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
5th floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Client Address]
Case Number: 248736
Business Number: […]
Dear [Client]:
Subject: GST/HST ruling - Clinical Supervision Services
Thank you for your correspondence of November 1, 2024, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to clinical supervision services.
The HST applies in the participating provinces at the following rates: 13% in Ontario; 14% in Nova Scotia; and 15% in New Brunswick, Newfoundland and Labrador, 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 information in your inquiry, our telephone conversation […], and other sources, we understand the following:
1. You are a registered psychotherapist with the […][applicable regulatory body] ([…][College]).
2. The [College] is the provincial regulatory body that oversees the practice of the profession of psychotherapy in […][Province X].
3. The [College] was established under the […][applicable provincial legislation]. The profession of psychotherapy is governed under the […][provincial act governing health professions].
4. You are registered for the GST/HST, […].
5. You offer psychotherapy services in [Province X].
6. You meet the [College] requirements to provide clinical supervision for registered psychotherapists.
7. You are the clinical supervisor at […][a counselling clinic], where you provide clinical supervision to registered psychotherapists […].
8. You explained, during our telephone conversation […], that you also provide letters and reports related to your psychotherapy services, upon the request from clients. The letters and reports are in regards to the treatment performed. You currently do not charge a fee for this service.
9. The [applicable provincial legislation], define clinical supervision as […]:
a professional relationship where the individual who is receiving supervision is engaged in a collaborative learning process with a clinical supervisor, […] designed to, […] foster discussion of the direction of the therapy and the therapeutic relationship and safeguard the well being of patients […]
10. According to the [College], […][registered psychotherapists] are required to practise with clinical supervision for the following reasons:
* because of their registration category,
* when encountering a challenging client situation,
* when expanding their area of practice, or
* by order of a [College] committee.
Additionally, applicants (non-registrants) who are in the process of fulfilling the requirements to become a [registered psychotherapist] with the [College] are also required to fulfill a number of clinical supervision hours.
11. Clinical supervision is outlined in the [College]’s […][standards of practice] which includes the following guidelines:
[Registered psychotherapist]s provide clinical supervision only if they are qualified to do so.
[Registered psychotherapist]s appropriately supervise persons whom they are professionally obligated to supervise.
12. According to the [College], [Registered psychotherapist]s are required to maintain a clinical record for each client […]. Registered psychotherapists may charge a reasonable cost-recovery fee when providing a report of a client’s clinical record, as requested by that client.
13. Providing reports is outlined in the [College]’s [standards of practice] […].
RULING REQUESTED
You would like to know whether the supply of clinical supervision services rendered by a registered psychotherapist is subject to the GST/HST.
RULING GIVEN
Based on the facts set out above, we rule that the supply of clinical supervision services rendered by a registered psychotherapist is exempt pursuant to paragraph 7(j.1) of Part II of Schedule V as of June 20, 2024.
EXPLANATION
Generally, all supplies of goods and services made in Canada are taxable unless an exemption from the GST/HST applies. Taxable supplies are supplies made in the course of a commercial activity and may be taxable at the rate of 0% (zero-rated supplies), 5%, 13%, or 15% on the value of the consideration for the supply depending on the province in which the supply is made. Zero-rated supplies are included in Schedule VI. Exempt supplies are not subject to the GST/HST and are included in Schedule V.
Part II of Schedule V sets out the health care services that are exempt from GST/HST. A supply of a health care service rendered by a health care professional that is not included in Part II is generally subject to GST/HST.
Section 7 of Part II of Schedule V exempts a supply of a psychotherapy service if the service is rendered to an individual by a practitioner of the service.
Section 1 of Part II of Schedule V defines “practitioner” in respect of supplies of psychotherapy services, to mean a person who
(a) practises the profession of psychotherapy,
(b) where the person is required to be licensed or otherwise certified to practise the profession in the province in which the service is supplied, is so licensed or certified, and
(c) where the person is not required to be licensed or otherwise certified to practise the profession in that province, has the qualifications equivalent to those necessary to be so licensed or otherwise certified in another province.
