Section 259

Subsection 259(1) - Definitions

Facility Operator

See Also

Elim Housing Society v. The Queen, 2015 TCC 282

care aide services provided at nursing staff direction were therapeutic care

The appellant ("Elim"), a B.C. non-profit organization, sought the enhanced (83%) public service body HST rebate respecting a long-term care facility with up to 118 residents (mostly with dementia, severely impaired mobility, complex medical issues and a life expectancy of between three months and three years), which was constructed and operated by it (the "Harrison"), on the basis that it was making "facility supplies." There were five nurses and 16 care aides available to provide care during the day. Before allowing Elim's appeal, Woods J found:

  • Elim provided a medically necessary process of health care (noting, at para. 63, that "much of the care… is delivered through care plans, created by nurses, and which are tailored to address specific medical concerns" and rejecting, at para. 64, the Crown submission that "the term ‘medically necessary' should mean medically necessary as determined by a physician")
  • there was active involvement of physicians (stating, at para. 71, that "the physicians generally have a pro-active approach by visiting their patients roughly every two weeks…[, they] receive updates from the nursing staff…[and] are available at all times and participate in The Harrison's inter‑disciplinary meetings and medication reviews")
  • the residents were subject to medical management (stating at, para. 78, that "it is not necessary that the physician have management of the health care process itself")
  • residents received sufficient therapeutic health care services

On the last point, she stated (at paras. 83, 86, 90-91, 95-97):

The gist of the dispute between the parties is whether the services provided by care aides at The Harrison, such as toileting and bathing, are therapeutic health care services.

…[T]he term "therapeutic" can mean "having a good effect on the mind or body": Cuthbertson v. Rasouli, 2013 SCC 53… .

…[M]any of the routine services provided to residents by care aides apply nursing expertise to address particular medical concerns…[and are] of a different type than ordinary assistance with activities of daily living… .

The agreed upon test was that therapeutic health care services had to be provided for at least 2.4 hours (10 percent) each calendar day. … [J]udicial interpretations…do not support the bright line 10 percent test. … The Harrison received funding during the relevant period for 2.8 hours of care per resident per day. Since some of the care… is provided in groups (e.g. oversight for choking risk at meals), the funding actually provides greater than 2.8 hours… .

Words and Phrases
therapeutic

Administrative Policy

3 July 2012 Ruling Case No. 109082

insufficient physician involvement in nursing home

The residents in a nursing home

have heavy care needs and require a two-person transfer, are totally incontinent and are either cognitively impaired or have dementia. In addition, many residents require restorative aid and/or complex wound care which is provided by specialized nursing staff. The nursing staff spends several hours each day assisting each resident with the activities of daily living (i.e., transfer, toileting, feeding, and mobility) whether rendering the services themselves or supervising other staff members in the delivery of these services.

Before finding that the charitable operator was not making a facility supply, CRA stated:

The medically necessary process of health care for a resident at the Facility is such that the nursing staff and other health care professionals are responsible for the delivery of the key services, actions, operations and events that reflect the objectives outlined in the Letters Patent for the Facility and not the Attending Physician. The Attending Physician may be required under the Attending Physician's Agreement and the Long-Term Care Homes Act and Long-term Care Homes Program Manual to perform certain duties and meet certain responsibilities (i.e., visit with each resident every week, provide an on-call service, review the results from all diagnostic tests ordered, counter-sign all orders, perform semi annual reviews of the care plan and other services). However, the Facility, or part of the Facility was not established for the medical or surgical treatment of an individual. The underlying purpose for residents and/or their legal guardians to seek residence at the Facility is to receive 24-hour nursing care and supervision within a secure setting and not medical care provided by a physician.

13 September 2011 Ruling Case No. 102589 (similar to 13 September 2011 Ruling Case No. 118500)

The registrant (a charity) operated "group homes" whose main function was to give on-going life skills training and life-long learning and support in developments skills to people with significant developmental disabilities. The individuals providing these services worked in the fields of social services, nursing and psychology. After already having ruled that the group homes did not qualify as health care facilities, CRA went on to note that as the above activities did not fit the definition of a "facility supply," the registrant was not a "facility operator" and not eligible for the public service body GST rebate.

Facility Supply

Administrative Policy

26 September 2017 Ruling 126881

supplies at Ontario long-term care home qualified

A registered charity (the “Corporation”) operates a long-term care home that provides extensive care for individuals who have been approved following an assessment process for admission by their regional Community Care Access Centre as being in need of nursing care and medical attention. The Corporation has been licensed by the Province of Ontario’s Ministry of Health and Long-Term Care (MOHLTC) pursuant to the Long-Term Care Homes Act, 2007 to operate the home, and the MOHLTC is the main source of funding of the operations of the home. Health care services provided at the home include:

- 24-hour nursing services and assistance with daily living

- daily physician’s services and visit for each resident

Physician services are provided on an ongoing, continual basis in that physicians regularly visit and provide 24-hour on-call services. All residents of the home have a physician on-call at all times.

