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: 248010
Dear [Client]:
Subject: GST/HST interpretation
Supply of nurse staffing services to long-term care facilities
Thank you for your correspondence of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the supply of nurse staffing services to long-term care facilities. We apologize for the delay in this response.
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.
From your incoming request, your website, blank copies of a typical master services agreement (MSA) and statement of work (SOW) you provided, and our discussions we understand the following:
1. […] is the trade name used by […](the Corporation) for doing business.
2. The Corporation is registered for purposes of the GST/HST and its GST/HST registration number is […].
3. The Corporation is in the business of providing staffing services.
4. The object of your request relates to the supply by the Corporation of registered and licensed practical nurses to long-term care homes (the Facilities).
5. The Corporation also dispense, to the Facilities, services rendered by care aides that are not registered or licensed practical nurses. These other services include bathing, grooming, mobility support, meal preparation, housekeeping and other home care services. The supply of these services is not the subject of this letter.
6. The Corporation signs master service agreements (MSA) with the Facilities. The MSA outlines the scope of the relationship between the Corporation and the Facilities. It includes the terms and conditions for the services to be performed under a Statement of Work (SOW) including the hourly rates of the nurses, the allowances payable by the Facilities on top of the hourly rates and general contract provisions.
7. The MSA provides that the Corporation may be engaged as an independent contractor to provide services. Under the MSA the Corporation must maintain, at its expense, a comprehensive general liability insurance covering bodily injury and property of the Facilities.
8. When a Facility wishes to engage the Corporation for a specific assignment, the Facility prepares a SOW indicating the assignment, the location and duration of the assignment and the guaranteed hours of work per week.
9. The Corporation indicates on the SOW the personnel assigned to the engagement and the person’s certification. The SOW provides that the personnel is assigned to perform the tasks described in the SOW. The SOW is signed by the Corporation and the Facility. You mentioned that it is understood by the Corporation and the Facilities that the certification of the individuals identified to fulfill an assignment serves to describe the assignment and that the certification properly describes the scope of work within which the individual will perform under the assignment.
10. The personnel assigned to a Facility are employees of the Corporation.
11. When at a location, you mentioned that the nurses are responsible for their work. Depending on the Facility, the nurses may be fully responsible for their unit or floor or they may have to report to an employee of the Facility.
12. The nurses are responsible for their training as required by the […][applicable provincial regulatory body].
13. It is understood that none of the tasks performed by the nurses at the Facilities are done for cosmetic purposes.
RULING REQUESTED
You would like to know if the supply made by the Corporation of services rendered by registered and licensed practical nurses to the Facilities is exempt from the GST/HST further to the decision A-Supreme Nursing & Home Care Services Inc. v. His Majesty The King, 2023 TCC 39 (the A-Supreme decision).
A GST/HST ruling is a written statement which sets out the Canada Revenue Agency’s (CRA’s) position on how the relevant provisions of the legislation apply to a clearly defined fact situation, and where all the relevant facts and supporting documentation have been presented in writing. As we are not in possession of all of the pertinent facts, we are unable to provide a ruling. We are pleased, however, to provide you with an interpretation of the relevant provisions of the ETA as it relates to the nature of your request.
INTERPRETATION GIVEN
Generally, all supplies of property 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%, 14% or 15% on the value of the consideration for the supply depending on the province in which the supply is made. Exempt supplies are not subject to the GST/HST and are included in Schedule V. Part II of Schedule V provides that the supplies of certain health care services are exempt from the GST/HST.
It is our understanding that your question relates to the determination of whether section 6 of Part II of Schedule V applies to the supply of nursing personnel by the Corporation.
Section 6 reads as follows:
A supply of a nursing service rendered to an individual by a registered nurse, a registered nursing assistant, a licensed or registered practical nurse or a registered psychiatric nurse, if the service is rendered within a nurse-patient relationship.
Institutions such as hospitals, nursing homes, long-term care facilities and other health care facilities are often faced with staffing needs. To address the situation, health care facilities enter into agreements with agencies to provide personnel.
A supply made by an agency to a health care facility will be exempt under section 6 of Part II of Schedule V, only if it meets all the following conditions:
1. It is a supply of a nursing service rendered to an individual by a registered nurse, a registered nursing assistant, a licensed or registered practical nurse, or a registered psychiatric nurse and the service is rendered within a nurse-patient relationship.
2. The nursing service is not a cosmetic service supply or a supply, in respect of a cosmetic service supply.1 However, where the supply of nursing service is a cosmetic service supply or a supply, in respect of a cosmetic service supply, that is made for medical or reconstructive purposes, this condition is met. 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.
3. The nursing service is a qualifying health care supply as defined in section 1 of Part II of Schedule V2. Qualifying health care supply means a supply of property or 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.
The characterization of arrangements involving staffing agencies varies depending on the obligations and responsibilities agreed to by the parties. Depending on the agreement the supply made by the agency may be a supply of personnel or the supply may be characterized as a nursing service. As a result, the tax status of the supply made by the agency will vary depending on the particular circumstances of each situation.
