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
[Addressee]
Case Number: 248333
Business Number: […]
Dear [Client]:
Subject: GST/HST ruling - Tax status of your counselling services
Thank you for your correspondence of September 20, 2024, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the supply of your counselling services. 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 (effective April 1, 2025); 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
We understand the following:
1. You are a certified member of […][a health professional association] ([…][the Association]).
2. You have a […][Counsellor] designation from [the Association] and are in good standing with the association.
3. You work as a counsellor in […][Province A].
4. The professions of psychotherapy and counselling therapy are not regulated in [Province A].
5. [The Association] has confirmed with a regulatory college in a regulated province that the requirements for becoming an [Counsellor] are substantially equivalent to the requirements to be licensed to practise the profession of psychotherapy in that province.
Additionally, [the Association] has confirmed with a regulatory college in a regulated province that the requirements for becoming an [Counsellor] are substantially equivalent to the requirements to be licensed to practise the profession of counselling therapy in that province.(footnote 1)
6. You provide counselling services within various organisations across several unregulated provinces […].
7. You also provide counselling services in […][Province B], where counselling therapy services are regulated by the […][applicable regulatory body].
8. The organizations to whom you provide your counselling services are:
[…]
9. You are incorporated under the following Corporation: […].
10. Your Corporation is registered for the GST/HST under registration number […].
RULING REQUESTED
You would like to know if the supply of your counselling services is exempt from GST/HST.
RULING GIVEN
Based on the facts set out above, we rule that:
For services you provide in unregulated provinces:
1. Supplies of services that are psychotherapy services rendered on or after June 20, 2024, are exempt pursuant to section 7(j.1) of Part II of Schedule V;
2. Supplies of services that are counselling therapy services rendered on or after June 20, 2024, are exempt pursuant to section 7(j.2) of Part II of Schedule V.
As you are not licensed to practise counselling therapy in […][Province B], which regulates the profession of counselling therapy, your supplies of counselling therapy services and/or psychotherapy services in that province would not fall under the exempting provisions and would be subject to the GST/HST.
EXPLANATION
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. Zero-rated supplies are included in Schedule VI. Exempt supplies are not subject to the GST/HST and are listed in Schedule V.
Part II of Schedule V lists supplies of health care services that are specifically identified as exempt supplies. If a supply of a particular health care service is not included in Part II of Schedule V, then the supply of the service would be subject to the GST/HST at the applicable rate, depending on the province in which the supply is made, unless another relieving provision in the ETA applies to the supply.
Paragraph 7(j.1) of Part II of Schedule V exempts a supply of a psychotherapy service when the service is rendered to an individual by a practitioner of the service. Paragraph 7(j.2) of Part II of Schedule V exempts a supply of a counselling therapy service when the service is rendered to an individual by a practitioner of the service.
Practitioner
Section 1 of Part II of Schedule V defines a “practitioner” in respect of a supply of psychotherapy services or counselling therapy services, to mean a person who
(a) practises the profession of psychotherapy or counselling therapy,
(b) where the person is required to be licensed or otherwise certified to practise the respective 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 respective profession in that province, has the qualifications equivalent to those necessary to be so licensed or otherwise certified in another province.
A person is not required to be licensed or otherwise certified to practise the profession of psychotherapy or counselling therapy in [Province A]. Therefore, in order to be a practitioner in respect of psychotherapy services or counselling therapy services, a person is required to have qualifications equivalent to what is required to be licensed or otherwise certified to practise the respective profession in a province that licenses the profession. Where a person providing psychotherapy services or counselling therapy services does not have equivalent qualifications, the person will not be a practitioner in respect of psychotherapy services or counselling therapy services for GST/HST purposes.
The Canada Revenue Agency (CRA) does not provide rulings on whether a person has qualifications equivalent to those required to be licensed or otherwise certified to practise the profession in a regulated province.
Services Rendered by a Person with the [Counsellor] Designation in an unregulated province
[The Association] has confirmed with a regulatory college that, for GST/HST purposes, [Counsellor]s have qualifications equivalent to those required to practice the profession of psychotherapy in that province. Similarly, [the Association] has also confirmed with a regulatory college that, for GST/HST purposes, [Counsellor]s also have the qualifications equivalent to those required to practice the profession of counselling therapy in that province. Therefore, a person member of [the Association] with a [Counsellor] designation, meets the definition of “practitioner” in respect of psychotherapy and counselling therapy services that are supplied in provinces that do not regulate the professions.
