not designated by the Minister as a “hospital authority”, to determine if there is eligibility for the 83% (and 87%) PSB rebate, it is necessary to determine if the Corporation is a “facility operator” or an “external supplier”.

Facility Operator

A “facility operator” is defined in subsection 259(1) as meaning “a charity, a public institution or a qualifying non-profit organization (other than a hospital authority), that operates a qualifying facility”.

As the Corporation is a charity, it meets the first requirement of the definition. In order to meet the second requirement, the Corporation must operate a “qualifying facility”.

Qualifying Facility

Subsection 259(2.1) sets out three criteria that must be met for a facility, or part of a facility, other than a public hospital, to be a qualifying facility, for a fiscal year, or any part of a fiscal year, of the operator of the facility or part.

A facility or part of a facility will be considered a qualifying facility if:

(a) supplies of services that are ordinarily rendered during that fiscal year or part to the public at the facility or part would be facility supplies if the references in the definition of “facility supply” in subsection 259(1) to “public hospital or qualifying facility” were references to the facility or part;

(b) an amount, other than a nominal amount, is paid or payable to the operator as qualifying funding in respect of the facility or part for the fiscal year or part; and

(c) an accreditation, licence or other authorization that is recognized or provided for under a law of Canada or a province in respect of facilities for the provision of health care services applies to the facility or part during that fiscal year or part.

The requirements contained in (a) to (c) above must be met in order for a particular facility to be a “qualifying facility” for purposes of section 259. A discussion of these requirements follows.

Facility Supply

Subsection 259(1) defines the term “facility supply” as

“an exempt supply (other than a prescribed supply) of property or a service in respect of which

(a) the property is made available, or the service is rendered, to an individual at a public hospital or qualifying facility as part of a medically necessary process of health care for the individual for the purpose of maintaining health, preventing disease, diagnosing or treating an injury, illness or disability or providing palliative health care, which process

(i) is undertaken in whole or in part at the public hospital or qualifying facility,

(ii) is reasonably expected to take place under the active direction or supervision, or with the active involvement, of

(A) a physician acting in the course of the practise of medicine,

(B) a midwife acting in the course of the practise of midwifery,

(C) if a physician is not readily accessible in the geographic area in which the process takes place, a nurse practitioner acting in the course of the practise of a nurse practitioner, or

(D) a prescribed person acting in prescribed circumstances, and

(iii) in the case of chronic care that requires the individual to stay overnight at the public hospital or qualifying facility, requires or is reasonably expected to require that

(A) a registered nurse be at the public hospital or qualifying facility at all times when the individual is at the public hospital or qualifying facility,

(B) a physician or, if a physician is not readily accessible in the geographic area in which the process takes place, a nurse practitioner, be at, or be on-call to attend at, the public hospital or qualifying facility at all times when the individual is at the public hospital or qualifying facility,

(C) throughout the process, the individual be subject to medical management and receive a range of therapeutic health care services that includes registered nursing care, and

(D) it not be the case that all or substantially all of each calendar day or part during which the individual stays at the public hospital or qualifying facility is time during which the individual does not receive therapeutic health care services referred to in clause (C), and

(b) if the supplier does not operate the public hospital or qualifying facility, an amount, other than a nominal amount, is paid or payable as medical funding to the supplier.”

A “physician” is defined in subsection 259(1) as “a person who is entitled under the laws of a province to practise the profession of medicine”.

The definition of “facility supply” is to be applied on a supply-by-supply basis. To be a “facility supply”, the property made available or the service rendered to an individual at the qualifying facility must be an exempt supply (other than a prescribed supply). Exempt supplies are listed in Schedule V to the ETA.

Section 1 of Part V.1 of Schedule V exempts supplies of property or a service made by a charity unless specifically excluded under paragraphs (a) to (p) of that section. As the Corporation is a charity, the supplies it makes to the Facilities’ patients would generally be exempt under section 1 of Part V.1 of Schedule V.

Section 2 of Part II of Schedule V exempts a supply of an institutional health care service made by the operator of a health care facility if the institutional health care service is rendered to a patient or resident of the facility. The terms “institutional health care service” and “health care facility” are defined in section 1 of Part II of Schedule V.

Of note, if a supply is of an institutional health care service that falls within section 2 of 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 (Footnote 3) .

