The Excise Tax Act treats most of the services of medical doctors as exempt. However, the concept of GST/HST registration, collection, and reporting requirements are important for physicians providing non-medical services. Physician services fall into two main categories: GST/HST exempt supplies (medical services) and GST/HST taxable supplies (non-medical services). Registration is required if a medical doctor’s GST/HST taxable supplies (non-medical services) exceed $30,000 for four consecutive calendar quarters.
Consistent with the tax policy of exempting basic health services from GST/HST, medical services are exempt where the services are consultative, diagnostic, treatment, or other health care services. The CRA has, in the past, considered the following services to be exempt: (1) Executive medical assessments carried out for the purpose of health care 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 (Form OCF-18).
If the primary purpose of a service is NOT to protect, maintain or restore health, they are considered a GST/HST taxable supply, and HST will be payable. Examples of services that are likely taxable for GST/HST (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 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.
The determination of GST/HST is often a factual determination, and complexities may arise in determining some supplies. For example, whether a supply is a “single or multiple supplies” in the case of HOCC fees. CRA in 2017 conducted a number of audits at Ontario hospitals whereby payments under the HOCC Program to physicians were reviewed. The OMA remains confident in the merits of the appeal and continues to recommend that members not charge HST on the continued receipt of HOCC payments. https://content.oma.org//wp-content/uploads/HOCCupdate2017_jun.pdf
MD Tax can assist with determining the applicability and compliance related to GST/HST on physician services. Please get in touch with us at [email protected] for discussion on this matter. Elliott Stone, CPA, CA, is the founder of MD Tax Physician Services in Toronto.