An agency sends a registered nurse to a nursing home. The nurse provides nursing care to residents. The home pays the agency. What was supplied, and by whom to whom, determines whether thirteen percent is owed on the invoice, and the answer is genuinely unsettled.
Key Takeaway
CRA's own guidance distinguishes a supply of personnel by a placement agency, which is generally taxable, from a supply of nursing services, which may be exempt. In Santa Cabrini Hospital v. Her Majesty The Queen, 2016 FCA 207, the Federal Court of Appeal concluded the object of the agreement was the supply of nurses and the agency provided a taxable placement service. In A-Supreme Nursing & Home Care Services Inc. v. The King, 2023 TCC 39, the Tax Court determined the supply was an exempt nursing service, in a case where CRA had reassessed over $1,000,000. A CRA interpretation cites both and states that characterisation varies depending on the obligations and responsibilities agreed to by the parties. Because many clients in this sector make exempt supplies themselves, the tax charged is frequently a real cost to them rather than a recoverable one.
A Note On Currency
Everything here is stated as verified in August 2026 and requires confirmation before reliance.
We have read neither of the judgments described. Our accounts of Santa Cabrini Hospital and A-Supreme come from a CRA interpretation and from professional commentary.
One CRA source we rely on is archived and dates from 2013[1]. Another is an interpretation which states expressly that it is not a ruling, does not bind CRA in a particular situation, and may be affected by future changes to the legislation or to CRA's interpretative policy[2].
We also report a direct conflict between sources on a basic point, which we have not resolved and which is set out in its own section.
This is not tax advice. This is an area where two courts have reached different conclusions and CRA's own guidance says the answer depends on the particular arrangement, which is precisely the situation requiring advice on specific facts.
The Distinction
The question, in CRA's own words.
Its guidance states that, unlike a supply of nursing services which may be exempt, a supply of personnel made by a placement agency is generally subject to the GST/HST at the applicable rate depending on the place of supply[1].
So there are two possible characterisations of the same commercial arrangement.
Either the agency supplies people to a facility, which is a taxable placement service, or the agency supplies the service those people perform, which may be exempt.
The economic reality looks identical from the outside, and this is our own emphasis. In both cases a nurse arrives, care is delivered, and the facility pays the agency.
The difference is legal rather than observable: what did the parties agree the agency would provide, and to whom was the service rendered.
This is the third time this series has encountered the same structural problem. In the health practice article the question was the purpose of a supply. In the financial intermediary article it was whether an activity was arranging or merely preparatory. Here it is whether the object of the contract is the person or the work.
In each case the same facts support two accurate descriptions, and the tax turns on which one governs.
Two Cases, Two Answers
The state of the law, which is not settled.
In Santa Cabrini Hospital v. Her Majesty The Queen, 2016 FCA 207, the Federal Court of Appeal concluded that the object of the agreement between the parties was the supply of nurses, and that the agency provided a taxable placement service[2].
In A-Supreme Nursing & Home Care Services Inc. v. The King, 2023 TCC 39, the Tax Court of Canada determined that the supply provided by the agency was the exempt supply of nursing services[2].
Commentary describes A-Supreme as involving a CRA audit of a staffing agency in the business of supplying healthcare workers, resulting in a reassessment for over $1,000,000, and identifies the main issue as whether the appellant provided a taxable or exempt supply when supplying nurses and personal support workers to nursing homes and long-term care facilities[3].
It records that the agreement between the appellant and its clients was for the provision of staff who carry out nursing services, and that the dominant element of the supply was in question[3].
Two decisions, similar sectors, opposite conclusions, and this is our own observation about what that means.
A taxpayer cannot resolve this by finding the case that matches their industry. Both cases are about nurses supplied to facilities. The outcomes diverged on the arrangements, not on the sector.
What CRA Says About Them
The Agency's own reconciliation of the two decisions, which is more candid than one might expect.
Its interpretation states that the characterisation of arrangements involving staffing agencies varies depending on the obligations and responsibilities agreed to by the parties. Depending on the agreement, the supply made by the agency may be a supply of personnel, or it may be characterised as a nursing service. As a result, the tax status of the supply made by the agency will vary depending on the particular circumstances of each situation. It cites both Santa Cabrini Hospital and A-Supreme as demonstrating this[2].
Three things follow, and they are ours.
CRA is not asserting that all staffing supplies are taxable. It is saying the answer depends on the arrangement, and it points to a decision that went the other way as authority for that proposition.
That is a meaningful concession, and an agency told by an auditor that its supplies are necessarily taxable should be aware the Agency's own published interpretation does not say so.
