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
Place de Ville, Tower A, 5th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 237938
Business Number: […]
[Client]
Subject: GST/HST RULING
83% Public Service Body rebate eligibility
Thank you for your fax of November 24, 2021, with accompanying documents, concerning the eligibility of […] (the Hospice) to claim an 83% public service body (PSB) rebate of the goods and services tax (GST) and the federal part of the harmonized sales tax (HST), and an 87% PSB rebate of the provincial part of the HST, in respect of its activities. We apologize for the delay in our response.
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 information obtained from your letter, from the Hospice's website (footnote 1), and other sources, we understand the following to be an accurate summation of the facts:
1. The Hospice 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 GST/HST purposes.
2. The Hospice was given the Business Number […] and is not registered for GST/HST purposes.
3. Following a proposed reorganisation, the Hospice has transferred all of its assets (land, building and building contents) to […] (the Foundation).
4. The Foundation is now a registered charity that permits the Hospice to continue using the transferred assets free of charge.
5. The Hospice does not operate a public hospital and is not designated by the Minister as a hospital authority.
6. The Hospice has a single location situated at […][address] (the Facility).
7. The Facility is operated to provide palliative care services and support for people affected by life-limiting illness, caregivers and the bereaved. The Hospice’s mission statement indicates that it offers “caring and compassionate services inclusive for all who are experiencing life-limiting illness, facing end of life, or grieving a loss.”
8. The Hospice operates two main programs:
* the Community Hospice Program, and
* the in-house Residential Hospice Program.
9. Both programs are operated through the Facility where about [#] nurses and [#] medical doctors are on payroll to help out with both programs. Nursing care is available 24 hours a day, 7 days a week by a team of registered nurses and other health care professionals.
10. According to its website (footnote 2), the Hospice offers three main types of services through its programs:
1. Community-based services that encompass the following undertakings:
* […][Community service 1]: volunteers provide non-medical support in a client's home including respite, emotional support, and/or companionship.
* [...][Community service 2]: skilled professional team of registered nurses, counselors, personal support workers provide support to the client and their family at the client’s home.
* […][Community service 3]: counselling made available for those facing a life-limiting diagnosis, for their caregivers, and for the bereaved.
* […][Community service 4]: offers support to absorb and process the diagnosis, accessibility to information about available services and eligibility, opportunities to meet others with similar challenges, redevelopment of healthcare goals, case management, advocacy and education.
* […][Community service 5]: offers professional assistance and navigation through the health care system, helping in self-care through maintaining social contacts, exercise and sleep routines.
* […][Community service 6]: offers help to experience and work through grief, individual grief support with trained counsellor, bereavement group support to connect, chat and share with others, help in navigating holidays and difficult occasions by honouring loved ones.
* […][Community service 7]: certified therapists donate their time to the Hospice for therapies such as meditation, playing with colors (art therapy), reflexology, yoga, reiki, wellness drumming among others.
* […][Community service 8]: offers help in managing daily tasks with chronic conditions, in taking charge of medical needs, in developing self-management skills, in learning about healthy eating, pain management, exercising, medication management, communicating with a healthcare professional and more.
2. Residential-based services that encompass the following:
* […][Residential-based service 1]: the Hospice employs a certified Registered Nurse (RN) as Clinical Lead; supported by a team of nurses and a team of 3 palliative physicians and a hospitalist […]. Also, residence volunteers are specially trained in end-of-life care and bereavement, in addition to completion of the Hospice Association of Ontario’s (HAO) mandated 30 hour training program.
* […][Residential-based service 2]: [#] rooms fully furnished with a hospital bed and reclining lounge chair where residents are welcome to bring personal objects to help feel at home. The rooms are also wired for technology and are equipped with a television and a personal fridge.
* […][Residential-based service 3]: the Hospice offers a home-like environment to residents and their families for a safe and relaxing feeling.
* […][Residential-based service 4]: small servings of light food may be offered to the residents by volunteers upon request.
* […][Residential-based service 5]: family members, children and pets are allowed to visit.
* […][Residential-based service 6]: individual counselling and/or one-on-one support offered to residents and family members by an interdisciplinary health team comprised of trained counsellors and facilitators available during the family’s stay.
and,
3. […][Other] services that encompass activities such as walking, painting, drawing among others.
11. The Hospice can receive referrals for its Community Hospice Program from anyone, including the individual seeking services.
