Canada Revenue Agency Provides List of Exempt and Taxable Health Care Service Providers
In the recent Excise and GST/HST News No. 80 (Spring 2011) (GST/HST News 80) published by the Canada Revenue Agency (CRA), the CRA puts on notice a list of health care professionals that it considers to offer TAXABLE services. Many of these health care professionals are likely not charging goods and services tax (GST) or harmonized sales tax (HST). This means, if these categories of health care professionals are audited by the CRA, it is likely that assessments will be issued. In the HST provinces (Nova Scotia (15%), Ontario, Newfoundland/Labrador, New Brunswick (13%), British Columbia (12%)), the assessments may add up to large amounts.
GST/HST News 80 puts health care professionals on notice.
The CRA's position is:
General Rule: Any basic health care service rendered to an individual by a health care professional that is specifically identified in Part II of Schedule V to the Excise Tax Act are exempt. In other words, you find the category of health care service or health care professional in that Schedule by name or description.
According to the CRA, the following services by the following provincially regulated (licensed or otherwise certified) health care professionals rendered to individuals/patients are specifically identified in Part II of Schedule V to the Excise Tax Act are as a general rule exempt:
- physicians,
- dentists and orthodontists,
- registered nurses, registered nursing assistants, licensed or registered practical nurses, registered psychiatric nurses,
- optometrists,
- chiropractors,
- physiotherapists,
- chiropodists,
- audiologists,
- speech-language pathologists,
- occupational therapists,
- psychologists,
- podiatrists,
- midwives,
- dieticians,
- social workers, and
- dental hygienists.
Exception to General Rule: Any health care service provided by other therapists and health care workers are TAXABLE. If you cannot find a category of health care professional or health care worker in Part I of Schedule V to the Excise Tax Act, their service re likely taxable.
While these other therapists and workers may be professionals in their fields and they may be certified in their province or territory, they are not identified in the Part II of Schedule V to the Excise Tax Act. Therefore the Act’s exemptions do not apply to their services even where, for example, the service is similar to a service performed by an identified health care provider, such as a nurse or physiotherapist. Some examples of therapists and other health care workers whose
services are generally considered by the CRA to be taxable for GST/HST purposes are (this is not an exhaustive list):
- assistants such as physiotherapy and occupational therapy assistants
- social service workers (this is a separate profession from social workers)
- laboratory technicians;
- psychometrists;
- nursing care aides;
- polysomnographic technologists;
- acupuncturists;
- kinesiologists;
- massage therapists;
- naturopaths;
- reflexologists;
- homeopaths;
- reiki therapists;
- sports therapists;
- rolfing therapists;
- traditional Chinese medicine providers;
- phlebotomists;
- personal support workers.
Exception to Exception: Certain services provided by an health care professional or health care worker listed above may qualify as exempt when provided to an individual in an exempt health care setting. For example, supplies made by the operator of a nursing home of services rendered by nursing care aides are exempt when they form part of an exempt institutional health care service rendered to a resident of the nursing home. In addition, services similar to those rendered by the providers listed above may be exempt when rendered by an identified exempt health care provider. For instance, if physiotherapists are entitled under the provincial law that regulates physiotherapy services to perform acupuncture on their clients in the course of
providing physiotherapy services, then their physiotherapy services that involve acupuncture would be exempt.
There are many other exceptions to the general rule. For example, health care services provided by the exempt list of professionals to corporations (not rendered to individuals or patients) are taxable. Also, certain services (e.g., cosmetic procedures, teeth whitening, etc.) are taxable even when provided by a licensed professional.
GST/HST News 80 has been provided because the CRA auditors need tools when going to audit health care professionals. There is an increased likelihood that health care professionals will be in the CRA national priority list for audits this year and in the coming years.
If you are not sure whether you are required to charge GST/HST or not, you should contact a GST/HST lawyer or professional. You may also write the CRA for a GST/HST ruling.
Cyndee Todgham Cherniak is the founding lawyer of LexSage, a boutique international trade law and sales tax firm in Toronto,
