The specific announcement was “The Government is committed to ensuring that the tax system reflects the evolving nature of the health care system and health care needs of Canadians. Economic Action Plan 2013 proposes to expand the Goods and Services Tax/Harmonized Sales Tax (GST/HST) exemption for publicly funded homemaker services to include personal care services, such as bathing and feeding, provided to individuals who, due to age, infirmity or disability, require such assistance at home. This change will be effective after Budget Day. It is estimated that this measure will reduce federal revenues by $5 million in each of 2013-14 and 2014-15. [ http://www.budget.gc.ca/2013/doc/plan/chap3-5-eng.html#a0-Chapter-3.5:-Supporting-Families-and-Communities]
Information on the Expanded Tax Relief
While the Canadian Home Care Association (CHCA) was pleased the federal government acknowledged home care in their Economic Action Plan 2013, this announcement raised a number of questions from CHCA member organizations about how to implement this tax change. In order to provide our membership with direction, the CHCA contacted the Federal Finance Department and Canadian Revenue Agency to obtain clarity on the action. Below is a summary of the relevant information on the announcement:
Understanding the Tax Relief: GST/HST and Health Care Services
A key policy underlying the Goods and Services Tax/Harmonized Sales Tax (GST/HST) is that basic health care services and certain health-related assistive services, such as government-supported homemaker services, are exempt from GST/HST. Exempt treatment means that suppliers of exempt services do not charge GST/HST, but they cannot claim input tax credits to recover the GST/HST paid on inputs in relation to these supplies.
Budget 2013 proposes to improve the application of the GST/HST to health-related assistive home care services to reflect the evolving nature of the health care sector and to clarify the application of the GST/HST to reports, examinations and other services performed for non-health care purposes.
GST/HST on Home and Personal Care Services
Government-supported home care services form an important adjunct to publicly-provided health care services. In line with the GST/HST exemption for basic health care, an exemption from the GST/HST is provided for publicly subsidized or funded homemaker services, such as cleaning, laundering, meal preparation and child care, which are rendered to an individual who, due to age, infirmity or disability, requires assistance in his or her home.
In addition to homemaker services, provincial and territorial governments are also subsidizing or funding personal care services, such as bathing, feeding, and assistance with dressing and taking medication, forindividuals who require assistance with these activities in their home. Such services are currently not covered under the exemption for homemaker services.
Budget 2013 proposes to expand the GST/HST exemption for homemaker services to exempt publicly subsidized or funded personal care services, such as bathing, feeding, and assistance with dressing and taking medication, rendered to an individual who, due to age, infirmity or disability, requires assistance in his or her home. The proposal will result in an exemption for home and personal care services that is more in line with current provincial and territorial practices for health-related assistive services delivered to persons in their homes.
This measure will apply to supplies made after Budget Day.
To understand how the tax relief was expanded supplementary information is available online.
Canadian Revenue Agency Advice
- Tax exemptions should have started on March 25th 2013
- What should clients do: If the client claims tax paid in error GST/HST they should use : GST 189 – Part B – Code 1. The client can claim tax directly from CRA.
- What should Home Care Agencies do: If it is the agency who makes the adjustment for the client, the agency should do it through their GST claims.
** The Federal Budget has not turned into law yet. It is still a bill so those requesting a refund will not be receive it until July ( budget gets passed as a law). **
The CRA is currently working on creating a publication to provide more advice, direction for clients and home care agencies and the public. They encourage you to contact them as it is their duty to provide clarification and also it will help inform their publication. CRA staff will be providing this information to the CHCA once it is published. Additionally it will be available on their website: http://www.cra-arc.gc.ca/
If you have more specific questions or special cases please contact:
Chantal Desrosiers, Manager
Health Care Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
613-941-3268
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