GST/HST Changes Affect Home and Palliative Care, Pensions

While there were few personal tax changes in last month’s Federal Budget, many seniors and their families may be affected to some degree by the adjustments made to GST/HST Canada. The paper burden has also been reduced for businesses who offer Pension Plans, including Pooled Retirement Pension Plans, or deal with the Governor General. 

Home Health Care Services. The Canadian Health Care System (publicly funded) receives an exemption from the GST/HST on Medical Services which reduces the cost of health care for the taxpayer. One of the areas that have fallen outside of this exemption is Home Care Services, and this is being corrected effective March 21, 2013.

Specifically, publicly subsidized or publically funded personal care services such as bathing, feeding, and assistance with dressing and taking medication provided to an individual who, due to age, infirmity, or disability requires assistance in their home will be exempt from GST/HST. This measure brings the Federal GST system in line with Provincial systems. Note that private home care services will still need to collect the GST/HST.

Taxable Non-Health Care Services. Effective March 21, 2013, medical practitioners will be required to collect and remit GST/HST of supplies and services that are not performed for the purpose of the protection, maintenance, or restoration of the health of a person or for palliative care. Taxable supplies would include such items as reports, examinations, and other services performed solely for the purpose of determining liability in a court proceeding or under an insurance policy. 

The requirement to collect and remit GST/HST will also apply to reports, forms, or tests that are not required for use in the protection, maintenance, or restoration of the health of a person. Specifically that means items like back-to-work notes, Driver’s License Reports, Disability Tax Credit form completions will now be subject to the GST/HST. 

Pension Plan Rules. Under current GST/HST legislation, an employer that participates in a Registered Pension Plan is deemed to have made a taxable supply and to have collected GST/HST in respect of that supply. The employer is then required to add the deemed GST/HST to its net tax. This is required even where the employer is also required to account for GST/HST on an actual taxable supply to the pension entity. The result is the employer remits GST/HST twice on the same taxable supply. 

Two measures will address this:

1. The employer, in conjunction with the pension entity, will now be able to “jointly elect” an actual taxable supply by the employer to be treated for no consideration. This simplifies the process by eliminating net tax adjustments.
2. In many cases, an employer's participation in a registered pension plan is minimal and consists of collecting and remitting pension contributions. The budget proposes to eliminate the need for the employer to account for the deemed taxable supply if the amount deemed is less than
   1. $5,000; and
   2. 10% of the total GST paid by all pension entities to the pension plan in that preceding fiscal year.

Business Information Requirements. Businesses who are GST/HST registrants are required to provide information to Canada Revenue Agency identifying the business’s operating name, legal name, ownership details, business activity and current contact information. Currently there is a penalty of $100 applied for failure to supply this information or updating information with CRA as it changes. Effective on Royal Asset, the CRA will have new powers to withhold GST/HST refunds claimed by a business until the required information is provided to CRA. 

Paid Parking. In general, Federal, Provincial and Municipal governments are subject to a special provision which exempts them from collecting and remitting GST/HST. Budget 2013 clarifies that parking is not covered under this blanket exemption for Public Sector Bodies (PSBs) in cases where parking is provided on a regular basis in the course of a business, carried on by PSBs, such as parking at a municipality or hospital. Occasional supplies, such as those for a special fund-raising event, will continue to apply for the exemption. 

Similar rules will apply to paid parking supplied by a charity which supplies parking by way of lease, license, or similar arrangement in the course of a business carried on by a charity set up or used by a municipality, university, public college, school, or hospital to operate a parking facility.

This clarification is intended to ensure that the legislation provides for the application of GST/HST to paid parking provided in the course of a business as originally intended.

Governor General. The Excise Tax Act provides for a special exemption on purchases for the use of the Governor General. In the past, businesses making taxable supplies for use of the Governor General were required to maintain special records to justify the non-collection of GST/HST. Effective June 30, 2013, taxable supplies for the use of the Governor General will have GST/HST applied and collected and the Governor General, if they so choose, will apply for a rebate of GST/HST paid directly from the Federal Government.