The combination of paragraph (a), subparagraphs (a)(i) and (a)(ii), and clause (a)(ii)(A) of the definition of “facility supply” further requires that the exempt supply of property be made available, or the exempt supply of a service be rendered, at a qualifying facility and be part of a medically necessary process of health care for an individual for the purpose of maintaining health, preventing disease, diagnosing or treating an injury, illness or disability or providing palliative care. This process must be undertaken in whole or in part at the qualifying facility and reasonably be expected to take place under the active direction or supervision, or with the active involvement, of a physician acting in the course of practise of medicine (or in certain circumstances, a midwife, a nurse practitioner or a prescribed person in prescribed circumstances).

It is our understanding that palliative care differs from chronic care. Therefore, it is not necessary for elements referred to in clauses (a)(iii)(A) to (D) of the definition of “facility supply” to be met in order for a supply to qualify as a “facility supply”, where only palliative care is being provided, as in the present case.

The decision of the Tax Court of Canada in Elim Housing Society v The Queen (2013-148(GST)G) addressed the question as to whether Elim Housing Society (Elim) was a facility operator operating a qualifying facility. In this decision, the judge made the determination that Elim was entitled to claim the 83% PSB rebate as a facility operator operating a qualifying facility based on the presence of the following elements which indicated Elim to be making facility supplies:

• all of the residents had conditions that required “complex care” as that term was defined in a policy manual of the B.C. Ministry of Health Services;
• the residents were extremely dependent on care either by reason of mental or physical impairment, or both;
• residents were under the care of a physician, who was either associated with the facility or had a pre-existing relationship with the resident;
• a tailored care plan was created for each resident, documented and implemented:

• detailed records were kept on the implementation of the care plans,
• medication reviews were required every six months, and
• inter-disciplinary meetings were held annually;

• physicians visited residents frequently (e.g., roughly on a bi-weekly basis);
• physicians were at, or on-call to attend, the facility at all times;
• physicians provided substantial medical care (e.g., addressed medical concerns, participated in medication reviews, attended interdisciplinary meetings);
• registered nurses were at the facility at all times, and nurses were in regular communication with physicians for prescription or advice;
• the facility received funding for 2.8 hours of care per resident per day (the calculation was based on scheduled staffing hours);
• the care provided was of a different type than ordinary assistance with activities of daily living that a more robust individual might require.

After comparing the services and the care provided at the Facilities to the relevant elements described in the Elim decision, we are of the view that facility supplies are provided at the Facilities by the Corporation.

To the extent that the health care services provided at the Facilities are exempt supplies that are part of a medically necessary process of health care for the individual for purposes described in paragraph (a) of the definition of “facility supply” and are rendered at the Facilities under the active direction or supervision, or with the active involvement, of a physician, they will meet the requirements of subparagraphs (a)(i) and (a)(ii) of the definition and will, therefore, constitute facility supplies.

Supplies of residential hospice care, when part of a medically necessary process of health care for the individual for the purpose of maintaining health, preventing disease, diagnosing or treating an injury, illness or disability or providing palliative health care, which process is undertaken in whole or in part at the Facilities and is reasonably expected to take place under the active direction or supervision, or with the active involvement, of a physician acting in the course of the practise of medicine, would be considered facility supplies.

As there is no evidence seen, in the description of some of the services or programs provided, of an expectation of active physician direction or supervision, or active physician involvement, being undertaken, supplies made, for example, of […][other programs and services], would not fall within the definition of “facility supply”, and thus such activities would not be eligible for the 83% (and 87%) PSB rebate under this particular provision. As noted below, the Corporation may still be entitled to a 50% PSB rebate of the GST and the federal part of the HST and a 82% PSB rebate for the provincial part of the HST for charities in relation to such supplies of services and programs.

As mentioned above, subsection 259(2.1) sets out three criteria that must be met in order for a facility or part of a facility to be considered a qualifying facility for all or part of a fiscal year. The first criterion that must be met, under paragraph 259(2.1)(a), is that the exempt supplies made at the qualifying facility must be facility supplies. The exempt supplies that are facility supplies made by the Corporation would meet this first criterion.

Qualifying Funding

The second criterion that must be met under paragraph 259(2.1)(b) for a facility to be a “qualifying facility” is that an amount, other than a nominal amount, is paid or payable to the operator as qualifying funding in respect of the facility or part for the fiscal year or part.

