Proposed Amendment - Exemption for Counselling Therapy Services

GST/HST Notices – Notice 335
March 2024

Except as otherwise noted, all statutory references in this publication are to the provisions of the Excise Tax Act (ETA). The information in this publication does not replace the law found in the ETA and its regulations.

If this information does not completely address your particular situation, you may wish to refer to the ETA or relevant regulation, or call GST/HST Rulings at 1‑800‑959‑8287 for additional information. If you require certainty with respect to any particular GST/HST matter, you may request a ruling. GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, explains how to obtain a ruling or an interpretation and lists the GST/HST rulings centres.

If you are located in Quebec and wish to request a ruling related to the GST/HST, please call Revenu Québec at 1‑800‑567‑4692. You may also visit the Revenu Québec website at revenuquebec.ca to obtain general information.

For listed financial institutions that are selected listed financial institutions (SLFIs) for GST/HST or Quebec sales tax (QST) purposes or both, whether or not they are located in Quebec, the CRA administers the GST/HST and the QST. If you wish to make a technical GST/HST or QST enquiry related to SLFIs, please call 1‑855‑666‑5166.

GST/HST rates

Reference in this publication is made to supplies that are subject to the GST or the HST. The HST applies in the participating provinces at the following rates: 13% in Ontario and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%. If you are uncertain as to whether a supply is made in a participating province, refer to GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of Supply Rules for Determining Whether a Supply is Made in a Province.

Table of Contents

• Introduction
• Proposed amendment
• Questions and answers
  • General information
  • Practitioner
  • Exempt services
  • GST/HST registration
  • Application of the GST/HST digital economy measures when services are provided via electronic means
  • Input tax credits

Introduction

Generally, most supplies of property and services made in Canada are subject to the GST/HST, unless they are specifically exempt under Schedule V.

Part II of Schedule V sets out the health care services that are exempt from the GST/HST. More specifically, Part II of Schedule V exempts supplies of certain health care services when the services are supplied under specific conditions, such as conditions regarding the type of service being rendered and who renders the service.

Certain health care services may be provided by persons practising counselling therapy. However, there is currently no provision in Part II of Schedule V that refers specifically to the exemption of the supply of counselling therapy services from the GST/HST.

Proposed amendment

The Minister of Finance proposes to exempt from the GST/HST the supply of psychotherapy and counselling therapy services.

The definition of practitioner found in section 1 of Part II of Schedule V would be replaced with the following (for additions, note the bolded text):

practitioner, in respect of a supply of optometric, chiropractic, physiotherapy, chiropodic, podiatric, osteopathic, audiological, speech-language pathology, occupational therapy, psychological, psychotherapy, counselling therapy, midwifery, dietetic, acupuncture or naturopathic services, means a person who

a. practises the profession of optometry, chiropractic, physiotherapy, chiropody, podiatry, osteopathy, audiology, speech-language pathology, occupational therapy, psychology, psychotherapy, counselling therapy, midwifery, dietetics, acupuncture or naturopathy as a naturopathic doctor, as the case may be,

b. where the person is required to be licensed or otherwise certified to practise the profession in the province in which the service is supplied, is so licensed or certified, and

c. where the person is not required to be licensed or otherwise certified to practise the profession in that province, has the qualifications equivalent to those necessary to be so licensed or otherwise certified in another province.

Section 7 of Part II of Schedule V lists specific services that are exempt from the GST/HST if the service is rendered to an individual by a practitioner of the service. The list of services found under section 7 of Part II of Schedule V would also be amended by adding the following after paragraph (j):

(j.1) psychotherapy services;

(j.2) counselling therapy services;

These proposed amendments would apply to qualifying supplies made after the applicable legislation receives royal assent and becomes law.

Questions and answers

General information

1. When will the amendment come into effect?

The amendment will come into effect when Bill C-59 receives royal assent and becomes law. There is no timeline for when that will occur.

2. Will all supplies of counselling therapy services be GST/HST exempt under the amendment?

The amendment will only exempt from the GST/HST a counselling therapy service where the service is rendered to an individual by a practitioner of the service.