And because the answer turns on the agreement, the agreement is where the outcome is determined, which is the subject of a later section.
The interpretation carries its own limits. It states that it is not a ruling, does not bind CRA with respect to a particular situation, and could be affected by future changes to the legislation or to CRA's interpretative policy[2].
A Conflict In The Sources
A disagreement we encountered while researching this article, which we report rather than resolve.
One commercial source states flatly that all staffing and recruitment services are taxable, with no exemptions, and that CRA audits in this sector focus on accuracy rather than eligibility[4].
That statement cannot be reconciled with the material set out above.
CRA's own guidance says a supply of personnel is generally taxable while a supply of nursing services may be exempt[1]. Its interpretation says the tax status varies with the circumstances[2]. And a Tax Court decision found an agency's supply to be exempt[2][3].
We flag the conflict for two reasons, and this is our own view.
The first is methodological. This is exactly the kind of confident simplification that circulates in an area where the real answer is uncomfortable, and a business relying on it would conclude the question was closed when it is not.
The second is practical. The direction of the error matters. An agency told that its supplies are certainly taxable will charge tax, and if its supplies were in fact exempt it has charged a client who, as explained below, frequently cannot recover it.
That is the same two-directional exposure this series identified in the financial intermediary article, and the same reason a confident default in either direction is unsafe here.
Where The Line Appears To Fall
The factual features that seem to matter, drawn from the sources.
Commentary describes CRA's position as being that where the staffing agency's responsibility is limited to providing registered or licensed nurses to the facility so that the facility may satisfy its own staffing requirements, and with the nurses subject to the control of the operator of the facility, the services rendered by the agency are taxable rather than exempt[5].
Two elements appear there and this is our own reading.
Whose staffing requirement is being met. Where the facility has a roster to fill and the agency fills it, the agency is providing people. Where the agency has undertaken to deliver care, it is providing a service.
Who controls the worker. Where the facility directs the nurse, the facility is running the care and the agency has stepped back at the point of delivery.
Control is a familiar test to readers of this series. It appeared in the personal services business article and again in the trucking article, in each case distinguishing an independent supplier from something else.
Here it is doing different work. It is not asking whether the worker is an employee; it is asking what the agency sold.
We would add a caution. That description of CRA's position dates from 2013 and is a commentator's characterisation. The same source noted at the time that CRA's position had not yet been tested in the Tax Court and that its legality was far from certain[5], and A-Supreme has since gone the other way on its facts.
Accountable For The Quality
The other side of the same line, from CRA's own guidance, and it is the more useful formulation for an agency.
It states that if the company is responsible for the provision of nursing services to the patients or residents of the facility and is accountable for the quality of nursing care provided, the company may have made an exempt supply of a nursing service rendered by a registered or licensed nurse to an individual, where the service is provided within a nurse-patient relationship[1].
That gives an agency something concrete to assess, and this is our own analysis.
Accountability for quality is not a label. It shows up in real features of an arrangement: who supervises clinically, who investigates a complaint, who carries professional liability, who sets care standards, who is answerable if care falls short, and who bears the consequence.
An agency that supplies a person and steps away has none of those. An agency that manages a care programme, supervises its own staff and answers for outcomes has all of them.
Most real arrangements sit somewhere between, which is why the question is difficult and why the same sector produced two different outcomes.
We would put it to an agency as a single question: if the care is inadequate, who is answerable, and how would that be demonstrated?
An agency whose honest answer is that the facility is answerable is describing a supply of personnel.
The Nurse-Patient Relationship
The statutory hook, which contains a phrase doing considerable work.
Commentary quotes the exempting provision as covering a supply of a nursing service rendered to an individual by a registered nurse, a registered nursing assistant, a licensed or registered practical nurse or a registered psychiatric nurse, if the service is rendered within a nurse-patient relationship[3].
Two features matter, ours.
The service must be rendered to an individual. A supply made to a facility, of people, is not a service rendered to an individual, which is the structural reason a pure placement fails the exemption.
And it must be rendered within a nurse-patient relationship, which locates the relevant relationship between the practitioner and the person receiving care rather than between the agency and its client.
That creates the analytical difficulty at the heart of this area, and it is worth stating plainly.
In every one of these arrangements a nurse-patient relationship exists. The nurse attends a resident and provides care. What is contested is whether the agency's supply is that service, or whether the agency's supply is the nurse who then, separately, delivers it.
An agency also needs to consider the further conditions this series described in the health practice article, since that same Part of the Schedule contains exclusions which must be cleared. The interpretation notes the analysis is subject to the supply not being excluded by those sections[2].
What Is At Stake
The magnitude, computed by us at a thirteen percent rate.