Subsection 259(1) defines “qualifying funding” of the operator of a facility for all or part of a fiscal year of the operator as meaning

“a readily ascertainable amount of money (including a forgivable loan but not including any other loan or a refund, remission or rebate of, or credit in respect of, taxes, duties or fees imposed under any statute) that is paid or payable to the operator in respect of the delivery of health care services to the public for the purpose of financially assisting in operating the facility during the fiscal year or part, as consideration for an exempt supply of making the facility available for use in making facility supplies at the facility during the fiscal year or part or as consideration for facility supplies of property that are made available, or services that are rendered, at the facility during the fiscal year or part and is paid or payable by

(a) a government, or

(b) a person that is a charity, a public institution or a qualifying non-profit organization

(i) one of the purposes of which is organizing or coordinating the delivery of health care services to the public, and

(ii) in respect of which it is reasonable to expect that a government will be the primary source of funding for the activities of the person that are in respect of the delivery of health care services to the public during the fiscal year of the person in which the supply is made.”

The Corporation has entered into a funding agreement with the […] LHIN. The funding is to help fund caregiver support and hospice services. The funding provided by the […] LHIN to the Corporation in respect of its operation of the Facilities under the funding agreement constitutes “qualifying funding”, thus meeting the second criterion under the paragraph 259(2.1)(b) description of a “qualifying facility”.

Formerly, the funding received by the Corporation came from the […] CCAC, which was a charity that coordinated the delivery of health care services by arranging for health-care professionals to provide a range of care and supportive services. The […] CCAC provided funding to the Corporation for the purposes for which the […] CCAC itself received (from the MOHLTC via the MOHLTC’s agent, the […] LHIN funding from the Province of Ontario. That funding also constituted “qualifying funding”.

This criterion is thus satisfied.

Accreditation, licence or other authorization

The third criterion that must be met under paragraph 259(2.1)(c) for a facility, or part of a facility, other than a public hospital, to be a qualifying facility for a fiscal year, or any part of a fiscal year of the operator of the facility, or part, is that an accreditation, licence or other authorization that is recognized or provided for under a law of Canada or a province in respect of facilities for the provision of health care services applies to the facility or part during that fiscal year or part.

The Province of Ontario does not require an accreditation, licence or authorization to operate a residential hospice whose nursing services provided to residents/patients are funded directly or indirectly by the MOHLTC.

However, the Ministry of Health and Long-Term Care has given a mandate to the Ontario Palliative Care Network (the OPCN) to coordinate hospice palliative care in the province. The OPCN operates in partnership with the Local Health Integration Networks, among others, to ensure that the activities of the OPCN are aligned across the province. The […] LHIN has a palliative care program for which it provides funding […]

It is our view that the combination of these elements allows us to conclude that the Corporation, as the operator of the Facilities […], has an authorization that is recognized or provided for under a law of a province in respect of facilities for the provision of health care services.

Thus, in our view, the third criterion that must be met under paragraph 259(2.1)(c) for a facility to be a qualifying facility is satisfied.

Summary of “qualifying facility” analysis

To summarize, the Facilities meet all of the requirements of paragraphs (a) to (c) of the definition of “qualifying facility” in subsection 259(2.1) and, as a result, the Corporation is a facility operator for purposes of section 259. Accordingly, the Corporation qualifies for an 83% rebate of the GST and the federal part of the HST paid or payable on eligible purchases and expenses to the extent that it intended to consume, use or supply the property or service in the course of activities engaged in by the Corporation in the course of operating a qualifying facility for use in making facility supplies, or in the course of making facility supplies. As a resident of Ontario, the Corporation qualifies for an 87% rebate of the provincial part of the HST paid or payable on eligible purchases and expenses to the extent that it intended to consume, use or supply the property or service in the course of activities engaged in by the Corporation in Ontario in the course of operating a qualifying facility for use in making facility supplies, or in the course of making facility supplies.

As discussed above, the definition of “facility supply” requires that an exempt supply made to an individual at a qualifying facility be part of a medically necessary process of health care that is reasonably expected to take place under the active direction or supervision, or with the active involvement, of a physician. As such, not necessarily all supplies made by the Corporation constitute facility supplies. The determination of whether a particular supply is a facility supply is to be made on a case-by-case basis.

A facility operator may also be entitled to claim an 83% rebate of the GST and the federal part of the HST paid or payable on eligible purchases and expenses to the extent that it intended to consume, use or supply the property or service in the course of activities engaged in by the Corporation in the course of making home medical supplies or ancillary supplies. As a resident in Ontario, it may also be entitled to claim an 87% rebate of the provincial part of the HST paid or payable on eligible purchases and expenses to the extent that it intended to consume, use or supply the property or service in the course of activities engaged in by the Corporation in Ontario in the course of making home medical supplies or ancillary supplies.