This is demonstrated by the Federal Court of Appeal decision in Santa Cabrini Hospital v. Her Majesty The Queen 2016 FCA 207 and by the Tax Court of Canada A-Supreme decision. In the Santa Cabrini Hospital decision, the Federal Court of Appeal concluded that the object of the agreement between the parties is the supply of nurses and that the agency provided a taxable placement service. On the other hand, in the A-Supreme case, the Tax Court of Canada determined that the supply provided by the agency was the exempt supply of nursing services.
In determining whether an agency is making a supply of a nursing service or a supply of a placement service, the following criteria must be considered:
1. The object and nature of the agreement between the agency and the health care facility.
* Is the objective of the agreement the supply of nursing staff or is the objective the supply of nursing services?
2. The responsibilities and obligations of the parties under the agreement.
* Is the mission and functions of the agency the supply of nursing staff or is it to provide health care services?
* Is the agency responsible for maintaining general liability insurance for the nurses?
* Is the agency responsible for orienting the nurses on its own code of conduct and on the health care facility policies?
* Is the agency responsible for the training of the nurses?
3. The legal settings regulating the delivery of health care services by the health care facility.
* Is the health care facility required, by law, to provide health care services to its patients or residents?
* Can the facility delegate this responsibility to a subcontractor?
4. The degree to which the parties maintain management, direction and control over the nurses.
* Does the agency have control over the work of the nurses placed at the facility or is their management, direction and control entirely under the facility responsibility?
* Do the nurses affected to a facility require supervision in conducting their work? If yes, who assumes the responsibility – the agency or the health care facility?
* Are the nurses completely responsible over their work at the facility or are they integrated in teams where their work is subject to direction and control by the health care facility?
* If issues arise at the facility does the nurse report to the agency or to the facility?
5. The mission of the agency.
* Is the agency organized in such a way that it provides exempt nursing services in circumstances other than by lending personnel to health care facilities?
6. Assuming that the supply made by the agency has characteristics of both a supply of a nursing service and a supply of personnel, what is the predominant element of the supply?
No factor in and on itself is determinative of the nature of the supply being made, however, in a situation where:
* there is no indication in the agreement between the parties that the agency is providing nursing services,
* the nurses are under the exclusive control, management and direction of the health care facility,
* no agency personnel is on site or available to provide direction to the nurses,
* the agency has no access to patient files,
* the statutes regulating the health care services being rendered to patients of the facility provides that the health care must be under the control of the health care facility,
these factors would strongly indicate that the agency is not supplying nursing services but is
supplying a taxable service of placement of personnel.
On the other hand, in cases where:
* the agreement between the parties clearly indicates that the supply is a supply of nursing services,
* the supply of the services is under the control and direction of the agency and/or the nurse is fully in charge while at the facility,
* the legislative context allows the facility to hire agencies to provide health care services to its patients or residents,
* the agency is responsible for contracting a liability insurance in relation to the nursing personnel and for the training and orientation of the nurses,
these factors would indicate that the agency is supplying an exempt nursing service under section 6 of Part II of Schedule V (provided that the supply is not excluded by sections 1.1 or 1.2 of Part II of Schedule V).
In the present situation, we are unable to issue a ruling on whether the supplies made by the Corporation qualify as exempt nursing services under section 6 of Part II of Schedule V as the agreements do not provide sufficient information to establish the nature of the supplies. Specifically, the agreements do not expressly state the nature of the supplies made by the Corporation and if the nurses, while performing their duties at the Facilities, are fully in charge or if they are under the Corporation’s control and direction.
ADDITIONAL INFORMATION
Tax paid in error
You have indicated that the Corporation is collecting the GST from the Facilities for the supply of services made by registered and licensed practical nurses. We are providing the following, for your information, in regard to the notion of recovery of tax paid in error where the supply of services by the Corporation is exempt.
Where a supplier has charged or collected an excess amount as or on account of tax on supplies that are exempt supplies, the supplier may refund or credit the excess amount to the recipient in accordance with section 232. If the supplier refunds or credits the amounts collected as GST/HST, it must do so within two years after the day the amount was charged or collected and it must provide the recipient with a credit note containing prescribed information.
The supplier is not obligated to refund or credit the tax. Alternatively, persons who have paid an amount as GST/HST on supplies that qualify for exemption may make an application to the Canada Revenue Agency (CRA) for a rebate of the amount paid in error pursuant to section 261 using Form GST189, General Application for Rebate of GST/HST. The time limit to apply for this rebate is within two years after the day the amount was paid or remitted by the person.
For more information, 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.
Input Tax Credits
Generally, a GST/HST registrant is eligible to claim input tax credits (ITCs) to recover the GST/HST it pays to the extent that its expenses are inputs into making taxable supplies for consideration. No ITC is available where an expense was incurred for the purpose of making exempt supplies. Since you have been collecting GST on supplies that may be exempt, you may want to review the ITCs you are claiming to ensure you are only claiming the ITCs on inputs related to the making of taxable supplies.
For more information, refer to Guide RC4022, General Information for GST/HST Registrants.
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 interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (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 438-304-4971.
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,
Robert Demers
Industry Sector Specialist
Health Care Sectors Unit
Public Service Bodies and Governments Division
GST/HST Rulings Directorate
1 Section 1.1 of Part II of Schedule V provides that for purposes of Part II, other than paragraph 9, a cosmetic service supply or 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.
2 Section 1.2 of Part II of Schedule V provides that for purposes of Part II of Schedule V, 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.
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