e-4126 (Taxation)

The Goods and Services Tax/Harmonized Sales Tax (GST/HST) applies to a broad base of goods and services with only limited exceptions, which include basic groceries, residential rents, certain medical devices, prescription drugs and basic health care services. Applying the GST/HST to a broad base of goods and services makes the tax system more efficient and simpler, and helps keep the tax rate lower.

The policy underlying the GST/HST treatment of the health care sector is that basic health care services are tax-exempt. In determining what constitutes a basic health care service, the approach that the Government of Canada has taken is to refer to the provinces and territories, given their major role in delivering health care. In this regard, if a service is covered by the public health insurance program in a given province or territory, the GST/HST legislation exempts the service in that province or territory.

In addition, certain criteria have been developed for deciding whether services of recognized health practitioners should be tax-exempt in all provinces and territories. Under these criteria:

• if a service is covered by the public health insurance program of two or more provinces or territories, it may be exempted in all provinces and territories; and
• if a profession is regulated as a health profession by at least five provinces or territories, the services of that profession may be exempted in all provinces and territories.

It is the government’s understanding that psychotherapy and counselling therapy are not covered by the public health insurance program of any province or territory. It is also the government’s understanding that psychotherapy and counselling therapy involve different services, and neither is regulated in at least five provinces or territories. As an example, while Quebec permits members of certain professions to provide psychotherapy services, Ontario is the only province that regulates the practice of psychotherapy as a distinct health profession.

Finally, it is noteworthy that the supply of a psychotherapy service may be exempt from the GST/HST if the service is supplied by a health care professional authorized to provide such a service within the scope of practice for their own profession and for which a GST/HST exemption is available. For example, the services of psychologists and physicians are exempt from the GST/HST, and where these professions are authorized to provide psychotherapy services, these services would generally be exempt from the GST/HST.  

The Canada Revenue Agency document CRA’s Excise and GST/HST News – No. 97 (https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/news97/news97-excise-gst-hst-news-no-97.html#_Toc427668035) contains more information regarding the application of GST/HST to psychotherapy services.