- January 29, 2023
- Posted by: pts123
- Category: Finance & Accounting
Healthcare Professionals and GST/HST/PST Obligations Under the Excise Tax Act
A significant portion of healthcare professionals do not have to register for GST/HST/PST due to the fact that the services they provide fall under the category of exempt services under the Excise Tax Act. However, recent changes in the interpretation of what is considered exempt or non-exempt medical services mean that healthcare professionals now need to distinguish whether their activities are exempt or non-exempt and it is not uncommon for them to be both.
Healthcare professionals need to assess whether they are providing non-exempt services.
Healthcare professionals who are not registered for GST/HST/PST may be unknowingly subject to these taxes under the Excise Tax Act. This is a concern that should be brought to their attention by their accountant as it can be easily overlooked and can have negative repercussions. On the other hand, healthcare professionals who are already registered for sales taxes need to be aware of the various supplies and services that are subject to GST/HST/PST and work with their accountant to ensure compliance of the Excise Tax Act.
Non-Exempt Service exceeding $30,000 Per Year.
A healthcare professional is required to register for GST/HST/PST if they provide non-exempt services and exceed the annual threshold of $30,000 over the period of four consecutive quarters. Even after registration, healthcare professionals have a continued responsibility to file GST/HST/PST returns regardless of whether the amount of non-exempt services provided exceeds $30,000 per year or not.
Awareness of the Exempt and Non-exempt Specifics Is Important
When it comes to GST/HST/PST, healthcare professionals and their accountants must differentiate between services that promote, preserve, or restore a person’s health, which is exempt, and those that do not. For example, if a healthcare professional’s income from writing medical reports for insurance companies and block fees surpasses $30,000, they must register for GST/HST/PST. Therefore, registration is required if a medical doctor’s GST/HST/PST taxable supplies (non-medical services) exceed $30,000 for four consecutive calendar quarters.
It’s worth noting that certain services are always non-exempt, such as back-to-work notes, Driver’s License Reports, completion of Disability Tax Credit form, cosmetic surgery, and teeth whitening. On the other hand, any examinations and services covered by a provincial health insurance plan remain exempt.
Consistent with the tax policy of exempting basic health services from GST/HST/PST, medical services are exempt where the services are consultative, diagnostic, treatment, or other healthcare services. The CRA has, in the past, considered the following services to be exempt: (1) Executive medical assessments carried out for the purpose of healthcare for the patient (2) Prescription renewal without a visit (3) Preparation and transfer of medical records (4) Medical Reports upon patients or upon a person who the physician has examined including the following provided that the exam also has the purpose of promoting, protecting or maintaining health: (a) Employment and pre-employment examinations/reports (b) Immigration examination/reports (c) Employer Back to Work/Timely Return to Work/Modified Employment forms (d) Treatment Plan.
If the primary purpose of a service is NOT to protect, maintain or restore health, they are considered a GST/HST/PST taxable supply, and sales taxes will be charged. Examples of services that are likely taxable for GST/HST/PST are: (1) Cosmetic surgical procedures (2) Medical Reports based on chart review (3) Block & Annual Fees (4) Witness fees for court appearances (4) Expert opinion reports (5) Medical-legal reports (6) CPP/QPP disability reports (7) Preparing certificates or letters for employers, camps, or education institutions (7) Review of medical documentation for the third party (8) Teaching stipends (9) Consulting/research services (10) administrative role of department head at a hospital.
Be Proactive Knowing Your GST/HST/PST Responsibilities
As a healthcare professional offering a range of services, it’s crucial to assess your GST/HST/PST obligations annually with the help of a tax advisor. The nature of your professional activities can shift which may then require GST/HST/PST filing. It is possible to inadvertently surpass the $30,000 threshold for non-exempt services, resulting in unintended GST/HST/PST consequences.
It is advisable to ask your tax advisor whether GST/HST/PST applies to your situation specifically as it is something that can be overlooked. If you have concerns regarding this aspect of your GST/HST/PST filing requirements, it’s always a good idea to seek a second opinion.
To get assistance with your GST/HST/PST tax conditions or to seek a second opinion on your specific services, please contact DFD-CPA Chartered Professional Accountants.
This article only provides information in a general nature and is only as current as of the date on which it is posted. It is not updated and therefore may no longer be current. This document should not be relied upon as it does not claim to, nor provide advice on legal or tax matters. All tax situations are specific in nature and will likely differ from the situations that are presented in the article. It is advisable that you seek and consult a tax professional if you have any specific legal or tax questions. This document is intended to provide general information on a particular subject or subject (s) and this article is not an exhaustive treatment of such subject(s). In accordance, the information in this document is not intended to constitute or replace accounting, tax, legal, investment, consulting, or other professional advice or services. Before any decision is made, or any action taken which might affect your personal finances or business, you should consult a qualified, professional adviser.