12. The Hospice can receive referrals for its Residential Hospice Program from primary care and health care professionals. An Intake & Outreach Coordinator evaluates each individual’s case and affirms that the intake and assessment criteria is being met. Registration of individuals to the Residential Hospice Program is done prior to their admission date.
13. An individual admitted to the Residential Hospice Program must be registered with the Central Local Health Integration Network (LHIN) prior to admission. The individual must understand that the program is intended for palliative patients and that cardiopulmonary resuscitation will not be initiated at the Hospice, nevertheless, physical, emotional and supportive care will be offered.
14. Residents admitted to the Residential Hospice Program have a Collaborative Care Plan that is developed and implemented for each resident in accordance with the Canadian Hospice Palliative Care Association (CHPCA) Norms of Practice. The Collaborative Care Plan is initiated on admission and is reviewed regularly. It includes goals the Hospice aims to achieve with residents and their families on how to deal with palliative diagnosis, disability, illness, transition in care, social isolation, coping with loss, among others and the resident-tailored strategies to achieve such goals.
15. Residential-based services take place at the Facility. The Facility is considered the patient’s “residence” for LHIN purposes, which enables the Facility to receive some medical equipment and supplies (e.g., gloves, syringes, wound care equipment, briefs). Individuals at the Facility are called “residents”, but that term is more of a comforting measure. They are actually patients.
16. The average length of stay at the Facility for the in-house Residential Hospice Program is less than 20 days since people are being kept at home in the community care program for longer durations and then brought into the Facility with greater acuity.
17. The Hospice assigns a multidisciplinary health care team to each resident comprised of registered nurses, care aides, grief support workers, physicians, therapists, and social workers.
18. The Hospice ensures that […] registered nurses are on-site at the Facility and are dedicated to the hospice rooms on a 24/7 basis for each day in the year.
19. The Hospice also ensures that physicians are available on an on-call basis. It contracts with approximately four physicians to be available to the Hospice to render services to the Hospice’s clients under both programs. The physicians provide services to the clients of the Hospice and bill the Ontario Health Insurance Plan (OHIP) for these services
20. Physicians are responsible for prescribing medication, requesting diagnostic tests and reviewing results with the objective of reducing pain and keeping residents comfortable. Nurses on-site administer medication, monitor symptoms and follow-up with the physicians. Personal support workers on-site help residents with their daily living tasks such as dressing, feeding, showering, mobility and making their beds among others.
21. Volunteers at the Hospice are involved in both programs. They provide company to residents and help them during certain activities; they also provide various support services to members of the community and their families dealing with terminal illness.
22. The Hospice’s care is based on the Hospice Association of Ontario’s (HAO) ‘gold standard’ practices (footnote 3). The gold standards provide the benchmarks for high quality hospice palliative care at home. They are based on the National Principles and Norms of Practice for hospice palliative care led by the CHPCA. The gold standards establish the ideal level of care and support for people receiving hospice palliative care at home and are designed to encourage and support a consistent approach across the country to hospice palliative care services at home.
23. The Hospice’s norms of practice are determined by the CHPCA and Hospice Palliative Care Ontario (HPCO) guidelines.
24. The Hospice signed a Service Agreement with the Central LHIN effective [mm/dd/yyyy] to help fund caregiver support and hospice services. The Hospice receives funding from the Ministry of Health Ontario and Long-term Care (MHOLC) indirectly through the Central LHIN as base funding and as residence funding. In 2021, approximately […]% of the Hospice’s revenues came from government funding while the remainder […]% emanated from various donations, charities and fundraising events.
25. As part of its commitment to promote the delivery of public health services by non-profit organizations, the Province of Ontario passed the Local Health System Integration Act, 2006. On April 1st, 2021, the health system planning and funding functions from the LHINs transferred into Ontario Health. LHINs began operating under a new business name, Home and Community Care Support Services (HCCSS), to reflect a focused service delivery mandate (footnote 4).
26. An Amending Agreement between the Central LHIN and the Hospice was signed on […][mm/dd/yyyy] that establishes the flow of funds for hiring and employing the appropriate personnel to provide nursing services and personal support services. Schedule 2 of Appendix A provides the terms on pricing and payment. Specifically, the LHIN agrees to pay the Hospice an hourly rate of :
i) […]$ for personal support services, […], and
ii) […]$ for nursing services, […].
27. All of the Hospice’s current programs and services are provided free of charge. So far, the Hospice has relied on government funding and charitable donations to cover the costs of its current services.
28. As a result of the pandemic and increased costs, the Hospice is considering undertaking some income-earning activities for which it will levy fees for the services offered as part of such activities. The anticipated activities are:
* […][list of activities]
RULING REQUESTED
You would like to know whether the Hospice 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 Hospice is a facility operator making facility supplies.
