HST Exemption

News Reported on Thursday, June 28, 2007

Health-Related Social Work Services Exempt from HST

The Ontario Association of Social Workers is pleased to announce the passing of Bill C-40, the long-awaited federal legislation that confirms the exemption of HST for health-related services provided by social workers. After over a decade of lobbying, the legislation ensures that social workers are provided similar tax exemptions as other health professions. The exemption took effect for any services provided after October 3, 2003. Individuals in Ontario who use the title "social worker" and are members of the Ontario College of Social Workers and Social Service Workers will now be able to claim HST exemption when they provide health-related services. The types of health-related services exempt from HST for social workers are specifically defined as: -services that are rendered to an individual -services that are provided within a professional-client relationship between the social worker and the individual, and -services that are provided for the prevention, assessment or remediation of, or to assist the individual in coping with a physical, emotional, behavioural, or mental disorder or disability of the - individual or of another person to whom the individual is related, or to whom the individual provides care or supervision otherwise than in a professional capacity.

In summary, it is essential that the service be provided within the context of a professional social worker-client relationship. It is vital that one of the participants has a disorder or disability with which the social worker is helping the individual (or relative or caregiver) to cope or, alternatively, the purpose of the intervention is to prevent a disorder or disability from developing. The words "disorder or disability" will be the key limiting phrase for exempt services and vulnerable to interpretation, although the "health-related services" covered by the exemption are fairly broad.
Please note that services are not HST exempt when a social worker is consulted by another professional in relation to a client of the other professional, or if a social worker were hired to speak about a health-related issue for a seminar/conference. Similarly, services provided to a court, e.g., in custody and access cases, are not exempt. According to information obtained from HST officials, the exemption will likely be determined by the following criteria: -What is the focus of the service? Services that are of a therapeutic nature (healing, problem-solving, improving relationships, etc., defined quite broadly) will be covered. If, however, the service is primarily educational in nature or is in the form of supervision or consultation to another professional or to an agency, it will not be covered. -What constitutes the primary purpose of the service? It would not appear that services will be covered if, for example, the primary purpose of the interaction is to provide a service to the courts or to an agency, to assist them in reaching a conclusion or making a recommendation related to the client(s). The fact that the service may have secondary therapeutic gains is not relevant. If any OASW member wishes to access directly the text of the legislation, this information is available by clicking on Text of legislation or http://www.parl.gc.ca/HousePublications/Publication.aspx?Language=E&Mode=1&DocId=3297624&File=19. Social workers are encouraged to contact their accountants to discuss how to deal with this change in HST legislation, since at this time the legislation itself does not provide specifics regarding how the exemption will be interpreted. Social workers providing services that meet the criteria outlined above and who collected HST after October 3, 2003, are encouraged to provide information to clients regarding the availability of the HST rebate (e.g., waiting room flyers). If social workers have the mailing addresses of former clients, they may wish to provide them with this information as well. Clients can apply for the HST rebate from Canada Revenue Agency by downloading the rebate form at http://www.cra-arc.gc.ca/E/pbg/gf/gst189/.