There is considerable confusion in the medical community regarding the GST/HST treatment of hospital “on-call” fees paid to physicians. Many doctors assume that all payments from hospitals are exempt from GST/HST, but the Canada Revenue Agency (CRA) has clarified its position—and it may surprise you. 

CRA’s Position on Hospital On-Call Fees

According to the CRA, hospital on-call fees—stipends paid to physicians for being available to respond to hospital needs—are generally taxable supplies for GST/HST purposes.

The key distinction is that these fees are not paid for the actual provision of health care services to individual patients, but rather for the physician’s availability or readiness to provide such services if needed. The CRA considers this to be the supply of a right (intangible property), not a health care service, and therefore not exempt under the usual health care exemptions in the Excise Tax Act [3].

The CRA’s interpretation is clear: unless the on-call fee is directly tied to a health care service rendered to a specific individual, it is subject to GST/HST. The relevant CRA guidance can be found in GST/HST Interpretation 150125[2], which states that the on-call fee is a taxable supply and not exempt as a health care service. 

Why the Confusion?

Many physicians believe that because they are providing a medical service, all payments from hospitals should be exempt. However, the CRA distinguishes between payments for actual patient care (which may be exempt) and payments for being available (which are not). This distinction is not always intuitive, and even hospitals may be unaware of their obligations. 

What If the Hospital Refuses to Pay GST/HST?

A common issue arises when hospitals refuse to pay GST/HST on top of the on-call fee, leaving physicians in a difficult position. If you are a physician in this situation, consider the following practical steps:

1. Communicate in Writing: Clearly inform the hospital, in writing, that it is your understanding that under the Excise Tax Act[3], the on-call fee is a taxable supply. State that you will hold the hospital responsible for any GST/HST, penalties, and interest assessed by the CRA if the hospital fails to comply with its obligations. This written communication can serve as evidence of your efforts to comply with the law and to notify the hospital of its responsibilities.
2. Consider Registration Requirements: If your total taxable supplies (including on-call fees and any other taxable services) exceed $30,000 in a calendar quarter or over four consecutive quarters, you are required to register for GST/HST and remit the tax to the CRA [3]. Even if you are below this threshold, you may choose to register voluntarily.
3. Remitting GST/HST Out-of-Pocket: If the hospital refuses to pay the GST/HST, you may be legally required to remit the tax yourself, even if you did not collect it from the hospital. This can result in an out-of-pocket cost to you, as the CRA will assess the tax based on the gross amount received (i.e., the on-call fee is deemed to include GST/HST if not charged separately).
4. Seek Professional Advice: The GST/HST rules for health care professionals are complex and evolving. Consult with a qualified health care accountant or lawyer to ensure compliance and to discuss strategies for managing your GST/HST obligations. 

Key Takeaways

• On-call fees paid by hospitals to physicians are generally subject to GST/HST.
• The CRA’s position is that these fees are not exempt health care services, but taxable supplies of a right (intangible property).
• Physicians should notify hospitals in writing if GST/HST is not being paid, and clarify responsibility for any resulting tax, penalties, or interest.
• If required, physicians must register for GST/HST and remit the tax, even if not collected from the hospital.
• Always seek advice from a qualified health care accountant to ensure you are meeting your tax obligations. 

For more information, you can review the CRA’s stated position in Excise and GST/HST News – No. 101 [1,4], GST/HST Interpretation 150125 [2] and consult with your experienced healthcare accountant to ensure you are compliant with the latest requirements.

 

 

Disclaimer:

This blog post is for informational purposes only and does not constitute legal or tax advice. Every situation is unique, and you should consult a qualified professional before taking any action based on the information provided herein. The authors and the firm accept no liability for actions taken or not taken based on this content.

 

Footnotes:

1. CRA Newsletter – Excise and GST/HST News No. 101:The CRA directly addresses the GST/HST treatment of hospital on-call fees in Excise and GST/HST News No. 101. The newsletter explains that the fee paid to a physician for being on call is considered a taxable supply of a right (intangible personal property), not an exempt health care service. The newsletter further clarifies that only the additional amounts paid for actual intervention in patient care may be exempt as a health care service.

   Excise and GST/HST News No. 101 – Medical practitioner on-call fees .

2. CRA GST/HST Interpretation 150125 – Hospital On-Call Fee:This interpretation letter provides a detailed explanation of why on-call fees are taxable. The CRA states that the on-call fee is consideration for the supply of a right to call upon the physician, which is not an exempt health care service under section 5 of Part II of Schedule V to the Excise Tax Act. The letter also discusses the registration requirements for physicians and the implications if GST/HST is not collected from the hospital.

   GST/HST Interpretation 150125 – Hospital On-Call Fee (2016).

3. Excise Tax Act, Schedule V, Part II, Section 5:The statutory exemption for health care services applies only to a “consultative, diagnostic, treatment or other health care service rendered by a medical practitioner to an individual.” The supply of a right to be called upon (i.e., on-call coverage) does not meet this definition and is therefore not exempt.

   Schedule V, Part II, Section 5, Excise Tax Act.

4. CRA Newsletter – Practical Guidance:The CRA newsletter also provides practical guidance, noting that if the consideration for the supply of the right to call upon the medical practitioner is payable or reimbursed by the government of a province under a plan established under an act of the legislature of the province to provide for health care services for all insured persons, the supply may be exempt under section 9 of Part II of Schedule V. However, this is a question of fact and does not generally apply to standard hospital on-call arrangements.

   Excise and GST/HST News No. 101 – Medical practitioner on-call fees .

5. CRA Guidance on Registration and Remittance:The CRA’s position is that if a physician is required to register for GST/HST (i.e., if their taxable supplies exceed $30,000 in a calendar quarter or in four consecutive quarters), they must collect and remit GST/HST on taxable supplies, including on-call fees, even if the hospital refuses to pay the tax. If GST/HST is not collected, the amount received is deemed to include GST/HST, and the physician must remit the tax out-of-pocket.

   GST/HST Interpretation 150125 – Hospital On-Call Fee (2016).