Practitioner

3. Who will be a practitioner of counselling therapy services for GST/HST purposes?

To be a practitioner in respect of counselling therapy services, section 1 of Part II of Schedule V will require that a person:

• practise the profession of counselling therapy
• where the person is required to be licensed or otherwise certified to practise the profession of counselling therapy in the province in which the service is supplied, have the licence or certification
• where the person is not required to be licensed or otherwise certified to practise the profession of counselling therapy in that province, have the qualifications equivalent to those necessary to be so licensed or otherwise certified in another province

Therefore, the definition of practitioner depends on the province in which the person who practises the profession of counselling therapy provides their services.

4. How does a province regulate those who practise the profession of counselling therapy?

When a province regulates the practice of the profession of counselling therapy, that province requires that a person be licensed or otherwise certified to practise the profession of counselling therapy in that province. Those that practise the profession are governed by a regulatory body responsible for the regulation of their health profession in that province. The role of these regulatory bodies and the authority to monitor and regulate the health profession is set out in provincial legislation.

5. Which provinces currently regulate the profession of counselling therapy?

At this time, New Brunswick, Nova Scotia and Prince Edward Island regulate the profession of counselling therapy.

In New Brunswick, counselling therapists are regulated by the College of Licensed Counselling Therapists of New Brunswick in accordance with the Licensed Counselling Therapy Act.

In Nova Scotia, counselling therapists are regulated by the Nova Scotia College of Counselling Therapists in accordance with the Counselling Therapists Act.

In Prince Edward Island, counselling therapists are regulated by the College of Counselling Therapy of Prince Edward Island in accordance with the Regulated Health Professions Act.

The provinces and territories that regulate the profession may change at any time. It is the responsibility of the person supplying counselling therapy services to monitor the licensing requirements in the province(s) where they practise the profession of counselling therapy to ensure GST/HST compliance.

6. I am a member of a provincial association for counselling therapists. Does this mean that I am a member of a regulatory body?

In some provinces, counselling therapy service providers may be members of associations that promote the practices of their members.

Where an association is not regulated in provincial legislation and membership in the association is not required to provide counselling therapy services in the province, the association is not a regulatory body for GST/HST purposes. Non-members may also provide counselling therapy services in the provinces where such associations are present. These associations may set their own professional standards but this is not the same as regulating the profession of counselling therapy under provincial legislation. Therefore, membership in such an association does not mean that a person providing counselling therapy services is a member of a regulatory body.

7. My province does not currently regulate the profession of counselling therapy. Will the proposed amendment apply to me?

If a person provides counselling therapy services in a province that does not currently regulate the profession of counselling therapy, the proposed amendment may apply where the person has equivalent qualifications to those necessary to be licensed or certified to practise the profession of counselling therapy in a province that does regulate the profession.

A person providing counselling therapy services may confirm with the regulatory body from a province that regulates the profession whether their particular qualifications would meet the licensing requirements for the profession of counselling therapy in the province of that regulatory body. If they meet the qualifications, they must also determine whether their particular services would be included within the scope of practice of the profession of counselling therapy in the province of that regulatory body.

Where a person providing counselling therapy services does not have equivalent qualifications to those necessary to be licensed or certified in a regulated province, the person will not be considered a practitioner of counselling therapy services for GST/HST purposes under the proposed amendment. As such, any supplies of counselling therapy services made by the person will not be exempt under the proposed amendment once it receives royal assent and becomes law.

Exempt services

8. My province regulates the practice of the profession of counselling therapy and I am licensed to practise this profession in my province. Which of my services will be exempt?

What constitutes a counselling therapy service for GST/HST purposes may vary from province to province. The scope of practice of the profession of counselling therapy is determined by the applicable regulatory body in the province. A person who practises the profession of counselling therapy must refer to the governing body or relevant provincial legislation for the province in which they practise to determine whether the services they perform are counselling therapy services.

9. My province does not currently regulate the profession of counselling therapy but I meet the requirements to be licensed in a province that regulates the profession of counselling therapy. How do I determine which of my services will be exempt?

Where a person provides counselling therapy services in a province that does not regulate the profession of counselling therapy, the scope of practice of the profession of counselling therapy is determined by the applicable regulatory body in a province that does regulate the profession of counselling therapy.

As such, a person providing counselling therapy services may confirm with a provincial regulatory body whether their particular qualifications would meet the licensing requirements for the profession of counselling therapy for the provincial regulatory body and, if so, whether their particular services would be included within the scope of practice of the profession of counselling therapy in that province.