An agency billing $2 million a year has annual tax of roughly $260,000, or about $1.04 million across a four-year period.
At $5 million of billings, roughly $650,000 a year and $2.6 million over four years.
At $8 million, roughly $1.04 million a year and $4.16 million over four.
For calibration, the reported reassessment in A-Supreme exceeded $1,000,000[3]. On our own working, $1,000,000 of tax at thirteen percent corresponds to roughly $7.7 million of billings.
Two features make this exposure worse than the raw numbers suggest, and both are ours.
Staffing is a high-revenue, low-margin business. The billings largely represent wages passed through with a markup, so tax computed on gross billings is very large relative to the agency's actual profit.
An agency earning a fifteen percent margin on $8 million of billings has roughly $1.2 million of gross margin, against a four-year tax exposure of $4.16 million on our figures.
So an assessment of this kind is not a bad year. It exceeds several years of the entire gross margin of the business.
Held In Trust
A feature of the tax that changes the character of the liability.
Commentary states that the tax, when charged, is considered to be held in trust for the government, referred to as a deemed trust amount, and that it is the taxpayer's responsibility to collect, withhold and remit it. It records that in A-Supreme, because the staffing agency failed to do so on the basis that the supply was not subject to tax, it was later held by CRA to be directly liable for the respective amount[3].
Note what that sequence establishes, which is our own emphasis.
The agency's belief that the supply was exempt did not affect its liability. Having not charged the tax, it owed it.
This is now the fifth sector in this series where the same principle has appeared, and it is worth restating because it is the single most consequential rule in sales tax practice: the obligation to account does not depend on having collected.
The trust characterisation adds something further. Amounts held in trust for the Crown have consequences beyond an ordinary debt, particularly in insolvency and for those responsible for the corporation's affairs.
We have not examined those consequences and do not describe them. An agency facing a material assessment should ask about them specifically, because the answer affects who bears the liability if the company cannot pay.
The Client Cannot Always Recover
The consequence for the party paying the invoice, which changes the commercial dynamic entirely. This section is our own analysis.
In an ordinary supply chain, tax charged on a business input is recovered by the recipient and the amount washes out.
The clients in this sector are frequently not ordinary. Nursing homes, long-term care facilities, hospitals, clinics, schools and similar organisations make substantial exempt supplies, and their entitlement to recover tax on inputs is correspondingly restricted.
We have not verified the mechanics of that restriction, and rebate regimes exist for some public service bodies which we have not examined.
What follows structurally is that tax charged on a staffing invoice to such a client is, at least in part, a real cost rather than a recoverable one.
On our own figures, $1 million of staffing at thirteen percent carries $130,000 of tax. To a manufacturer making taxable supplies, that is a timing item. To a facility making exempt supplies, a substantial part of it is money gone.
That has a consequence agencies underestimate. The classification decision is not internal to the agency. It determines whether its client pays roughly thirteen percent more for labour.
Which produces the situation described next, and it is unusual.
Which Answer Does The Client Want
An observation about aligned and opposed interests, offered as our own.
In most tax classification disputes the supplier and the recipient want the same answer, or the recipient is indifferent because it recovers the tax either way.
Here they may be aligned in a way that is worth naming. Both the agency and an exempt-supplier client have an interest in the supply being exempt: the agency avoids an assessment risk, and the client avoids an unrecoverable thirteen percent.
That alignment is comfortable and it is dangerous, because it means nobody in the transaction has an incentive to test the position.
Two consequences follow.
An entire sector can settle on a treatment that suits everyone commercially and has never been examined. Commentary describes exactly that, noting that healthcare staffing companies historically did not bill or collect tax on the understanding that they were providing healthcare services, and that CRA has challenged that position through targeted audits[6].
And an agency that decides to start charging tax faces commercial resistance from clients who will bear it as a genuine cost, which is a real obstacle to correcting a position.
That second point deserves emphasis for anyone advising in this sector. The barrier to fixing this is not usually analytical. It is that fixing it makes the agency more expensive than competitors who have not.
The National Project
The enforcement context, which is broader than the healthcare question.
Commentary refers to a national GST/HST project on staffing agencies, and states that CRA has ramped up audits of staffing agencies and of businesses that contract these agencies[7].
It reports the project revealing various types of non-compliance, including hiring people off the books, failing to report bank accounts, and paying workers under the table[7].
Another describes CRA focusing on transactions between staffing agencies and their clients and uncovering instances of fraud, including false invoices and sham transactions[7].
Three observations, ours.
A national project is a different thing from ordinary risk-based selection. It indicates a sector-wide programme with dedicated resources, which is the same posture this series described in construction and in real estate.