As you are a member of [the Association] with the [Counsellor] designation, you are, for GST/HST purposes, a practitioner in respect of psychotherapy services and counselling therapy services. Therefore, the supplies of psychotherapy or counselling therapy services, that you render to individuals in unregulated provinces, are exempt pursuant to paragraph 7(j.1) or paragraph 7(j.2) of Part II of Schedule V.
Psychotherapy and Counselling Therapy Services
For purposes of the exemption in paragraph 7(j.1), psychotherapy services are services included in the scope of practice of the profession in the province of the regulatory body to which the person has equivalent qualifications. For example, if the determination is made that a person has the equivalent qualifications to what is required to be a Registered Psychotherapist in Ontario, psychotherapy services would be services within the scope of practice of a Registered Psychotherapist in Ontario.
Similarly, for purposes of the exemption in paragraph 7(j.2), counselling therapy services are services included in the scope of practice of the profession in the province of the regulatory body to which the person has equivalent qualifications. For example, if the determination is made that a person has the equivalent qualifications to what is required to be a Licensed Counselling Therapist in New Brunswick, counselling therapy services would be services within the scope of practice of a Licensed Counselling Therapist in New Brunswick.
The exemptions in paragraphs 7(j.1) and 7(j.2) only apply to supplies that are psychotherapy services or counselling therapy services and meet the conditions of the exemptions. If you make other supplies, the tax status (taxable or exempt) of the other supplies are determined independently from your supplies of exempt psychotherapy or counselling therapy services. It must be determined if another exempting provision may apply to the other supplies.
Limitations to the Exemption
It is important to note that the application of paragraphs 7(j.1) and 7(j.2) of Part II of Schedule V is limited by sections 1.1 and 1.2 of that Part.
Section 1.1 deems supplies that are made for cosmetic purposes to be excluded from Part II of Schedule V. In addition, section 1.2 provides that for the 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 Part II of that Schedule. Generally, supplies deemed not to be included in Part II of Schedule V would be taxable at the applicable rate of GST/HST, unless they are exempt pursuant to another provision.
A qualifying health care supply is defined in section 1 of that Part 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.
Read together, sections 1.1 and 1.2 provide that the exemptions for supplies of psychotherapy services or counselling therapy services under paragraph 7(j.1) or 7(j.2) are dependent upon the purpose for which the supply is made. For an exemption to apply, the supply has to be made for at least one of the enumerated qualifying health care supply purposes listed above and not be a cosmetic service supply.
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.
Services Rendered by a Person with the [Counsellor] Designation in a regulated province
It is the CRA’s understanding that the [applicable regulatory body] ([…][College]) regulates the practice of the profession of counselling therapy in […][Province B].
Where a person is required to be licensed or otherwise certified to practise the profession of counselling therapy in the province in which the service is supplied, the person must be so licensed or certified.
Since, the [College] is the regulatory body that determines who practices the profession of counselling therapy in [Province B], it is the regulatory body’s responsibility to determine if a person with a [Counsellor] designation, such as yourself, practices the profession of counselling therapy in that province.
At the moment, you are not a registered member of the [College]. Therefore, the counselling therapy services you render in that province do not fall under the exemptions previously mentioned.
ADDITIONAL INFORMATION
Determining if you still need to be registered to the GST/HST
You are currently registered to the GST/HST. Since the supplies of your psychotherapy and counselling therapy services in unregulated provinces are exempt from the GST/HST, you should determine if only certain or all the supplies you 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 Canada in the course of a commercial activity engaged in by the person in Canada is required to register for GST/HST purposes 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” if the total amount of revenues from their worldwide taxable supplies and any associates is $30,000 or less in any single calendar quarter and in the last four consecutive calendar quarters. In determining the total amount of revenues from taxable supplies (including zero-rated supplies) of property and services made inside and outside Canada, revenues from supplies of financial services, sales of capital property, and goodwill from the sale of a business are not included.
A small supplier may elect to be registered if they make certain taxable supplies. However, a person who is only engaged in exempt activities is not permitted to be registered to the GST/HST. This would be the case if you only make exempt supplies of psychotherapy and counselling therapy 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 cancelled by completing and filing Form RC145, Request to Close Business Number (BN) Accounts, or by contacting Business Enquiries at 1-800-959-5525.(footnote 2)
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 its 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 its registration. For more information on cancelling a GST/HST registration and its impact, please refer to GST/HST 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 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.
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
Senior Rulings Officer
Health Care Sectors Unit
Public Service Bodies and Governments Division
GST/HST Rulings Directorate
FOOTNOTES
1. […]
2. https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/account-close.html
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