To the untrained inspection a walk...

To the untrained inspection a walk-in medical clinic is a convenient portal to health care services. still while safe for patients, walk-in medical clinics set the doctors who work there at risk of catching a financial virus: GST

Since GST was introduced, greatest in number health care services have remained GST possessed of immunity This has always been dutiful news for service users, who haven't seen an additional 7% tacked onward to the bill (now 15% in the harmonized provinces of Nova Scotia, recent Brunswick, and Newfoundland and Labrador). However, the freshs has never been as fit for service providers, because unlike farmers (who generally do not charge GST onward their products due to zero-rated status), principally medical practitioners cannot recover the GST they pay.

Management companies and the spread of GST

Before 1991 many medical practitioners used a "management company" to provide them with space, staff, and equipment. This management company was typically be in possession ofed by a lower-income spouse and/or a family trust and would generally mark up its expenses by 15%) providing a useful income-splitting tool to the medical practitioner.

The introduction of GST made management companies a plenteous less useful tool: The amount of non-recoverable GST paid increased because of the management company's mark-up. In addition, GST was added to salaries, insurance, and other previously GST-exempt sumptuousnesss billed to the physician as management rewards This perhaps unintentional "manufacturing" of GST signalled the period of the management company for chiefly medical practitioners.

Group practice: incurable GST?

Medical clinics are structur in various ways. The clinics may be operated on corporations or partnerships, but it is also habitual for practitioners to set up cost-or fee-sharing arrangements.

The GST implications of these "group practices" have been a thorn in the side of the Canadian Medical Association (CMA) and the CCRA since the inception of GST A 1994 paper at the CICAs Commodity Tax Symposium identified medical practices as a critical GST issue. The CMA began working with the CCRA in 1995 to "educate" the dominion on how tax policy should apply to various practice standards The result was the release in 2000 of Policy Statement P-238-Application of the GST/HST to Payments Made Between Parties Within a Medical Practice Organization, which became effective January 1 2001

The locum

Policy Statement P-238 provides several examples of when GST might or might not apply in a arrange practice. For example, in a locum arrangement, where a sole-proprietor contracts with another practitioner to provide services to their patients while they're forward vacation or otherwise absent, GST will not apply if the proprietor and locum insert into a bona fide arrangement to share pays earned during that period. forward the other hand, if the payments are structur of the like kind that the proprietor charges the locum for the use of space and equipment, GST will apply to this minister of tangible and real property

In stark contrast to the Policy Statement, and greatest in quantity accepted practice, the Tax Court of Canada had occasion in June of 2000 to define the locum arrangement as an employer-employee relationship. This could require the withholding of income tax, CPP and EI, by means of the proprietor and result in the disallowance of expenditures to the locum.

The clinic

The legal arrangements of clinics are as varied as the physicians who staff them. An effective GST manner of making as set out in the Policy Statement, is for practitioners to share specified universal operating costs, such as crack utilities, and staff, under an agency agreement. single party can make payments by the agency of a common bank account to which each participant contributes, and then be reimbursed by dint of the other participants; or each can pay certain expenditures with a "settling up" at a certain number of agreed-upon point.

The CCRA has indicated that where there is an agency relationship among the parties, i.e. the charges are being incurred by united person on behalf of the arrange GST will not apply to the charges between them. However, the conception of "agency" is complex. The CCRA's policy statement onward the subject, which was issued in June of 1995 has still to be approved and is still labelled as a "Draft." Demonstrating that there's an agency relationship could include as it was steps as each doctor preparing a T4 slip for their proportionate share of staff salaries.

If the agreement is viewed as a endow of goods and services, GST will apply to the charges. This is the case if a doctor (or professional corporation) operates a clinic and allows other physicians to use the facilities in exchange for a portion of the recompenses they generate.

Diagnosis GST

Treating a patient requires couple basic steps: diagnosis and treatment. still as the saying goes, "An ounce of prevention is worth a confine in a pound of cure." So how do physicians obstruct GST? They take precautions to avoid spreading it.

If the intention is to have a "genuine" cost-sharing agreement, adequate documentation should be prepared in support of this position, and the parties must make certain they follow their agreement. If a physician is entering into an arrangement where they will pay a portion of their unconditional tenures to an existing practice, all parties involved should make strong to structure their arrangements for a like reason as not to inadvertently trigger GST