ADDITIONAL INFORMATION

Home medical supply

It is unclear whether the Corporation is involved in the provision of home medical supplies. Therefore, we offer the following information for your reference.

Subsection 259(1) defines a "home medical supply" to mean

"an exempt supply (other than a facility supply or a prescribed supply) of property or a service

(a) that is made

(i) as part of a medically necessary process of health care for an individual for the purpose of maintaining health, preventing disease, diagnosing or treating an injury, illness or disability or providing palliative health care, and

(ii) after a physician acting in the course of the practise of medicine, or a prescribed person acting in prescribed circumstances, has identified or confirmed that it is appropriate for the process to take place at the individual's place of residence or lodging (other than a public hospital or a qualifying facility),

(b) in respect of which the property is made available, or the service is rendered, to the individual at the individual's place of residence or lodging (other than a public hospital or a qualifying facility), on the authorization of a person who is responsible for coordinating the process and under circumstances in which it is reasonable to expect that the person will carry out that responsibility in consultation with, or with ongoing reference to instructions for the process given by, a physician acting in the course of the practise of medicine, or a prescribed person acting in prescribed circumstances,

(c) all or substantially all of which is of property or a service other than meals, accommodation, domestic services of an ordinary household nature, assistance with the activities of daily living and social, recreational and other related services to meet the psycho-social needs of the individual, and

(d) in respect of which an amount, other than a nominal amount, is paid or payable as medical funding to the supplier.”

Subsection 259(1) defines "medical funding" of a supplier in respect of a supply to be

"a amount of money (including a forgivable loan but not including any other loan or a refund, remission or rebate of, or credit in respect of, taxes, duties or fees imposed under any statute) that is paid or payable to the supplier in respect of health care services for the purpose of financially assisting the supplier in making the supply or as consideration for the supply by

(a) a government, or

(b) a person that is a charity, a public institution or a qualifying non-profit organization

(i) one of the purposes of which is organizing or coordinating the delivery of health care services to the public, and

(ii) in respect of which it is reasonable to expect that a government will be the primary source of funding for the activities of the person that are in respect of the delivery of health care services to the public during the fiscal year of the person in which the supply is made."

Ancillary supplies

As there is no indication that the Corporation is involved in the provision of ancillary supplies, we also offer the following information for your reference.

Subsection 259(1) defines an "ancillary supply" to mean

“(a) an exempt supply of a service of organizing or coordinating the making of facility supplies or home medical supplies in respect of which supply an amount, other than a nominal amount, is paid or payable to the supplier as medical funding, or

(b) the portion of an exempt supply (other than a facility supply, a home medical supply or a prescribed supply) of property or a service (other than a financial service) that represents the extent to which the property or service is, or is reasonably expected to be, consumed or used for making a facility supply and in respect of which portion an amount, other than a nominal amount, is paid or payable to the supplier as medical funding.”

Calculation of the PSB rebate

The rules in section 259 of the ETA provide that a PSB rebate is calculated and claimed on a claim period by claim period basis. The claim periods of a GST/HST registrant are the same as the reporting periods for its GST/HST returns (i.e., annually, quarterly or monthly). A PSB that is not a GST/HST registrant has two claim periods per fiscal year – the first six months and the last six months of its fiscal year.

A PSB claims its rebate on a property-by-property or service-by-service basis. It is the intended consumption, use or supply of a particular property or service at the relevant time that determines the PSB rebate entitlement for the non-creditable GST or HST paid on that property or service, not the overall activities of the PSB. Generally, the relevant time will be the time the supply was made to, or the property was imported or brought into Ontario by, the Corporation.

As required by subsection 259(4.1), the Corporation will be required to apportion its rebate claims between its inputs that are for consumption, use or supply in its activities carried on in the course of operating a qualifying facility for use in making facility supplies or in the course of making facility supplies, ancillary supplies or home medical supplies, and its other activities, unless subsection 259(14) applies.

