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Payments Made Between Medical Practitioners or Practitioners

In certain situations, payments made between medical practitioners or practitioners (hereinafter “practitioners”) supplying exempt healthcare services within a medical practice organization (such as a medical clinic) may be subject to taxes.

As a general rule, where several practitioners are involved in a medical practice organization and an amount is paid by a practitioner to another practitioner or is withheld from or invoiced to a practitioner by another practitioner, the amount paid or withheld is consideration for a taxable supply where that amount is used for:

  • the use of medical facilities
  • administrative services (such as secretarial, support or overhead services)
  • other goods and services (such as equipment, referrals, mentoring or coaching, bookkeeping, or marketing direction)

If the practitioner receiving the amount is a GST/HST and QST registrant, he or she must collect and remit taxes in respect of this taxable supply.

However, payments made in the following situations are not subject to taxes:

  • a bona fide arrangement whereby a practitioner agrees to share, with another practitioner, fees billed for exempt healthcare services provided to the latter’s patients while acting on his or her behalf during his or her temporary absence from the office (such as during periods of vacation or illness)
  • a partnership agreement under which a partner agrees to pay to the medical partnership a portion of the fees billed for exempt healthcare services
  • a cost-sharing arrangement in which one practitioner acts as an agent of another practitioner for the acquisition of specific goods and services common to their business practice (under such an arrangement, the practitioner pays a portion of the fees billed for exempt healthcare services to the agent practitioner as a reimbursement for the specific goods and services acquired by the agent practitioner on behalf of the practitioner)

For further information, refer to GST/HST policy statement P-238, Application of the GST/HST to Payments Made Between Parties Within a Medical Practice Organization, or interpretation bulletin TVQ. 1-4, Nominal Partnerships.

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