CRA ruled that the Corporation is a facility operator making facility supplies at a qualifying facility (i.e., the home) so that it is eligible for the 83% federal public service body rebate as well as the 87% Ontario PSB rebate. In its explanation, CRA briefly described satisfaction of the “qualifying funding” requirement in s. 259(2.1) as well as the facility accreditation requirement in s. 259(2.1)(c) (here, by the MOHLTC) and, similarly to 138196, provided an extended discussion of Elim Housing, noting that in that case:

  • physicians visited residents frequently (e.g., roughly on a bi-weekly basis); …
  • 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 care provided was of a different type than ordinary assistance with activities of daily living that a more robust individual might require.

CRA then stated:

After comparing the services and the care provided by the Corporation at [X] to its residents with the elements described in Elim, we are of the view that facility supplies are provided at [X] by the Corporation.

24 July 2017 Ruling 138196

Elim Housing followed in finding that an Ontario nursing home qualified

A registered charity (the “Corporation”) operates a nursing home, or long-term care facility (the Facility) that provides extensive care for individuals who are unable to manage their own basic requirements. The Corporation has a Long-Term Care Home Licence, issued by the Province of Ontario’s Ministry of Health and Long-Term Care (MOHLTC) pursuant to the Long-Term Care Homes Act, 2007, for the Facility. The Facility only has residents who have been assessed by a physician retained by the Province as being unable to live independently. They require ongoing medical support to assist them in their living and health care needs. All residents require medical and/or nursing care 24 hours per day. There are a specified number of physicians who are either present or on call 24 hours per day, and also extensive nursing services provided.

CRA ruled that the Corporation is a facility operator making facility supplies at a qualifying facility (i.e., the Facility) so that it is eligible for the 83% federal public service body rebate as well as the 87% Ontario PSB rebate. In its explanation, CRA briefly described satisfaction of the “qualifying funding" requirement in s. 259(2.1) as well as the facility accreditation requirement in s. 259(2.1)(c) (here, by the MOHLTC), and focused on the “facility supply” requirement, stating:

Elim Housing … 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” …;
  • the residents were extremely dependent on care either by reason of mental or physical impairment …;
  • 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: …
  • 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 Facility to its residents to the elements described in Elim, we are of the view that facility supplies are provided at the Facility by the Corporation.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 259 - Subsection 259(14) 93% use of utilities for facility supplies deemed to be 100% 189

18 March 2013 Interpretation Case No. 134610

The "Society") is a registered charity which provides long-term residential care for seniors with complex care needs. CRA was asked whether the care services rendered by are assistants to residents, including bathing, grooming, dressing, feeding, transporting and mobility assistance, were "therapeutic health care services" for purposes of s. 259(1)(a)(iii)(D). CRA stated that in order for care services to so qualify,

there must be an identification or diagnosis of a particular injury, illness, disability or other health issue (i.e., what we will call a "health condition") of an individual and it must be reasonable to conclude that the service in question is rendered with the objective of treating that health condition or its symptoms.

Although most of the mooted services here instead entailed assistance with activities of daily living, CRA noted that "there may be situations in which a service of assisting a resident with an activity that an average person would often perform on their own may be considered a therapeutic health care service." To illustrate, CRA offered the following examples:

(i) Turning or repositioning and the direction of a physician to deal with bed sores;

(ii) Application of topical cream or ointment at the direction of a registered nurse to treat a wound;

(iii) Range of motion exercises in accordance with a treatment plan of a licensed physiotherapist to address stiffness in the shoulder area during recovery from a minor fracture;

(iv) Taking a resident for walks while recuperating from surgery at the recommendation of a physician recommends periodic walks to prevent blood clots and improve gastrointestinal and urinary tract function.

20 May 2011 Headquarters Letter Case No. 115028

A division of a registered charity which had been designated as a hospital authority by the Minister, and which had been claiming the public services body rebate at a 50% rate in respect of GST incurred in operating an Ontario nursing home (where most of the residents suffered from Alzeimer's or other cognitive deficiencies), was not entitled to claim the rebate at the higher 83% rate that would have been available if it had qualified as operating a "qualifying facility" for use in making "facility supplies," given that "the vast majority of care services provided at the Home are rendered by the nursing and support staff, with minimal instruction, management or supervision by a physician." This interpretation of the requirement for "active direction or supervision" or "active involvement" of a physician (or certain substitutes) accorded with the purpose of the higher rebate:

...it was not the intent of the Department of Finance to make the 83% PSB rebate available to nursing homes and similar long-term care operations that do not make supplies of health care services similar to those traditionally provided in hospitals....These [latter] types of facilities include, for example, those that offer a high level of therapeutic care, cancer clinics, day surgery clinics and community health centres that render primary care services.