The 83% (and 87%) PSB rebate rate may not apply to all of the Corporation’s purchases and expenses. Pursuant to subsection 259(14), where all or substantially all of the non-creditable tax charged for a claim period is tax incurred in its capacity as a facility operator, the Corporation will be entitled to claim an 83% (and 87%) PSB rebate on all of the non-creditable tax charged for that claim period. In other words, if 90% or more of the non-creditable tax charged for a claim period is tax incurred in activities engaged in by the Corporation in the course of operating a qualifying facility for use in making facility supplies, or in the course of making facility supplies, ancillary supplies, or home medical supplies, then the Corporation will be entitled to claim an 83% (and 87%) PSB rebate on all of the non-creditable tax charged for that claim period. If less than 90% of non-creditable tax charged in a claim period is for these purposes, then the Corporation is entitled to claim an 83% (and 87%) PSB rebate to the extent the non-creditable tax charged is for activities engaged in by the Corporation in the course of operating a qualifying facility for use in making facility supplies, or in the course of making of facility supplies, ancillary supplies, or home medical supplies.

Rebate for purchases that do not qualify for 83% rebate

As a charity for purposes of the GST/HST, the Corporation is eligible to claim a 50% PSB rebate of the GST and the federal part of the HST paid or payable on eligible purchases and expenses intended for consumption, use or supply in activities engaged in by the Corporation otherwise than in the course of operating the Facilities for use in making facility supplies, or in the course of making facility supplies, ancillary supplies, and home medical supplies.

As the Corporation is only resident in Ontario, it is also eligible for an 82% PSB rebate of the provincial part of the HST paid or payable on eligible purchases and expenses intended for consumption, use or supply in activities engaged in by the Corporation otherwise than in the course of operating a qualifying facility for use in making facility supplies, or in the course of making facility supplies, ancillary supplies, and home medical supplies.

PSB rebates from previous periods

The Corporation may find that it has GST/HST that was paid or payable but has not been claimed in a rebate or that it has claimed rebates in respect of certain activities at an incorrect rate. The requirements for claiming such additional rebate amounts are not the same and are described in detail below.

Where a person has made an application for a PSB rebate for a particular claim period and later discovers additional GST/HST that was paid or payable in that claim period but was not claimed, subsection 259(6.1) may apply. Where certain conditions are met, subsection 259(6.1) allows a PSB to claim a rebate in respect of property or a service for a particular claim period in a rebate application for a subsequent claim period ending after September 8, 2017. If a PSB has not claimed a rebate in respect of property or a service for a particular claim period, new subsection 259(6.1) allows the rebate to be carried forward where the following four conditions are met:

• The PSB did not claim the rebate in the application for any other claim period;
• The application for the subsequent claim period is filed within two years after

• if the person is a registrant, the day on or before which the person is required to file its GST/HST return for the particular claim period, and
• if the person is not a registrant, the day that is three months after the last day of the particular claim period;

• The PSB did not change the claimant type under which it was eligible to claim PSB rebates at any time from the beginning of the claim period in which the GST/HST was paid or payable to the end of the subsequent claim period; and
• The applicable rebate factor(s) did not change at any time from the beginning of the claim period in which the GST/HST was paid or payable to the end of the subsequent claim period.

Subsection 259(6.1) does not apply in situations where a person has claimed a PSB rebate in respect of a property or service and later finds out that it was eligible to claim the rebate at a higher rate. If the Corporation has already claimed a PSB rebate for a claim period and subsequently discovers that the rebate was not claimed at the proper rate, the Corporation must adjust the previously filed rebate application to claim a PSB rebate at the higher rate. The Corporation cannot include the additional rebate amount in the PSB rebate application for a different claim period. For more information on how to adjust a previously filed rebate claim, see "How do you make changes to a rebate application you already filed?" in GST/HST Guide RC4034, GST/HST Public Service Bodies' Rebate. A reassessment or additional assessment of a rebate claim shall not normally be made more than four years after the day the application for the rebate was filed.

For more information on the calculation of the rebate, please refer to the same GST/HST Guide RC4034, GST/HST Public Service Bodies' Rebate. This guide is available on our website.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-7298. 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,

Melissa Drapeau, CPA, CGA
Health Care Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

FOOTNOTES

1 […]

2 In general terms, “non-creditable tax charged” means the GST/HST paid or payable on property or services for which the Corporation cannot claim an input tax credit, rebate, refund or remission other than a PSB rebate.

3 Sections 1.1 and 1.2 of Part II of Schedule V

A supply that is a cosmetic service supply or a supply in respect of a cosmetic service supply, that is not made for medical or reconstructive purposes is generally deemed under section 1.1 of Part II of Schedule V not to be included in Part II of Schedule V and is therefore not exempt under section 2 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 provides that for the 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 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, unless they are exempted pursuant to another provision.

The expression "qualifying health care 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 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."

For more information on the expression “qualifying health care supply”, please refer to GST/HST Notice 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.