Therefore, the definition of practitioner depends on the province in which the person who practises the profession of psychotherapy provides their services.
Based on the facts, you are a registered psychotherapist with the [College] and render your psychotherapy services in [Province X]. The [College] is the regulatory body in that province that regulates the profession of psychotherapy. Therefore, pursuant to the definition in section 1 of Part II of Schedule V, you are considered a practitioner of the profession of psychotherapy in [Province X].
Scope of practice
The CRA does not define the term “psychotherapy service” as the scope of practice of the profession of psychotherapy may vary from province to province. Hence, a service provider must refer to the governing body, professional association, or provincial health care legislation of the province in which the health care professional practises to determine whether the service rendered is within the scope of practice of the particular profession.
As stated in the facts, the [College] incorporates clinical supervision as part of the standards of practice of a registered psychotherapist. Therefore, clinical supervision services are within the scope of practice of the profession of psychotherapy in [Province X] and are considered to be psychotherapy services.
Psychotherapy services are exempt under paragraph 7(j.1) of Part II of Schedule V if the service is rendered to an individual by a practitioner of the service. As a clinical supervisor, part of your supervision includes the review of your supervisees’ patient’s medical records and commenting on their treatment. Hence, you are considered to be rendering your services to an individual patient.
Cosmetic service supply and qualifying health care supply
As a practitioner whose clinical supervision services are psychotherapy services rendered to an individual, your supply of clinical supervision services may be exempt under paragraph 7(j.1) of Part II of Schedule V subject to the requirements of sections 1.1 and 1.2 explained below.
The application of the exemption under section 7 of Part II of Schedule V is limited by sections 1.1 and 1.2 of that Part. Sections 1.1 and 1.2 deem supplies that are made for cosmetic purposes and supplies that are not qualifying health care supplies not to be included in 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.” Accordingly, the supply of clinical supervision services is not a cosmetic service supply, nor is it made for cosmetic purposes, and section 1.1 of Part II of Schedule V is satisfied.
A “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.”
Hence, supplies of property or services are not qualifying health care supplies if they are not made for one of the purposes listed in (a) to (e).
Based on the facts, the [College] distinguishes clinical supervision from other types of supervision or consultation and defines it as a special kind of supervision outlined by specific characteristics. The [College] also considers the purpose of clinical supervision to be […] that of discussing the direction of therapy a patient is receiving and that of safe-guarding the well-being of a patient.
Consequently, clinical supervision is not solely for the purposes of shaping a competent psychotherapist and fulfilling provincial registration requirements. Clinical supervision is additionally undertaken for the purposes of providing effective patient treatment and ensuring patient protection from adverse effects in the course of a psychotherapeutic treatment.
Therefore, the supply of a clinical supervision service is considered a qualifying health care supply for GST/HST purposes as it is made for the purpose of assisting (other than financially) an individual coping with a mental disorder and for the purpose of treating, relieving or remediating a mental disorder. Hence, section 1.2 of Part II of Schedule V does not apply to the supply.
As such, the supply of clinical supervision services rendered to an individual by a registered psychotherapist is an exempt psychotherapy service pursuant to paragraph 7(j.1) of Part II of Schedule V.
ADDITIONAL INFORMATION
Supply of letters and reports upon the request of clients
As stated in the facts, the [College] incorporates the provision of letters and reports related to psychotherapy services, upon the request from a client, as part of the standards of practice of a registered psychotherapist. As a registered psychotherapist, part of your responsibilities include providing a report or certificate relating to the treatment performed, when requested by a client. Therefore, the supply of letters and reports related to your psychotherapy services, upon the request from a client, is within the scope of practice of the profession of psychotherapy in [Province X] and is considered to be psychotherapy services.
As explained above, paragraph 7(j.1) of Part II of Schedule V exempts the supply of psychotherapy services. Where a supply meets the exemption criteria of section 7, it also has to satisfy the criteria of sections 1.1 and 1.2 of Part II of Schedule V (i.e., the supply must be a qualifying health care supply and not be a cosmetic service supply).