PSB rebate of the GST and the federal part of the HST
As a charity that is also a facility operator, the Hospice is entitled to a PSB rebate of the GST and the federal part of the HST as follows:
An 83% PSB rebate of the non-creditable GST charged (footnote 5) or the federal non-creditable HST charged in respect of property or a service to the extent that the property or service is for consumption, use or supply in activities engaged in by the Hospice in the course of operating the Facility for use in making facility supplies, or in the course of making facility supplies, ancillary supplies or home medical supplies.
PSB rebate of the provincial part of the HST
As the Hospice is resident in Ontario, it is also entitled to a PSB rebate of the provincial part of the HST as follows:
An 87% PSB rebate of the provincial non-creditable HST charged in respect of property or service to the extent that the property or service is for consumption, use or supply in activities engaged in by the Hospice in Ontario in the course of operating the Facility for use in making facility supplies, or in the course of making facility supplies, ancillary supplies or home medical supplies.
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 Hospice 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 next if the Hospice is a “facility operator”.
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 Hospice is a charity, it meets the first requirement of the definition. In order to meet the second requirement, the Hospice 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, or part of the facility as in this case, 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) 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, (…) 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 public hospital or 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 Hospice is a charity, the supplies it makes to the 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 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. Section 2 of Part II of Schedule V may also apply to exempt supplies of services that the Hospice makes.
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 6).
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 public hospital or 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 public hospital or 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.
Supplies of residential hospice care, as is the case of the current services provided within the Residential Hospice Program, when part of a medically necessary process of health care for the individual for the purpose of providing palliative health care, which process is undertaken in whole or in part at the part of the Facility that is a qualifying facility and is reasonably expected to take place under the active direction or supervision, or with the active involvement, of a physician or a nurse practitioner acting in the course of the practise of medicine or in the course of the practise of a nurse practitioner respectively, would be considered facility supplies.
If the Hospice engages in any activities or programs for which there is no expectation of active physician or nurse practitioner direction or supervision, or active physician or nurse practitioner involvement, being undertaken, then supplies of services provided within such activities or programs would not fall within the definition of “facility supply”, and thus such activities or programs would not be eligible for the 83% (and 87%) PSB rebate under this particular provision.
As there is no evidence seen, in the description of some of the services or programs provided under the Community Hospice Program, of an expectation of active physician or nurse practitioner direction or supervision, or active physician or nurse practitioner involvement, being undertaken, supplies made, for instance, of day hospice programming, in-home visiting and volunteer support, caregiver support, and bereavement care, 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 Hospice may still be entitled to a 50% PSB rebate of the GST and the federal part of the HST and an 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 part of the Facility that is a qualifying facility must be facility supplies. The exempt supplies that are facility supplies made by the Hospice meet this first criterion.
Qualifying Funding
The second criterion that must be met for a facility or part of the 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 Hospice has entered into a funding agreement with the Central LHIN. The funding is to help fund caregiver support and hospice services. The funding provided by the Central LHIN to the Hospice in respect of its operation of the Facility under the funding agreement constitutes “qualifying funding”, thus meeting the second criterion under the paragraph 259(2.1)(b) description of a “qualifying facility”.
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 Ministry of Health and Long-Term Care (MOHLTC).
However, the MOHLTC 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 LHINs, among others, to ensure that the activities of the OPCN are aligned across the province. The Hospice is accountable to the Central LHIN, which in turn is accountable to the MOHLTC. The Hospice is included in the Integrated Health Service Plan 2016-2019 and has a Service Accountability Agreement with the Central LHIN (footnote 7). Through the Accountability Agreement, the Central LHIN provides funding to the Hospice for palliative care services.
It is our view that the combination of these elements allows us to conclude that the Hospice, as the operator of the Facility, 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 also satisfied.
Summary of “qualifying facility” analysis
To summarize, part of the Facility meets all of the requirements of the definition of “qualifying facility” in subsection 259(2.1) and, as a result, the Hospice is a facility operator for purposes of section 259 (footnote 8). Accordingly, the Hospice qualifies for an 83% PSB 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 Hospice in the course of operating the part of the Facility that is a qualifying facility for use in making facility supplies, or in the course of making facility supplies. As a resident of Ontario, the Hospice 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 Hospice in Ontario in the course of operating the part of the Facility that is 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 Hospice 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 Facility 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 Facility in Ontario in the course of making home medical supplies or ancillary supplies.
