Key Takeaways
- The federal government announced new GST/HST exemptions for certain health care services in the 2023 Fall Economic Statement
- The exemptions apply to psychotherapy, counselling, multidisciplinary health care, and medical devices prescribed by a health care professional
- The exemptions aim to make health care more affordable and accessible for Canadians, especially seniors, elders, and people with disabilities
- The exemptions will take effect on January 1, 2024, and will reduce the tax burden on eligible health care consumers and providers
What are the new GST/HST exemptions for health care services?
The goods and services tax (GST) and the harmonized sales tax (HST) are federal taxes that apply to most supplies of property and services made in Canada. However, some supplies are exempt from GST/HST, meaning that no tax is charged or collected on them.
In the 2023 Fall Economic Statement, the federal government announced new GST/HST exemptions for certain health care services that are currently taxable. The new exemptions are:
- Professional services rendered by psychotherapists and counselling therapists
- Multidisciplinary health care services provided by a team of health care professionals
- Medical devices prescribed by a physician, dentist, nurse practitioner, pharmacist, or other authorized health care professional
These exemptions will take effect on January 1, 2024, and will apply to supplies made on or after that date.
Why are the new GST/HST exemptions beneficial for Canadians?
The new GST/HST exemptions are intended to make health care more affordable and accessible for Canadians, especially those who need mental health support, chronic disease management, or assistive devices.
According to the government, the new exemptions will:
- Reduce the cost of psychotherapy and counselling services by 5% to 15%, depending on the province or territory
- Encourage the provision of multidisciplinary health care services that can improve health outcomes and reduce wait times
- Expand the list of medical devices that are exempt from GST/HST, such as blood glucose monitors, insulin pumps, and hearing aids
The government estimates that the new exemptions will save Canadians $1.2 billion over five years, starting in 2024-25.
Who can benefit from the new GST/HST exemptions?
The new GST/HST exemptions can benefit both health care consumers and providers.
Health care consumers who can benefit from the new exemptions include:
- Seniors and elders who may need psychotherapy, counselling, or multidisciplinary health care services to cope with aging, isolation, or chronic conditions
- People with disabilities who may need medical devices to improve their mobility, communication, or quality of life
- People with mental health issues who may need psychotherapy or counselling services to address their emotional or psychological challenges
- People with chronic diseases who may need multidisciplinary health care services to manage their symptoms, prevent complications, or optimize their health
Health care providers who can benefit from the new exemptions include:
- Psychotherapists and counselling therapists who can offer their services at a lower cost and attract more clients
- Health care professionals who can collaborate with other disciplines and provide integrated care to their patients
- Medical device suppliers who can sell their products at a lower price and increase their market share
How can you take advantage of the new GST/HST exemptions?
If you are a health care consumer who needs or wants to use the services or devices that are newly exempt from GST/HST, you can take advantage of the new exemptions by:
- Checking with your health care provider if they are aware of the new exemptions and if they will adjust their prices accordingly
- Asking for a receipt that shows the GST/HST amount charged or exempted on your purchase
- Claiming any eligible medical expenses on your income tax return, as the new exemptions do not affect the medical expense tax credit
If you are a health care provider who supplies the services or devices that are newly exempt from GST/HST, you can take advantage of the new exemptions by:
- Updating your accounting and invoicing systems to reflect the new exemptions and the applicable GST/HST rates
- Informing your clients or customers of the new exemptions and the reduced prices of your services or products
- Reviewing your GST/HST registration status and reporting obligations, as the new exemptions may affect your taxable sales and input tax credits
IMPORTANT LINKS:
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- How to Get the Grocery Rebate Payments in Canada in January 2024
Conclusion
The new GST/HST exemptions for health care services are a welcome relief for many Canadians who need or want to access quality health care at a lower cost. The exemptions are also a boost for the health care sector, as they can stimulate the demand and supply of health care services and products. The exemptions will come into effect on January 1, 2024, and will apply to supplies made on or after that date. To learn more about the new exemptions and how they affect you, you can visit the Canada Revenue Agency website¹ or consult a tax professional.
Source: (1) A Guide to 2023 GST/HST Exemptions: What Goods and Services are …. https://turbotax.intuit.ca/tips/a-guide-to-2023-gst-hst-exemptions-what-goods-and-services-are-exempted-16327. (2) A Guide to 2023 GST/HST Exemptions: What Goods and Services are …. https://turbotax.intuit.ca/tips/a-guide-to-2023-gst-hst-exemptions-what-goods-and-services-are-exempted-16327. (3) General Information for GST/HST Registrants – Canada.ca. https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4022/general-information-gst-hst-registrants.html.