As such, where an administrative fee is charged for the supply of a letter or report related to your psychotherapy services, upon the request from a client, your letter or report would have to be made for at least one of the enumerated qualifying health care supply purposes for their supply to be exempt pursuant to paragraph 7(j.1) of Part II of Schedule V.
The supply of a letter or report that is not a qualifying health care supply would not be exempt of the GST/HST under paragraph 7(j.1) of Part II of Schedule V.
For more information on qualifying health care supplies, please refer to GST/HST Policy Statement P-256, Qualifying Health Care Supplies and the Application of the GST/HST to Supplies of Medical Examinations, Assessments, Reports and Certificates.
Tax paid in error
Your supply of clinical supervision services is exempt, effective June 20, 2024. Therefore, if you charged or collected an amount as GST/HST in error or on an exempt supply made after that date, you may, pursuant to section 232:
* adjust the amount charged if the amount has not been collected; or
* refund or credit the amount to the patient if the amount has been collected.
A professional who adjusts, refunds or credits the amount must do so within two years after the day the amount was charged or collected and must provide the patient with a credit note containing specific information.
A professional who adjusts, refunds or credits the amount charged or collected as GST/HST in error to patients, may deduct the amount when determining their net tax for the reporting period in which the credit note is issued. The amount may only be deducted to the extent it has been included in determining the net tax for the reporting period in which the credit note is issued or a preceding reporting period of the professional. This amount should be reported as an adjustment on line 107 (or line 108 if the return is filed electronically) of the practitioner’s GST/HST return for the appropriate reporting period.
Alternatively, a practitioner can choose not to adjust the amount charged or issue a refund or credit. In these cases, patients who have paid an amount as GST/HST on exempt supplies in error may claim a rebate of the amount paid using Form GST189, General Application for GST/HST Rebates. The time limit to apply for this rebate is two years after the day the purchaser paid the amount.
For more information, including the specific information that must be contained on a credit note or debit note, refer to GST/HST Memorandum 12.2, Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act and Guide RC4033, General Application for GST/HST Rebates.
Determining if you still need to be registered for the GST/HST
We understand that you are currently registered for the GST/HST. Since the supply of your psychotherapy services and clinical supervision services are exempt from the GST/HST, you should determine if some or all of the supplies your are making are exempt from the GST/HST and if you are still required to be registered.
Every person who makes a taxable supply in the course of a commercial activity engaged in by the person in Canada is required to be registered for the GST/HST, except where the person is a small supplier or the person's only commercial activity is the making of supplies of real property by way of sale otherwise than in the course of a business. Examples of taxable supplies include those from the sale of health care products, books and other educational materials and the supply of teaching services. Taxable supplies also include the leasing of commercial real property.
In general, a person is a small supplier when the total revenues of the person from worldwide taxable supplies (other than supplies of financial services, sales of capital property and goodwill attributable to the sale of a business) in any single calendar quarter and in the last four consecutive calendar quarters, and those of associated persons, do not exceed $30,000.
A small supplier may choose to be registered if they make some taxable supplies. However, a person only engaged in exempt activities is not permitted to be registered for the GST/HST. This would be the case if you only make supplies of exempt psychotherapy services and clinical supervision services, and you or any of your associates do not make taxable supplies. If this is the case, you should close your GST/HST account. A GST/HST account can be closed by filing Form RC145, Request to Close Business Number (BN) Accounts, or by contacting Business Enquiries at 1-800-959-5525.
A person who cancels their GST/HST registration and ceases to be a registrant may be required to account for the GST/HST on capital property previously used in their taxable activities and on non-capital property on hand at that time. In addition, the person may be required to repay input tax credits previously claimed on services, rent, royalties and similar payments that relate to a period after cancellation of their registration. For more information on cancelling a GST/HST registration, please refer to GST/HST Guide RC4022, General Information for GST/HST Registrants, under the heading “Cancelling your registration”.
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 interpretations 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 interpretations 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 873-455-1361.
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,
Kassandra Leonard
Rulings Officer
Health Care Sectors Unit
Public Service Bodies and Governments Division
GST/HST Rulings Directorate
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