ON Chiropractic Spring 2015 | Page 26

Business HST I N THE CLINIC I n July 2010, Ontario implemented a major tax reform that harmonized the provincial sales tax (PST) with the federal GST under one single value added tax system called the harmonized sales tax (HST) at 13%. Most goods and services in or imported into Canada are subject to GST/HST. It is important for business operators to know which goods and services are taxable and which are exempt. Does the HST Apply to Health Care Services? Does the HST Apply to Health Care Supplies? Under the HST system, the services of some health care professionals are taxable and the services of others are exempt. The list of health care professionals whose services are exempt from GST/HST can be found in Part II of Schedule V to the Excise Tax Act (the ETA). If you provide only exempt goods and services, you cannot register for a GST/HST account. The following is a partial list of health care professionals whose services are listed as exempt: chiropractors, chiropodists, dieticians, podiatrists, physiotherapists, registered nurses, registered nursing assistants and licensed or registered practical nurses. If a health care professional is not listed in Part II of Schedule V to the ETA , the services that they provide are usually taxable. The following is a partial list of therapists or health care workers whose services are generally considered by the Canada Revenue Agency (CRA) to be taxable for GST/ HST purposes: acupuncturists, health care assistants (including physiotherapy and occupational therapy assistants), kinesiologists, massage therapists, naturopaths and sports therapists. Most supplies are taxable. Certain supplies are exempt from GST/HST while others are zero-rated . Zero-rated supplies are taxable at the rate of 0%. No GST/HST is charged on them, but GST/HST registrants can claim an input tax credit for the GST/HST they pay on purchases and expenses made to provide them. Zero-rated medical supplies count towards your total worldwide taxable supplies of goods and services. Custom-made orthotic and orthopaedic devices are one example of a zero-rated supply. If these devices are not entirely custom-made, they are zero-rated only when prescribed by a medical practitioner. See the CRA’s GST/ HST Memoranda Series Chapter 4-2, Medical and Assistive Devices for more 26 SPRING 2015 information. Do I Need to Apply for a GST/ HST Account? It is mandatory for businesses (except public service bodies) to register for a GST/HST account if your total worldwide taxable supplies of goods and services exceed $30,000 in a single calendar quarter or in four consecutive calendar quarters. This includes zero-rated supplies like custom-made orthotics and orthopaedic devices. The following are general examples of products and services commonly supplied in a chiropractic practice which count towards a clinic’s total worldwide taxable supplies of goods and services: ∞∞ massage therapy clinical service provided to patients by a chiropractor or any other non-medical practitioner, ∞∞ fees for non-clinical services (e.g., medical-legal reports, return to work/ school notes, copying of clinical records), ∞∞ fees paid by an associate for the use of the principal’s facilities or administrative services (we strongly urge you to consult with your legal or tax adviser regarding your specific situation), ∞∞ sale of most dietary supplements (except those which count as basic groceries and are therefore exempt), and, ∞∞ sale of most orthotics, cervical pillows, and other orthopaedic supports. Businesses which only provide exempt goods and services cannot: ∞∞ register for GST/HST, ∞∞ charge GST/HST, or, ∞∞ claim input tax credits (ITCs). In general, businesses with GST/HST taxable sales of $30,000 or less in the last year (“Small Suppliers”) are not required to register and collect the tax. If you are already registered but taxable sales are $30,000 or less, you still