Psychotherapy and Counselling Therapy Services Now Exempt from GST/HST

The Canadian government has made a significant stride in healthcare accessibility by exempting psychotherapy and counselling therapy services from GST/HST. This change, introduced through Bill C-59 and enacted with Royal Assent on June 20, 2024, reclassifies psychotherapists and counselling therapists as healthcare practitioners under the Excise Tax Act.

Understanding the Impact of Bill C-59

Historically, these essential mental health services were subject to GST/HST, posing financial hurdles for both practitioners and clients. However, with the passage of Bill C-59, services provided directly to individuals by psychotherapists and counselling therapists are now exempt from GST/HST. This shift aims to make mental health care more affordable and accessible across Canada.

Key Details to Note

Exemption is now in effect upon Royal Assent, allowing practitioners to streamline their financial practices and focus on client care without the added tax burden.

**No More ITCs** With the exemption, providers can no longer claim Input Tax Credits (ITCs) for GST/HST paid on related expenses. This change reflects the new status of these services as healthcare-related and exempt from indirect taxation.

There is nothing specific that is required to stop charging GST/HST on these exempt services, you can simply remove tax from your invoices.

It is important to note that the exemption 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. Services such as group counselling, supervision, workshops and management fees are still taxable services.

Action Steps for Providers

If you’re a psychotherapy or counselling therapy provider affected by these changes and no longer need to charge GST/HST, consider these steps to determine if you should cancel your GST/HST account.

  1. Verify Eligibility: Ensure your services meet the criteria outlined in Bill C-59 for the exemption. If you still offer taxable services of $30,000 or more in 4 consecutive quarters, you will be required to maintain your GST/HST account. Please note that these now exempt services rendered to an individual do not count toward your threshold.
  2. Access CRA Online Services: Log in to the CRA’s Business Account portal for account management. Click on the RT0001 account.
  3. Navigate to GST/HST Account Services: Look for options related to managing your GST/HST account, if you scroll down you should see “Close your GST/HST account” on the right-hand side.
  4. Submit Your Request: Follow the prompts to initiate the cancellation of your GST/HST account. Provide accurate information to expedite the process and select the date that you would like to de-register.
  5. Confirmation: Once processed, you’ll receive official confirmation of your account cancellation from the CRA.
  6. Timeline: You will have 30 days from the date you selected as your final GST/HST registrant date to file and pay any previously collected sales tax.

Embracing Change for Better Healthcare Access

Bill C-59’s enactment marks a significant win for mental health care in Canada, helping to remove some of the financial barriers for individuals seeking vital psychotherapy and counselling services. Providers are encouraged to stay informed about these regulatory changes and adapt their financial strategies accordingly.

For the latest updates and detailed guidance on tax obligations and exemptions, consult official resources from the Canada Revenue Agency (CRA) or seek advice from qualified tax professionals, such as The Number Work Professional Corporation.