Municipality

Cases

Wellesley Central Residences Inc. v. Canada (National Revenue), [2011] GSTC 101, 2011 FC 760

R.L. Barnes J. affirmed the Minister's decision not to designate the taxpayer as a municipality given that there was insufficient basis to interfere with the Minister's discretion. The taxpayer corporation was a registered charity that constructed a 112-unit residential facility to care for frail seniors and people with HIV. The Minister's policy was to to allow the municipality designation for entities that supplied accommodation, but withhold it where residents are provided with a variety of services in addition to the supply of accommodation, which was the case here - the taxpayer provided personal care, homemaking, and coordination with other service providers. Although the taxpayer's activities were laudable, the designation was within the Minister's discretion and the decision not to make such a designation was "transparent, intelligible, and rationally supported by the reasons given" (para. 23).

Administrative Policy

RC4034 "GST/HST Public Service Bodies' Rebate" - Includes Forms GST66 and RC7066 SCH" 2010

If a local authority is determined to be a municipality, it has the benefit of municipal status for all GST/HST purposes. For example, a paramunicipal organization can apply to be determined to be a municipality. ....

If a person is designated to be a municipality for particular exempt municipal services that it supplies, the person is considered to be a municipality only for the purposes of the public service bodies' rebate and only for those particular exempt municipal services. The designation does not apply to the organization as a whole.

The designation allows the person to apply for a rebate of the GST/HST using the municipality rebate factor, but only for the tax paid or payable on purchases used in the course of supplying the exempt municipal services for which the organization was designated.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 259 - Subsection 259(4) 24

Non-Creditable Tax Charged

Administrative Policy

10 August 2017 Ruling 182286

Ontario electricity rebate does not reduce the non-creditable tax charged

The Ontario Rebate for Electricity Consumers Act, 2016 (Ontario Rebate Act), provides financial assistance to certain Ontario electricity recipients by means of an 8% reduction in the amount payable for electricity. The 8% rebate amount is shown as a separate line item that reduces the total amount payable for electricity after the HST has been calculated and applied. How does the rebate impact input tax credits and public service body rebate claims?

After ruling that the rebate “has no impact on claiming ITCs or the PSB rebates of the provincial part of the HST,” CRA stated:

The Ontario rebate is financial assistance provided by the province to eligible recipients of electricity and serves to reduce the total amount payable by the recipients. The rebate is not a reduction in consideration for the supply of electricity, nor is it a reduction to the HST payable in respect of the supply of electricity. The Ontario rebate does not alter the value of the ITC that is claimable by a registrant who uses the electricity consumed in its commercial activities.

Furthermore, the Ontario rebate does not impact on the calculation of the non-creditable HST charged in respect of the electricity for the claim period, and therefore does not affect the amount of the PSB rebate.

Subsection 259(3) - Rebate for Persons Other Than Designated Municipalities

Administrative Policy

12 June 2014 Ruling 133588r [no PSB rebate of charity re provincial HST on purchases for use in province where no PE]

no PSB rebate of charity re provincial HST on purchases for use in province where no PE

The Charity, which was incorporated in Participating Province X, was found not to have a permanent establishment in Participating Province Y, i.e., what, by virtue of s. 2(2) of the New Harmonized Value-added Tax System Regulations, No. 2, would be a permanent establishment under Part IV of the ITA Regs if Charity's activities were a business. As it is not resident in Participating Province Y, Charity "would not be entitled to a PSB rebate of the provincial part of the HST to the extent that the property or services are intended to be consumed, used or supplied in the course of its activities in [Participating Province Y]."

Excise and GST/HST News - No. 89 (Summer 2013) under "Time limits for claiming a public service bodies' rebate (PSB rebate)"

Non-creditable tax charged for a particular claim period only includes GST/HST that was payable or that was paid without having become payable during that claim period. GST/HST payable in one period generally cannot be included in the non-creditable tax charged for a subsequent claim period. …

If a PSB has already claimed a PSB rebate for a claim period and subsequently discovers additional GST/HST that was paid or payable during that claim period, the PSB must adjust the previously filed rebate application to claim a PSB rebate for the additional GST/HST. The PSB cannot include the additional tax in the PSB rebate application for a different claim period.

Articles

Michael Matthews, "Claim Your Public Service body Rebates on Time – or Amend", Canadian GST/HST Monitor (CCH), May 2014, No. 308, p. 1.

