GST Exemption Issues
In 2007, the CASW announced the excemption of GST for health-related services. Please see details related to this issue below.
- In the summary, under (1) Health
- Section 54. (1) Part II of Schedule V to the Act is amended by adding the following after section 7.1:
- “exempts health-related services rendered in the practise of the profession of social work”
- 7.2 A supply of services rendered in the practise of the profession of social work where
- (a) the service is rendered to an individual within a professional-client relationship between the supplier and the individual and is 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; and
- (b) either
- (i) if the supplier is required to be licensed or otherwise certified to practise the profession of social work in the province in which the service is supplied, the supplier is so licensed or certified, or
- (ii) if the supplier is not required to be licensed or otherwise certified to practise that profession in that province, the supplier has the qualifications equivalent to those necessary to be licensed or certified to practise that profession in a province in which such a requirement exists.
For Immediate Release
June 26, 2007
Health-related Social Work Services Now Exempt from GST
The Canadian Association of Social Workers (CASW) is pleased to announce the passing of Bill C-40, a long-awaited Bill that confirms the exemption of GST/HST for health-related services provided by social workers. After over a decade of lobbying by CASW, the legislation ensures that social workers are provided similar tax exemptions as other health professions.
According to CASW President Veronica Marsman, Bill C-40 is significant for the public as well as for social workers. “Social workers are very happy with what this means to their practice, but, beyond that, this is an important step in ensuring the public has increased access to social work services,” said Marsman.
CASW encourages social workers with specific questions about the Bill to consult their provincial/territorial social work organizations or their local Canada Customs and Revenue Agency (CCRA) office.
Pending GST Exemption for Social Work Services
Lynn Lambert, MSW RSW
Private Practice Committee Member (Calgary)
January 5th, 2006
As many of you are aware, there was a Proposed Amendment to the Excise Taxation Act (ETA) on October 3, 2003 regarding exempting Social Workers from being subject to the payment of GST (Proposed addition of section 7.2 to Part II of Schedule V to the ETA). However, more than two years have passed and the Proposed Amendment to the ETA has not been ratified as law! We continue to remain in limbo regarding the status of Social Workers with respect to GST, with absolutely no clear certainty as to when the Proposed Amendment to the ETA will become law. As a Social Worker, if you have not made any GST payment since the announcement on October 3, 2003, and the Proposed Amendment to the ETA does not become law at some time in the future, you will be obliged to make the full GST payment owing from October 3, 2003 to that future date. In addition, you will have to pay a penalty plus interest.
Given the current Federal Election in progress, you can make a difference with respect to this matter. You can contact your Member of Parliament (MP) to voice your concerns. To contact your local MP, please use the following Government of Canada link. When you go the website link, you can find your MP, his / her mailing address and phone number by either providing your postal code or the name of your MP in the section entitled "Members of Parliament (MP) and the Senate":
Thank you for your attention to this important matter.
Social Workers in Limbo over GST
Audrey Ferber MSW, RSW
From: The Advocate Volume 29, Issue 3, Fall 2004
On October 3, 2003, the federal government tabled in the House of Commons proposed legislative amendments to include new GST exemption for health-related services provided by social workers. This was the result of years of lobbying by CASW representatives. CASW sent out a news release to all provincial associations announcing this proposed legislation along with an email proclaiming that social workers would no longer be required to charge GST from their clients starting on October 4, 2003.
Unfortunately, this announcement has caused a tremendous amount of confusion and frustration. Many social workers have since been advised by Revenue Canada that they could face interest charges and financial penalties if they stopped collecting GST and making their quarterly GST payments to the government. The explanation was that the proposed legislation was not yet passed into law and therefore not in effect. At the same time, social workers who continued to collect GST from clients were faced with an almost impossible challenge – how GST payments could be returned to clients if the legislation was passed by the House of Commons and deemed retroactive to October 3, 2003.
In order to gain clarification on these matters, I organized a workshop presented by Eileen Martin, a representative from the GST section of Revenue Canada in Calgary on June 24. About 22 private practitioners attended this workshop traveling all the way from Spruce Grove near Edmonton and Medicine Hat and Lethbridge to the South. The information that people heard was disconcerting, disheartening, somewhat clarifying and somewhat confusing.
The proposed GST amendment has not been passed and is a long way from being passed. It has only gone to the Ways and Means Committee of the federal government as a motion to become a motion. The next step would be for it to become a motion of the Ways and Means Committee. Therefore, the official notification by CASW that social workers would be exempted from charging GST as of October 4, 2003 was and is incorrect.
This leaves social workers in a difficult position. Those who have continued to charge GST and continued to pay the GST to the government are following the status quo and are avoiding any prospect of facing interest or penalties on GST payments in the future. If you stopped charging GST and stopped paying GST to the government, you may decide to continue this and see what happens. If the government contacts you for payment and charges interest and penalties on the arrears, you can appeal to the Fairness Program found on the GST web site and pay only the GST included in your fee. But this would still mean you could be losing 7% of your income.
If the amendment is passed into legislation, there is no guarantee that the exemption would be retroactive to October 3, 2003 or any other time. If it is made retroactive, those service providers who continued to collect GST could (1) have clients submit a rebate form to request a return of their GST as ‘tax paid in error’, (2) reimburse the clients directly, or (3) request a reimbursement on behalf of the clients. If the provider continued to make regular GST payments to the government but had not identified GST in invoices or receipts to the client, the provider could apply to the government for a refund on paid GST as ‘tax paid in error’ and would not have to return the GST to clients.
Another disconcerting part of this amendment is that not all clinical social work would be GST exempt. The current wording of the amendment is that GST exemption applies only to “service provided to an individual within a professional-client relationship between the supplier and the individual to assist the individual in coping with a physical, emotional, behavioral 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”. According to Revenue Canada, the GST exempt services would include spouses and family members such as family therapy. Group work would not be GST exempt nor would some Employee Assistance Program (EAP) services such as critical incident debriefing and workshops. As it stands now, if the amendment were passed, most social workers would have to keep a separate record of exempted services and non-exempted services.
While this workshop helped clarify some issues, it still left many questions unanswered and even raised some new questions. It is unlikely that these matters will be resolved completely until this proposed amendment becomes legislation. For now, the decision about whether to continue or stop collecting GST from clients is still left up to each social work practitioner. We encourage those social workers who are not happy with this state of affairs to make their concerns known to the CASW. Our national association could do more to advocate for social workers currently in a dilemma about the GST and could help the federal government understand more about the nature of social work and what corresponding GST regulations would be workable.
Alberta’s CASW representative is ACSW past-president Jake Kuiken. Questions about the GST can be directed to Revenue Canada at their GST line: 1-800-959-8287.