GST On-Call Fees
The recently released Excise and GST/HST News – No. 101 provided the Canada Revenue Agency’s interpretation Section 5 of Part II of Schedule V to the Excise Tax Act (ETA) as it pertains to on-call fees for medical practitioners. Section 5, in conjunction with sections 1.1 and 1.2 of that Part, functions to exempt a qualifying health care supply of a consultative, diagnostic, treatment or other health care service from the application of GST/HST when it is rendered by a medical practitioner* to an individual, and is not performed for cosmetic purposes.
On-call agreements generally outlines what set fee will be paid to the medical practitioner for remaining on call during a given period of time. The agreements also generally state that the medical practitioner will be paid additional amounts for intervening in patient care if and when called upon to do so during their on-call period.
In their release, the CRA considers this type of agreement to be a distinct supply of a right by the medical practitioner that allows the facility to meet an operational requirement. In their view, at the time the agreement is entered into, it is not known whether the medical practitioner will be called upon to render health care services to the facility’s patients. Moreover, the set fee that is paid for the right to call upon the medical practitioner is not contingent on him or her rendering health care services during their on-call period.
In the CRA’s view: by remaining available to render health care services should the need arise, the medical practitioner fulfils his or her obligation under the agreement. Even if the medical practitioner is called upon to intervene in patient care, he or she must remain available to be called upon again until the end of their on-call period. Therefore, the nature of the supply of the right to be called upon is not dependent upon, altered, or extinguished, by a future rendering of health care services by the medical practitioner to the facility’s patients. The supply of such a right does not qualify as an exempt health care service, or part of an exempt health care service, under section 5 of Part II of Schedule V, as the supply of a right is not exempt under that section.
As a result of this interpretation of the provisions in the ETA, the supply of on-call coverage to the facility, whether or not the medical practitioner is contacted, would be a taxable supply of intangible personal property, and as a result, subject to the GST/HST provided the medical practitioner is a registrant and is not on call in their capacity as an employee of the facility. Of note, if such fees, along with other taxable activities provided by the medical practitioner exceeds $30,000 in any given 12 month period, they will be required to register and collect the GST/HST.
Any additional amounts paid to compensate the medical practitioner for their intervention in patient care would likely be viewed as consideration for an exempt supply under section 5 of Part II of Schedule V of the ETA. It should be noted that if the consideration for the supply of the right to call upon the medical practitioner is payable or reimbursed by the government of a province, under a plan established under an act of the legislature of the province to provide for health care services for all insured persons of the province, the supply of the right may be an exempt supply of property under section 9 of Part II of Schedule V. Whether section 9 would apply in such cases is a question of fact.
This is another example of where persons operating in what seems to be an exempt activity can inadvertently fall into the GST/HST regime. If you are a medical practitioner who is getting paid for other types of services provided that do not involve direct patient care (such as research, articles, opinions, etc), it would be prudent to have a GST/HST review performed.