Some important changes to the taxation of psychotherapy and counselling therapy services were announced this week. While the House of Commons has recently adjourned for summer recess, a number of sales tax measures introduced prior to the break. This includes details contained in Bill C-59 receiving Royal Assent on June 20, 2024.

Historically, psychotherapists and counseling therapists had not been considered “practitioners” under the Excise Tax Act, which required GST/HST to apply to their services. The introduction of Bill C-59 adds both psychotherapists and counseling therapists to the list of health care practitioners, meaning professional services provided by these practitioners in future should be exempt from GST/HST as health care services.

It is important to note that the exemption permitted by way of Bill C-59 applies to psychotherapy and counselling therapy services rendered to an individual by a practitioner. Therefore, not all services performed by these practitioners will be exempt from GST/HST if not rendered to an individual.

When is the new legislation effective?

The new legislation was made effective immediately upon receiving Royal Asset on June 20, 2024.

Can I still claim input tax credits (ITCs) on my expenditures as a provider?

Likely not. Since psychotherapy and counselling therapy services are now exempt from GST/HST, practitioners can no longer claim ITCs for GST/HST paid on expenses related to these services.

For assistance with implementing these changes to your business, contact us and ask to speak to a member of our HST team.