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Tax Savings Opportunities for Long-Term Care Providers

15/02/2016


Seniors are one of the fastest-growing population groups in Canada and the demand for senior care services is rising, creating significant room for business growth within the arena of personal care facilities within Canada.

If you are the owner / operator of a long-term care facility, you may be eligible for tax rebates that you aren’t even aware of. For example, here is a brief summary of two recent court cases that may be of interest to your business.

The first is the Elim Housing Society case, where the Society was allowed to claim the 83% public service body rebate as a “facility operator”. The second is the Cartier House Care Centre case, where Cartier was granted a GST rebate of tax paid in error to third party contractors for homemaker services. Both of these cases are significant because they were under the general proceedings of the courts and a significant departure from how the Canada Revenue Agency (CRA) has treated these situations in the past through their reviews and rulings. Neither of these cases have been appealed by the CRA.

Please review the summaries below to see if they are similar to your situation as there may be an opportunity to review your treatment of these items.

Elim Housing Society case

In the Elim Housing Society (“Elim”) Tax Court of Canada case, the court ruled that this facility operator is entitled to claim the 83% public service body rebate. Here are the key facts which were presented in the case.

The facility, which qualified for the 83% rebate has the following characteristics:

  1. Elim is a registered charity. (Please note that not-for-profit organizations may qualify as well.)
  2. Elim provides long-term care facility and receives provincial government funding for a portion of the residents in care. Residents are elderly and a vast majority of them suffer from dementia.
  3. The care is considered “complex care” and the residents are dependent on the care either by reason of mental or physical impairments or both.
  4. A nurse is on duty at all times. Each resident is required to have a physician on call at all times.
  5. Four physicians have arrangements with the facility to care for the patients and most patients rely on one of the four physicians. The physicians make regular visits to the facility.
  6. Elim provided services that are medically necessary.
    1. ​​​​The residents must have health assessments and care plans must be developed to address health concerns.
    2. Detail records must be kept on each patient.
    3. Medical plans custom created for each patient to meet specific medical concerns.

If your facility provides similar level of care, you may be eligible for the 83% rebate as a “facility operator”.

Cartier House Care Centre Case

In the Cartier House Care Centre (“Cartier”) case, the court ruled that the entity is eligible for a refund of the GST paid to third party contractors that supplied “homemaker services”. Homemaker services are exempt of GST.

For the third party contractor services to qualify as GST-exempt homemaker services, the following factors were considered by the court in the particular case of Cartier:

  1. The entity provided residential care home and assisted living residence. It provided both “health service” and “hospitality service”.
  2. Fraser Health Authority (FHA) is responsible for managing the health care in the region, and funds the “health service” provided by the entity to the residents. “Health service” included bathing, dressing, grooming, transferring, feeding, washroom and medication assistance, laundry and personal clothing, etc. Some of these services qualify as homemaker services.
  3. GST paid to the third party contractor for other services such as security services, heating system repair, etc. do not qualify for a refund. Services attributed to homemaker services are eligible for a GST refund.

If you have paid GST to third party contractors for homemaker services, you may be eligible for a refund of the GST paid to the contractors.

If you have any questions in respect of the above summaries, please contact Heather Weber, CPA, CGA, MNP’s Indirect Tax Services Leader at 250.763.8919 or [email protected]​ or one of the Speciality Tax Business Advisors listed below.

B.C.: Angela Chang
T: 778.374.2121

AB: Mitch LaBuick
T: 780.969.1468

SK: Jeff Harrison
T: 306.751.7998

MB: Mark Brubacher
T: 204.924.7531

ON: John Frim
T: 519.772.1961