10. I am a licensed counselling therapist in a province that regulates the profession. I provide counselling therapy services and services that are not within the scope of practice of the profession of counselling therapy in that province. Will all of my services be exempt?

No. The proposed amendment applies to counselling therapy services. Not every activity engaged in, or treatment modality offered, by a counselling therapist is within the scope of practice of the profession of counselling therapy.

To correctly apply the GST/HST, a counselling therapist will have to determine whether each supply they make is a counselling therapy service. This is particularly important for a counselling therapist who practises the profession of counselling therapy in conjunction with other services and/or is registered with one or more regulatory body for one or more type of health care profession.

Where a counselling therapist supplies a service that is not a counselling therapy service, the supply of the service is subject to the GST/HST if the supply does not fall within another exempting provision of the ETA. The counselling therapist, if a GST/HST registrant, is required to collect the GST/HST at the applicable rate calculated on the value of the consideration for the supply.

11. I am a registered occupational therapist and a member of the College of Occupational Therapists of Ontario. I provide counselling therapy services in Ontario. Will the proposed amendment have an impact on my practice?

Supplies of counselling therapy services will continue to be exempt from the GST/HST when rendered by regulated professionals who are authorized in their scope of practice to perform counselling therapy services.

12. A charity or public institution makes supplies of counselling therapy services. Will the proposed amendment have an impact on the tax status of their supplies?

Most supplies of services made by a charity or public institution are exempt from the GST/HST. Supplies of counselling therapy services made by a charity are generally exempt under section 1 of Part V.1 of Schedule V. Supplies of counselling therapy services made by a public institution are generally exempt under section 2 of Part VI of Schedule V. The proposed amendment would not have an impact on the tax status of supplies of counselling therapy services made by a charity or public institution.

GST/HST registration

13. I am a licensed counselling therapist in a province that regulates the profession. I only provide counselling therapy services. I am registered for GST/HST purposes as my services are taxable. When can I cancel my registration?

Supplies of counselling therapy services remain taxable until the proposed legislation receives royal assent and becomes law. There is no timeline for when that will occur.

Therefore, a licensed counselling therapist who makes taxable supplies in Canada in the course of a commercial (taxable) activity engaged in by the licensed counselling therapist is required to remain registered for the GST/HST, unless they are a small supplier.

In general, a licensed counselling therapist is a small supplier in a particular calendar quarter and the following month where their total revenues from worldwide taxable supplies, including zero-rated supplies, in the previous four consecutive calendar quarters do not exceed the small supplier threshold of $30,000 (or $50,000 for a public service body). Examples of taxable revenues include those from sales of health care products, books and other educational materials; teaching services and consulting services. The calculation of total revenue for purposes of the small supplier threshold excludes revenues from taxable supplies attributable to the sale of goodwill of a business, supplies of financial services and sales of capital property. For more information on GST/HST registration requirements, go to When to register for and start charging the GST/HST.

14. I am a licensed counselling therapist in a province that regulates the profession. I only provide counselling therapy services. I am registered for GST/HST purposes as my services are taxable. When can I stop charging the GST/HST?

Supplies of counselling therapy services remain taxable until the proposed legislation receives royal assent and becomes law. There is no timeline for when that will occur. Therefore, licensed counselling therapists who are GST/HST registrants must continue to charge the GST/HST on their supplies of counselling therapy services.

15. I am a counselling therapist and I practise in a province that does not regulate the profession of counselling therapy. I only provide counselling therapy services. I am registered for GST/HST purposes as my services are taxable. When can I cancel my registration?

Supplies of counselling therapy services remain taxable until the proposed legislation receives royal assent and becomes law. There is no timeline for when that will occur.

Therefore, a counselling therapist who makes taxable supplies in Canada in the course of a commercial (taxable) activity engaged in by the counselling therapist is required to remain registered for the GST/HST, unless they are a small supplier.

In general, a counselling therapist is a small supplier in a particular calendar quarter and the following month where their total revenues from worldwide taxable supplies, including zero-rated supplies, in the previous four consecutive calendar quarters do not exceed the small supplier threshold of $30,000 (or $50,000 for a public service body). Examples of taxable revenues include those from sales of health care products, books and other educational materials; teaching services and consulting services. The calculation of total revenue for purposes of the small supplier threshold excludes revenues from taxable supplies attributable to the sale of goodwill of a business, supplies of financial services and sales of capital property. For more information on GST/HST registration requirements, go to When to register for and start charging the GST/HST.

