21 December 1999 GST/HST Ruling 8196/HQR0001802 - Application of the GST/HST to Supplies

Dear Sir:

Thank you for your letters of May 14, 1999 and September 24, 1999, with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of medical reports made by your client, XXXXX[.] Please note that as of November 1, 1999, Revenue Canada became the Canada Customs and Revenue Agency (the "CCRA").

On the basis of the above mentioned letters and our telephone conversation of November 9, 1999, our understanding of the facts and the transactions is as follows:

Statement of Facts

XXXXX is a medical facility that specializes in the assessment of injured patients (i.e., individuals). XXXXX subcontracts with medical practitioners to perform the examinations and assessments and to prepare the resulting medical reports. XXXXX also subcontracts with other health care professionals to assist the medical practitioner in the assessment of the individuals and the preparation of the reports.

2. The individual is referred to XXXXX by his or her family physician for an examination and assessment for the purpose of determining the extent of the individual's injuries in order to provide the family physician with guidelines for appropriate medical treatment as well as the individual's entitlement to insurance benefits.

3. The medical practitioner and other health care professionals perform the examination of the individual and prepare a medical report based on the examination. The examination and consequent medical report is not an insured service for the purposes of the XXXXX[.]

4[.] XXXXX invoices the individual and also submits a copy of the invoice to the individual's primary insurer for reimbursement of the medical practitioner's charges for the examination and the medical report.

Ruling Requested

The GST/HST is not collectible on the amounts charged by XXXXX to individuals and their primary insurers for the assessments and supplies of medical reports.

Ruling Given

Based on the facts set out above, we rule that the amounts charged by XXXXX to individuals and their primary insurers are consideration paid to XXXXX for a taxable supply consisting of a service of arranging for a medical practitioner to examine and assess an individual and a "resupply" of a medical report. The GST/HST at the rate of 7% is calculated on the value of the consideration for this supply which includes the amount related to the reimbursement of the medical practitioner's charges to XXXXX[.] In the case of a supply made in a participating province (Newfoundland, Nova Scotia, and New Brunswick), the rate of tax is 15%.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act (the "ETA"), or to CCRA interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

Under Part II of Schedule V to the ETA, a supply of a health care service is exempt from tax when the service is supplied by a specific health care professional, such as a medical practitioner or other practitioner (e.g., physiotherapist) and the service is rendered to an individual. The terms "medical practitioner" and "practitioner" are defined in section 1 of Part II of Schedule V. By virtue of provincial legislation, only a natural person (i.e., individual) can be licensed or otherwise certified as a medical practitioner or other practitioner to practice medicine or render other health care services. Section 9 of this Part also exempts the supply of goods and services by any person where, and to the extent that, the consideration for the good or service is paid for or reimbursed by a provincial health insurance plan.

A corporation such as XXXXX is not a medical or other health care practitioner, nor can it practice medicine or render health care services to individuals. As stated in the ruling above, it is our view that XXXXX is making a supply of a service consisting of arranging for a medical practitioner to perform an examination and assessment on an individual and a "resupply" of a medical report that was prepared by the medical practitioner as a result of this examination and assessment. This supply made by XXXXX is not a supply of a health care service. Thus, as section 9 noted above is not applicable, none of the exempting provisions in Part II of Schedule V apply to this supply and the GST at the rate of 7% is collectible on the value of the consideration charged by XXXXX to the individual and the individual's primary insurer. This value includes the amount related to the reimbursement of the amount paid by XXXXX to the medical practitioner. XXXXX is entitled to claim input tax credits for any GST it paid on supplies it incurred in the course of facilitating the examinations and assessments and supplying the medical reports.

Please note that supplies made by medical practitioners and other practitioners of health care services rendered to individuals will retain their exempt status regardless of who pays for these services, i.e., where the consideration for these services is billed to a third party. For example, where a medical practitioner makes a supply to XXXXX of a health care service rendered to an individual, this supply is exempt of tax pursuant to section 5 of Part II of Schedule V to the ETA and no tax is collectible on the invoice billed to XXXXX by the medical practitioner. When XXXXX invoices an individual or an insurance company for the reimbursement of the medical practitioner's charges, the invoice is in respect of a separate supply from the original supply made by the medical practitioner to XXXXX that, as stated above, does not meet any of the exempting provisions of Part II of Schedule V (e.g., it is not a supply made by a medical practitioner or a practitioner nor is it a supply of a health care service).

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-6761.

Yours truly,

Susan Eastman
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division