Determining The Taxability Of A Supply For GST/HST Purposes: Nature Of A Supply, Its Principal Or Dominant Purpose, Taxable And Non-Taxable Characteristics

• Published date: 14 June 2023
• Law Firm: SpenceDrake Tax Law
• Author: Mr Cris Best

A-Supreme Nursing & Home Care Services Inc. v. The King, 2023 TCC 39 (CanLII), https://canlii.ca/t/jwjb2

The Tax Court of Canada decision in A-Supreme Nursing & Home Care Services Inc. v. The King, 2023 TCC 39 ("ANHC"), involved a CRA audit of a staffing agency in the business of supplying healthcare workers, resulting in a reassessment for over $1,000,000 in GST/HST. The decision is of interest as it clarifies the scope and taxability of the supply of nursing services for GST/HST purposes. Furthermore, when a supply exhibits both taxable and non-taxable characteristics, how do you determine its principal or dominant purpose and therefore its taxability?

The main issue in ANHC was whether the appellant provided a taxable or exempt supply when supplying nurses and personal support workers to nursing homes and long-term care facilities. The CRA argued that the appellant should have charged GST/HST for the placement of nurses, which is a taxable supply. However, the appellant filed its tax returns on the basis that it supplied nursing services, an exempt or tax-free supply.

As per the Federal Excise Tax Act, RSC 1985, cE-1 ("ETA"), the majority of healthcare services are GST/HST exempt. GST/HST in Ontario, a combined 13%, is considered to be held in trust for the government when charged, referred to as...