Enhanced hospital GST / HST rebates for long-term care facilities

If you operate a long-term care facility and are currently only claiming the goods and services (GST) or harmonized sales tax (HST) rebate for charities or qualifying non-profit organizations (NPOs), it may be time to revisit your eligibility for an enhanced hospital rebate.

The 2022 Federal Budget announced a number of measures, including expanding indirect tax rebates for long-term care facilities.

Budget 2022 recognized the increasing role of nurse practitioners in delivering health care services, whether such services are delivered in a remote or non-remote area. To be eligible for the expanded hospital rebate, a charity or NPO must deliver the health care service with the active involvement of, or on the recommendation of, either a physician or a nurse practitioner, irrespective of geographic location. 

The key expansion is the removal of the requirement of active care by a physician in non-remote areas. This should increase the eligibility of long-term care facilities for more hospital rebate opportunities that were not available prior to the budget announcement.

What has changed

Since 2005, the Excise Tax Act has provided NPOs and registered charities who operate long-term care facilities a means to recover a rebate equivalent to that of a hospital authority. For GST provinces, this enhanced rebate is 83 percent of the tax, versus a 50-percent rebate for qualifying NPOs or for registered charities. Currently, Ontario is the only HST province that provides for an enhanced hospital rebate of 87 percent on the provincial eight-percent component of its HST.

(New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador do not provide an enhanced rebate on the provincial component of their HST. The enhanced 83-percent rebate will apply to the federal five-percent component and the operator will continue to recover its charity or qualifying NPO rebate entitlement on the provincial component.)

However, the original legislation had restrictive criteria that were often difficult to interpret and apply to the day-to-day operations of a care facility. One of the criteria to satisfy in the making of a facility supply was that a patient receiving health care must be reasonably expected to take place under the “active direction or supervision,” or with the “active involvement” of a physician. 

In a 2015 Tax Court of Canada decision, Elim Housing Society v. The Queen, the Crown contended that bi-weekly physician visits to long-term care facilities were “routine” and not active direction or active involvement. The courts found the health care process at the society’s facility was intensive and ongoing. In addition to the bi-weekly visits, physicians would receive updates from the nursing staff on treatment and care plans, and were available at all times, participating in inter-disciplinary meetings and medication reviews. The courts found that overall, the physician care did constitute active involvement.

We continue to apply the care criteria – but can now rely on the care being provided by a nurse practitioner irrespective of geographic location. Your MNP Indirect Tax advisor can help by reviewing your operations and determining if the eligibility criteria can be met, taking into account the new changes.