Where a counselling therapist provides counselling therapy services in a province that does not regulate the profession of counselling therapy, they will first have to determine whether they have the qualifications equivalent to those necessary to be a licensed counselling therapist in a province that regulates the profession of counselling therapy before determining whether their supplies of counselling therapy services can be exempt. Refer to Question 7.

16. I am a counselling therapist and I practise in a province that does not regulate the profession of counselling therapy. I only provide counselling therapy services. I am registered for GST/HST purposes as my services are taxable. When can I stop charging the GST/HST?

Supplies of counselling therapy services remain taxable until the proposed legislation receives royal assent and becomes law. There is no timeline for when that will occur. Therefore, counselling therapists who are GST/HST registrants must continue to charge the GST/HST on their supplies of counselling therapy services.

Where a counselling therapist provides counselling therapy services in a province that does not regulate the profession of counselling therapy, they will first have to determine whether they have the qualifications equivalent to those necessary to be a licensed counselling therapist in a province that regulates the profession of counselling therapy before determining whether their supplies of counselling therapy services can be exempt. If they meet the qualifications set by a provincial regulatory college, the rules that apply to a licensed counselling therapist in the province that regulates the profession will apply.

17. I am a licensed counselling therapist in a province that regulates the profession. I provide counselling therapy services and services that are not within the scope of counselling therapy services. I am registered for GST/HST purposes. When can I cancel my registration?

Supplies of counselling therapy services remain taxable until the proposed legislation receives royal assent and becomes law. There is no timeline for when that will occur. Therefore, counselling therapists who are not small suppliers (refer to Question 13) must remain registered and continue to charge the GST/HST on their supplies of counselling therapy services.

Some health professionals may offer a variety of services, some of which are exempt and some of which are not. For example, once the proposed legislation becomes law, a counselling therapist may make exempt supplies of counselling therapy services alongside taxable services, such as teaching seminars on counselling therapy or providing consulting services.

Where a licensed counselling therapist supplies a service that is not a counselling therapy service, it is important that they identify which supplies are subject to the GST/HST. The supply of such services is subject to the GST/HST if the supply does not fall within another exempting provision of the ETA. The licensed counselling therapist, if a GST/HST registrant, is required to collect the GST/HST at the applicable rate calculated on the value of the consideration for the supply.

Application of the GST/HST digital economy measures when services are provided via electronic means

18. I am a non-resident person that is not licensed to provide counselling therapy in Canada. I provide counselling therapy services online directly to clients in Canada or through a platform. How will the GST/HST apply to my services?

In general, the supply of counselling therapy services to clients remains a supply of a service even when delivered by electronic means.

It is important to note that as of July 1, 2021, GST/HST obligations may be triggered under the new digital economy measures in limited situations. The digital economy measures generally only apply to taxable counselling therapy services when provided directly by a non-resident person or through an intermediary, such as a distribution platform, to specific clients. Conversely, when such services are rendered by a person who is a resident of Canada, whether directly or through a platform, the regular GST/HST registration rules described above apply.

Therefore, to determine their GST/HST obligations, a non-resident person will first have to determine whether they meet the conditions to be a practitioner of counselling therapy.

Where a non-resident person is not a practitioner of counselling therapy for GST/HST purposes under the proposed amendment, the supply of counselling therapy services is a taxable supply. As a result, the non-resident person (supplier) or the intermediary (distribution platform operator) may have potential GST/HST obligations, including registering, charging, collecting and remitting the GST/HST under the new digital economy measures.

On the other hand, if a non-resident person providing counselling therapy services is a practitioner of counselling therapy, the supply of such services would generally be exempt under the proposed amendment and, therefore, would not fall within the scope of the new digital economy measures.

Supplies of counselling therapy services remain taxable until the proposed legislation receives royal assent and becomes law. Therefore, before such time, where a non-resident person (licensed or not) provides counselling therapy services online directly to clients in Canada or through a platform, the supplies remain taxable. As a result, the non-resident person (supplier) or the intermediary (distribution platform operator) may have potential GST/HST obligations, including registering, charging, collecting and remitting the GST/HST under the new digital economy measures.

For more information, go to GST/HST for digital economy businesses: Overview.

