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Getting a medical assessment for your private insurance? There'll soon be a tax for that

Getting a medical assessment for your private insurance? There'll soon be a tax for that

The Canadian Psychological Association is raising alarm bells over potential changes to federal tax laws, which CPA representatives say will place additional barriers in front of anyone seeking mental health services in Canada.

Draft policy changes to Canada’s Excise Tax Act, published at the end of 2014, could subject interactions with private insurers to GST and HST. This, says Dr. Karen Cohen, CEO of the Canadian Psychological Association, is worrisome.

“One in five Canadians have a mental health problem in a given year. And there are great barriers to access and care, and we don’t want to see those barriers be increased,” she told Yahoo Canada News.

Amendments proposed by the Canada Revenue Agency add what’s called a “qualifying health-care supply” to Canada’s Excise Tax Act.

Health services that fall under this definition are exempt from taxation, but the CRA draft policy notes that some services “performed by health-care professionals may be taxable or exempt depending on their purpose.”

“Supplies of medical examinations, reports and certificates that are made solely for other purposes, such as enabling a third party to make a decision for insurance or legal purposes,” the draft reads, “would be taxable at the applicable rate of GST/HST.”

The CPA’s reading of all this is that medical assessments from private insurers will fall under GST/HST laws.

Dr. Cohen said one of the challenges with the Canadian health-care system is that psychological services are not funded when provided outside of a publicly-funded institution.

“So outside of a hospital, if you go see a psychologist within the community, you’re either paying out of pocket or you’re paying for the use of some third-party private insurance.”

Adding a tax to this interaction is, Dr. Cohen continued, taking a service that’s already difficult to access because it isn’t publicly-funded, and making it even moreso by imposing a tax.

“One of the challenges of the Excise Act, as we understand it, is really that they’re saying that there has to be a primarily health-care purpose. And if the purpose of the assessment is (for) the insurer to determine your eligibility for a benefit, it isn’t a health-care purpose.”

The draft policy wasn’t a surprise to Dr. Cohen and her colleagues at the CPA.

The 2013 federal budget contained wording suggesting changes like these would be coming. Since then, the CPA has been in conversation with the CRA about the organization’s issues with the tax.

Just last week, the CPA submitted an official response to the draft policy outlining their concerns. There’s still some time — two or three weeks, according to the CPA — before the policy becomes final, and the organization hopes that changes could still be forthcoming.