GST/HST News: Focus on Health Care and Registration Compliance

GST and HST changes were announced related to exemption of certain health care services, nil consideration elections for closely related persons, and registration compliance.

Health Care Sector

The health care sector currently has two classifications for GST/HST. 

• Exempt.  Basic health care services are exempt from GST/HST and do not charge GST/HST to their patients.  In addition, they are also not eligible to claim ITC’s on their expenditures.
• Zero-rated. Prescription drugs and medical and assistive devices designed to assist an individual in coping with a chronic disease, illness or disability are zero-rated supplies meaning that GST/HST are charges at 0%.  This allows the supplier to claim ITC’s on their expenditures.

Effective February 11, 2014, three changes to certain health-related services and medical and assistive devices are implemented.

• Training Exemption. Training services that is designed to assist individuals with a disorder or disability or to alleviate or eliminate the effects are currently exempt from GST/HST.  The budget expands the exemption to include the designing and development of training programs subject to certain qualifications.
• Acupuncturist and Naturopathic Doctors’ Services. Services covered under a provincial health care plan are exempt from GST/HST in that province.  Exemptions are also provided for services by certain health care practitioners.  Effective February 11, 2014, Acupuncturists and Naturopathic Doctors are added to the list of health care practitioners exempt from GST/HST.
• Electronically Enhanced Eyewear. Eyewear specifically designed to electronically enhance the vision of individuals with vision impairment has been added to the list of medical and assistive devices that qualify as a zero-rated supply effective February 11, 2014.

Closely Related Persons – Nil Consideration Election

Some changes have been made to provide a nil consideration election in certain circumstances for members of a closely related group, effective January 1, 2015, in cases where new members have not yet acquired any property and continue as going concerns engaged exclusively in commercial activities. A new election form will be introduced.  Simplification procedures around joint venture elections have also been introduced.

GST/HST Registration Compliance

In general, a business with gross revenues in excess of $30,000 annually must register to collect and remit GST/HST on the total taxable supplies provided.  After Royal Assent, the Minister of National Revenue will be given the discretionary authority to register and assign an GST/HST registration number where an individual or business has failed to comply with the requirement to register.