Home medical supplies
There is some indication that the Hospice may be involved in the provision of “home medical supplies” via its [Community service 2] initiative, which offers a remote hospice service. For supplies that the Hospice makes which are not facility supplies, the 83% (and 87%) PSB rebate may also be available if the supplies qualify as “home medical supplies”.
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, a nurse practitioner acting in the course of the practise of a nurse practitioner 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 “an 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.”
In regards to medical funding, if the Hospice receives funding from the Central LHIN to help with the provision of home medical supplies, such funds could qualify as “medical funding” if they are to financially assist the Hospice with such health care services.
Depending on the circumstances, some items provided as remote hospice services, like in the [...][Community service 2] Program (e.g., nursing care in pain management and occupational therapy services), may qualify as “home medical supplies”. However, it is unclear whether any of the supplies of services and property are indeed “home medical supplies” since it is unknown whether all the criteria to qualify as “home medical supplies” are met. For instance, it is unknown whether a physician or a nurse practitioner acting in the course of the practise of medicine or in the course of the practice of nurse practitioner has identified or confirmed that it is appropriate for a medically necessary process to take place at the individual’s place of residence or lodging (other than a public hospital or a qualifying facility), or whether the supply is made on the authorization of a person who is responsible for coordinating the process of health care or palliative care that the individual is receiving at their residence.
ADDITIONAL INFORMATION
As there is no indication that the Hospice is involved in the provision of ancillary supplies, we offer the following information for your reference.
Ancillary supplies
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 Hospice.
As required by subsection 259(4.1), the Hospice 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 Hospice’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 Hospice 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 Hospice 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 Hospice 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 Hospice 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 Hospice 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.
Please note that this allocation is to be performed for each property or service identified in the claim period.
Rebate for purchases that do not qualify for 83% rebate
As a charity for purposes of the GST/HST, the Hospice is eligible to claim a 50% PSB rebate of the GST and the federal part of the HST for the non-creditable tax charged on eligible purchases and expenses intended for consumption, use or supply in activities engaged in by the Hospice otherwise than in the course of operating the Facility for use in making facility supplies, or in the course of making facility supplies, ancillary supplies, and home medical supplies.
As the Hospice 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 Hospice 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 Hospice 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 Hospice has already claimed a PSB rebate for a claim period and subsequently discovers that the rebate was not claimed at the proper rate, the Hospice must adjust the previously filed rebate application to claim a PSB rebate at the higher rate. The Hospice 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.
Other anticipated income-earning activities
You mentioned that the Hospice is considering the possibility of undertaking some activities for which the services will be supplied at a fee. The CRA reserves the right not to issue a ruling where it considers that one would not be appropriate. In this case, you are seeking information on anticipated events, i.e. if and when the Hospice starts operating income-earning activities. Since the GST/HST is a transactional tax, the application of GST/HST on the Hospice's forthcoming services, as described, would be made on a case-by-case basis. As such, if, after reviewing this letter, you wish to obtain a ruling on any of the particular income-earning activities the Hospice becomes engaged in, we invite you to follow-up in writing including all relevant agreements, descriptions and supporting documentation. For more information, see guide RC4082, GST/HST Information for Charities.
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 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. The interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the 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.
CONTACT
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 343-553-4626. 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.
Sincerely,
Amal Khorchid
Officer
Health Care Sectors Unit
Public Service Bodies and Governments Division
GST/HST Rulings Directorate
FOOTNOTES
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3 Standards and Norms of Practice - Canadian Hospice Palliative Care Association (chpca.ca): https://www.chpca.ca/resource/norms/
4 https://health.gov.on.ca/en/common/system/services/lhin/facts.aspx
5 In general terms, "non-creditable tax charged" means the GST/HST paid or payable on property or services for which the Hospice cannot claim an input tax credit, rebate, refund or remission other than a PSB rebate. For more information, see guide RC4034, GST/HST Public Service Bodies' Rebate or GST/HST Memorandum 13.5, Non-creditable Tax Charged.
6 Section 1.1 of Part II of Schedule V provides that, “For the purposes of this Part, other than section 9, a cosmetic service supply and 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.”
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”.
Section 1.2 of Part II of Schedule V provides that, “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.”
A “qualifying health case 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.”
7 Central Local Health Integration Network (LHIN) (centrallhin.on.ca)
8 As the Hospice is a facility operator, it is not an external supplier, since the definition of “external supplier” in subsection 259(1) excludes a facility operator.
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