Elim Housing Society v. R. - TCC: Long-term care facility entitled to full 83% GST rebate

Elim Housing Society v. R. - TCC:  Long-term care facility entitled to full 83% GST rebate


Elim Housing Society v. The Queen (November 10, 2015 – 2015 TCC 282, Woods J.).

Précis:   This decision concerned whether a long-term care facility was subject to a 83% GST rebate, as contended by the taxpayer, or a 50% GST rebate as contended by the Crown:

[1]             Elim Housing Society (“Elim”) is a British Columbia non-profit organization that operates residential care facilities, including a long-term care facility called The Harrison. This appeal under the Excise Tax Act (the Act) concerns Elim’s entitlement to a public service body rebate with respect to this facility.

[2]             For purposes of goods and services tax (GST) and harmonized sales tax (HST) under the Act, Elim claimed public service body rebates with respect to The Harrison on the basis that its supplies are encompassed by the term “facility supply,” as that term is defined in subsection 259(1) of the Act. Elim has been reassessed to reduce the amount of eligible rebates on the basis that The Harrison did not make facility supplies.

[3]             There are two claim periods at issue, 2009 and 2011. For 2009, the GST was in effect and the rebate with respect to The Harrison was reduced from 83 percent to 50 percent. For 2011, the HST was in effect and the rebate was similarly reduced. It is not necessary that I outline the specifics of the HST reduction. For convenience, I will refer to the rebate claimed by Elim as the “83 percent rebate” and the rebate that was assessed as the “50 percent rebate.”

[4]             It appears that the amounts at issue with respect to The Harrison are approximately $293,337 for 2009 (related to the construction of the facility) and $13,775 for 2011 (Ex. R‑1, Tabs 5, 6).

[5]             For the information of readers, counsel advised at the commencement of the hearing that several long-term care facilities have outstanding tax disputes similar to this one which may be affected by the outcome of this appeal.

The Court held, on the evidence, that The Harrison was providing medically necessary health care to residents and, accordingly, was entitled to the 83% rebate.  As a result the appeal was allowed in full, with costs.

Decision:    This decision is highly fact dependent but turns on a very simple disagreement between the parties:

[59]        In order for Elim to qualify for the 83 percent rebate, The Harrison must make supplies of property or services that satisfy the requirement in paragraph (a) of the definition of facility supply” excerpted below.


(a) […] the property is made available, or the service is rendered, to an individual at a public hospital or qualifying facility as part of a medically necessary process of health care for the individual for the purpose of maintaining health, preventing disease, diagnosing or treating an injury, illness or disability or providing palliative health care, […]

[Emphasis added]

[60]        The essence of the disagreement between the parties is whether the health care provided by The Harrison is medically necessary.

[61]        What is meant by the term medically necessary? The difficulty with this language is that it is extremely broad. A simple example is a supply of food and drink, which may be considered a health care service that is medically necessary.

[62]        In the case of The Harrison, it makes sense in my view to look at the nature of the care services provided and determine the extent to which they address medical concerns.

The Court examined the role of physicians at The Harrison:

[74]        The Crown implies that the role of physicians who treat residents at The Harrison have a passive or incidental part in the health care process (Respondent’s Written Submissions, para. 64). This view does not reflect the true role of physicians in the health care process. The physicians not only make themselves available at all times for the residents, but through their regular visits and other interactions with the nursing staff, the physicians would be very knowledgeable about the condition of their patients and involved with their care.

[75]        Finally, the Crown submits that residents admitted to The Harrison are required by regulation to be medically stable. Dr. Blinkhorn expressed doubt that this accurately reflects the reality of the situation, but in any event this requirement appears to only apply at the point in time when the individual becomes a resident. The fact is that the life expectancy of the residents at The Harrison is between three months and three years. It is reasonable to expect that the residents will require substantial medical care by a physician during this final stage of their lives.

It also looked at the extent of medical management:

[77]        This requirement is satisfied in respect of the residents at The Harrison. Medical management is demonstrated by the fact that residents are required to have a physician on call at all times and The Harrison is required to have inter‑disciplinary meetings for each resident annually, which generally involve the attendance of a physician. In addition, the residents at The Harrison who have physicians associated with The Harrison are visited regularly by physicians and during the visits the physicians are kept up-to-date by the nursing staff. The health care process is a team approach, which includes nurses and physicians.

[78]        It is worth mentioning that this legislative requirement focusses on the resident. It is the resident who is required to be subject to medical management, not the health care process. Accordingly, it is not necessary that the physician have management of the health care process itself.

[79]        It is clear that residents at The Harrison are generally subject to medical management and that this is reasonably expected to be required by the health care process.

Finally the Court looked at the amount of therapeutic health care offered:

[80]        There remain two disputed elements in the definition of “facility supply,” both of which involve the term “therapeutic health care services.” These elements are that the health care process must reasonably be expected to require that the resident receive both a range of therapeutic health care services throughout the process, and a sufficient amount of therapeutic health care services during each calendar day.

[97]        Turning to the facts of this case, The Harrison received funding during the relevant period for 2.8 hours of care per resident per day. Since some of the care provided at The Harrison is provided in groups (e.g. oversight for choking risk at meals), the funding actually provides greater than 2.8 hours of care per day per resident.

[98]        When one considers the high level of health care that is provided generally at The Harrison, I find that this requirement is satisfied.

In the result the Court concluded that The Harrison met all of these requirements and allowed the appeal in full, with costs.