Prior practice of carrying forward rebate claims to subsequent returns (p. 1)

By strictly applying the law, the Canada Revenue Agency ("CRA") has recently effectively announced a policy change which affects all public service bodies ("PSB")… .

Since the introduction of the GST, almost every PSB took the position that any amount of GST/HST that was paid or payable in a previous claim period could be claimed in any subsequent PSB claim, since a PSB has up to four years to claim the rebate. For example, for a PSB that is a monthly filer, an invoice dated January 1, 2014 but not processed before June 2014 would normally be included in the June rebate claim. This was a practical and reasonable solution as it is virtually impossible for larger PSBs to receive and process their suppliers' invoices within a 30 day period (i.e., the typical claim period for a monthly filer).

Requirement in GST/HST News No. 89 that additional claims must now be made in the same return (p. 2)

It appears that the CRA's position [fn 3: Revenue Quebec is adopting the same administrative policy for QST purposes] has created two options for PSBs: (1) assume the cash flow consequences by postponing filing rebate claims until all invoices have been processed, or (2) file amended rebate claim applications each time an invoice is received or processed after the rebate claim period. Both solutions place an unnecessary burden on PSBs.

Subsection 259(4) - Rebate for Designated Municipalities

Cases

Whitehorse (City) v. The Queen, 2012 TCC 298, aff'd 2013 FCA 144

The taxpayer sought a s. 259(4) GST rebate on a travel allowance paid to its employees for return trips to Edmonton or Vancouver, on the basis that the taxpayer was deemed to have paid them pursuant to s. 174(a)(iv). The principal purpose of these flights was to allow employees to take time off in more populated areas, a benefit that helped the taxpayer attract a larger pool of qualified employees. In issue was whether the travel allowance was paid for supplies of property or services acquired by the employees "in relation to" activities engaged in by the taxpayer, as required by s. 174(a)(iv).

Sheridan J. dismissed the taxpayer's appeal - although the allowances were helpful to the taxpayer's employee hiring and retention, the flight expenses were intended for employee recreation. There did not exist a "sufficient nexus" between the flights and the taxpayer's activities (para. 22).

It was not clear which authority governed - the test in ExxonMobil that the allowance not be for the "exclusive personal use" of the employees, or the test in Midland Hutterian Brethren that there be a "functional connection between the needs of the business and the goods" (or services, in this case). Sheridan J. suggested that the tests were essentially the same, but expressed in different terms (para. 20).

Administrative Policy

RC4034 "GST/HST Public Service Bodies' Rebate" - Includes Forms GST66 and RC7066 SCH" 2010

Using the Special Quick Method does not affact your public service bodies' rebate entitlements and you still claim your rebate in the ususal way.

GST M 500-4-2 "Municipal Rebates"

Subsection 259(4.1)

Administrative Policy

6 July 2001 Headquarter Letter 34915

"Hospital activity, for purposes of the 83% GST/HST rebate, means the operation of a facility that is a public hospital and excludes the provision of long-term care activities, such as residential care services. If a designated hospital authority operates a separate facility for the purpose of providing residential care, where the designated hospital authority provides residential care within a segregated ward or section of a public hospital, the GST/HST paid in respect of the operation of the separate residential care facility or the residential care activity carried on in the segregated ward or section of a public hospital must be 'carved out' of the 83% rebate pursuant to the apportionment rules provided in subsection 259(4.1) .... ."

Subsection 259(14)

Administrative Policy

24 July 2017 Ruling 138196

93% use of utilities for facility supplies deemed to be 100%

After ruling that an Ontario nursing home (the “Facility”) that was operated by a registered charity (the “Corporation”) qualified for the federal 93% PSB rebate as well as the Ontario 87% PSB rebate on the basis of its similarities to the facility in Elim Housing, CRA stated:

Generally, subsection 259(14) means that where the Corporation incurs 90% or more of the GST/HST for a property or a service acquired in its capacity as a facility operator (e.g., for use in making facility supplies), all of that GST/HST is deemed to have been incurred in that capacity. As such, the Corporation could claim a PSB rebate for that property or service at the rate of 83% for the GST and the federal part of the HST and, as a resident only in Ontario, at 87% for the provincial part of the HST. For example, if the Corporation incurs GST/HST on its utilities, and the Corporation determines it incurs 93% of the GST/HST in its activities as a facility operator for making facility supplies, the Corporation may claim 100% of the GST/HST it pays on the utilities using the 83% (and 87%) PSB rebate rates.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 259 - Subsection 259(1) - Facility Supply Elim Housing followed in finding that an Ontario nursing home qualified 446