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Do I Have to Register for GST / HST?

01/02/2017


Paying taxes is a duty physicians must comply with but many doctors aren’t aware they may have to register for indirect federal and provincial taxes such as the GST / HST as well. As a service provider, once you, as an individual or as a corporation exceed $30,000 in GST / HST taxable supplies in the previous 12 consecutive months, you are deemed to be a registrant and must register and obtain your GST / HST number.

To help determine whether or not you need to be registered for GST / HST, here is a list of key issues to consider when evaluating a source of income or revenue for tax purposes.

Exemptions to GST / HST

You need to remember the supply of goods and services made in Canada are subject to the GST / HST unless there is a specific exemption or zero rating provision found in the Excise Tax Act (ETA). Medical practitioners generally rely on exemptions found in Schedule V of the Act to make a majority of their revenues exempt from the GST / HST.

Section 5 in the Schedule includes a provision that exempts the supply of a consultative, diagnostic, treatment or other health care service rendered by a medical practitioner to an individual.

In Section 9 is the provision that exempts the supply of a property or service when it is covered under a provincial healthcare plan (insurance).

Taxable Activities Rising in Number

However, changes to how medical practitioners are being remunerated have resulted in increasing the number of sources of earnings that are going to be subject to the GST / HST.

Examples of taxable activities can include, but are not limited to, the following:

  • Preparation of reports and examinations when performed solely for the purpose of determining liability in a court proceeding or under an insurance claim
  • Back-to-work notes
  • Driver’s license reports
  • Disability tax credit form completions
  • Expert opinion reports
  • Medical / legal reports
  • CPP disability reports
  • Management fees paid
  • Administrative work such as being the head of a department, scheduling physicians to work in the emergency room
  • Fees received for research projects
  • Project consultation or facilitation
  • Cosmetic surgical procedures for non-medically required purposes
  • Expert witness fees
  • Consulting services including medical research
  • Fees received for performing administrative duties
  • On-call payments
  • Fees for research, teaching or any other services that are not consultative, diagnostic or treatment in nature
  • Annual block fees because these fees do not relate directly to services actually rendered to an individual

When evaluating the nature of these transactions, you also need to assess whether or not taxable transactions are lumped together with exempt transactions. This can happen when there is one contract that covers a number of different services being provided by the medical practitioner. As the Canada Revenue Agency (CRA) has issued rulings around such instances, there is a very real possibility that when both taxable and exempt transactions are covered under one agreement, the entire agreement and payments could be treated as taxable.

Additionally, when a medical practitioner receives funding from a provincial authority, the nature of the payment needs to be reviewed to determine if the payment is for supplying a service by the medical practitioner to the grant provider or if the payment is in the form of grant funding. These determinations are not an easy process.

The landscape of earnings and revenues for medical practitioners is continually changing and you have to be diligent in knowing the basic rules on how the GST / HST can impact your business. MNP is here to help you sort out these matters and help reduce the impact taxes can have on your practice. For more information, contact Calvin Carpenter, Vice President, Professional Services, at 780.451.4406 or [email protected]