Input tax credits

19. I am a licensed counselling therapist in a province that regulates the profession. When the proposed legislation receives royal assent and becomes law, will I still be able to claim input tax credits (ITCs) for the GST/HST I pay?

Once the proposed legislation receives royal assent and becomes law, counselling therapy services provided by a licensed counselling therapist in a province that regulates the profession of counselling therapy will be exempt services.

ITCs are only available for GST/HST registrants to recover the GST/HST paid or payable on property and services to the extent that the property or services are acquired, imported or brought into a participating province by the registrant for consumption, use or supply in the course of their commercial (taxable) activities. An ITC cannot be claimed for the GST/HST paid or payable on property or services that a registrant acquired, imported or brought into a participating province for purposes of making exempt supplies.

Therefore, once the proposed legislation receives royal assent and becomes law, licensed counselling therapists will no longer be able to claim ITCs for the GST/HST paid or payable in respect of their exempt supplies of counselling therapy services.

20. I am a licensed counselling therapist in a province that regulates the profession. I am registered for GST/HST purposes. I recently purchased new computers and supplies for my office and claimed the associated ITCs. What happens when the proposed legislation receives royal assent and becomes law?

Supplies of counselling therapy services made after the proposed legislation becomes law will be exempt from the GST/HST (provided all conditions for the exemption are met). The change in tax status for counselling therapy services will impact a GST/HST registrant’s ITC entitlement. A licensed counselling therapist who is a GST/HST registrant will not be entitled to claim ITCs on inputs (for example, services, capital and non-capital property) acquired for the purpose of making supplies of counselling therapy services that are exempt.

In addition, as a result of the change in tax status of their supplies, a licensed counselling therapist may be required to remit the GST/HST resulting from a change in use (that is, a deemed sale and repurchase) of certain capital property acquired prior to the proposed legislation becoming law.

If, as a result of counselling therapy services becoming exempt from the GST/HST, there is a change in use of capital personal property (for example, office computers) by a licensed counselling therapist from more than 50% in taxable activities to 50% or less in taxable activities, the licensed counselling therapist ceases to use the property primarily in taxable activities.

Where the licensed counselling therapist is a GST/HST registrant, they will be deemed to have sold the property immediately before the change in use occurs. At the time the change in use occurs, they will also be deemed to have collected the GST/HST on the sale of the property equal to the basic tax content of the property at that time.

In addition, the licensed counselling therapist will be deemed to have repurchased the same property at the time the change in use occurs and to have paid the GST/HST on the purchase of the property equal to the basic tax content of the property at that time.

The deemed sale will effectively require the licensed counselling therapist to account for all, or part, of the GST/HST previously claimed as an ITC at the time of the original purchase of, or on any later improvements made to, the property. The licensed counselling therapist will have to account for the amount of the GST/HST deemed to have been collected on the deemed sale of capital personal property in their net tax calculation. This is done by including the amount on line 103 of their GST/HST return (or line 105 if the return is filed electronically) for the reporting period in which the change in use of the property occurs. The licensed counselling therapist will not be eligible to claim an ITC for the GST/HST deemed to have been paid on the deemed repurchase of the property. The licensed counselling therapist would have to remit any positive amount of net GST/HST owing for the reporting period.

For more information on how to calculate the basic tax content and change in use, refer to Guide RC4022, General Information for GST/HST Registrants.

21. I am a counselling therapist and I practise in a province that does not regulate the profession of counselling therapy. When the proposed legislation receives royal assent and becomes law, will I still be able to claim ITCs for the GST/HST I pay?

A counselling therapist will first have to determine whether they have the qualifications equivalent to those necessary to be a licensed counselling therapist in a province that regulates the profession of counselling therapy before determining whether their counselling therapy services can be exempt. If they meet the qualifications set by a provincial regulatory college, the rules that apply to a licensed counselling therapist in the province that regulates the profession will apply. Therefore, once the proposed legislation receives royal assent and becomes law, they will no longer be able to claim ITCs for the GST/HST paid or payable in respect of their exempt supplies of counselling therapy services.

If they do not meet the qualifications equivalent to those necessary to be licensed in a province that regulates the profession of counselling therapy, they will be required to remain registered for the GST/HST (unless they are a small supplier), the supply of their services will remain taxable and they will be entitled to continue to claim ITCs.

Further information