The conduct described is at the serious end. Off-books labour and cash wages are not classification errors; they are a different category of problem, and they colour how the sector is approached.
And an agency with an entirely legitimate classification question is being examined within a programme framed around that conduct. That is unfair in one sense and simply the reality in another, and it argues for having documentation in order before an examination rather than during one.
The Agency That Disappears
A fraud pattern that creates exposure for innocent clients, described plainly in commentary.
It sets out a typical scenario: an employer, being a registrant, hires temporary workers through a third-party staffing agency. The agency charges the employer for the cost of the workers plus tax, which allows the employer to claim credits based on the invoices provided. The agency then absconds without remitting the tax[8].
It adds a variant: sometimes the agency hires a subcontractor to provide the labour, and the subcontractor later disappears with the tax that should have been remitted[8].
And it identifies other patterns, including using multiple bank accounts while reporting revenues from only some of them, and unreported cash transactions[8].
The structure of the fraud is worth understanding, and this is our own analysis.
The tax is collected from the client and never reaches the Crown. The client has a valid-looking invoice and claims a credit. So the Crown has paid out a credit against a remittance it never received, and the party who took the money is gone.
The recovery question then becomes: who bears that loss.
The answer, in a great many jurisdictions and apparently here, is that pressure falls on the party who is still present and solvent, which is the client.
The Client Gets Audited Too
The consequence for the business that hired the agency, and it is the most important part of this article for readers who are not agencies.
Commentary states the outcome directly: CRA will generally commence a tax audit of the business that hired the temporary staffing agency as well as the staffing agency itself[8].
On our own figures, a client that paid $1 million of staffing and claimed $130,000 of credits has that amount at issue if the credits are denied.
Three points, ours.
The client did nothing wrong in the ordinary sense. It engaged an agency, received workers, paid an invoice showing tax, and claimed a credit as any registrant would.
Its exposure arises from someone else's conduct, which is a pattern this series has now seen repeatedly. In the non-resident withholding article the payer was liable for a supplier's tax. In the flow-through share article investors bore an issuer's failure. Here a client bears an agency's.
And the protective steps available are unglamorous and cheap. Verifying that an agency's registration number is valid and active, at the outset and periodically, is a few minutes of work. Commentary elsewhere identifies subcontractor invoices being invalid, with credits denied, as a recurring issue in this sector[4].
A business using labour agencies should treat registration verification as a standing procurement control, in the same way this series recommended verifying subcontractor registration in construction.
Subcontractor Chains
An added complication where an agency does not supply its own people. This section is our own analysis, building on the reported variant above.
Staffing arrangements frequently involve more than two parties. An agency wins a contract and subcontracts fulfilment to another agency, which may itself use a third.
Each link adds a supply, a registration and a remittance obligation, and each is a point at which the chain can fail.
Commentary identifies exactly that failure mode, describing an agency's subcontractor disappearing with the tax[8], and separately identifies agencies relying on subcontractors whose registration numbers may be invalid[4].
Three consequences for an agency in the middle of such a chain.
Its own credits depend on its subcontractors' registrations being valid, so a subcontractor's status is the agency's problem rather than the subcontractor's.
Its classification analysis is complicated by not controlling delivery. An agency arguing that it is accountable for the quality of care, while the care is delivered by another agency's staff, has a harder case.
And the client's exposure runs through the chain regardless of how many links it contains, which means the client's diligence on its immediate counterparty may not be enough.
An agency that subcontracts should expect to be asked about its own supply chain, and a client should ask whether the agency it engaged is actually supplying the people.
Beyond Healthcare
The scope of the question, which is wider than nursing. These are our own observations.
The nursing cases are the developed authority, but the underlying issue arises wherever an agency supplies people who perform a service that would be exempt if supplied directly.
Personal support workers, addressed in A-Supreme alongside nurses[3]. Staff supplied to childcare operations. Teachers or instructors supplied to educational institutions. Practitioners supplied to clinics.
And in the opposite direction, the taxable characterisation is uncontroversial across most of the staffing sector. Commentary lists the ordinary questions CRA examines for staffing and recruitment generally: whether tax was charged on placement and recruitment fees, whether the correct rate was applied where clients are out of province, whether HR consulting has been used as a label to avoid tax, and whether reimbursements were treated correctly[4].
We would flag the labelling point specifically. Recharacterising a staffing supply as consulting, management or administration in order to change its treatment is the kind of step that fails on examination and looks worse than the original position.
The place of supply point is also worth attention for any agency with clients in more than one province, since the rate follows rules that are not intuitive and an error is systematic across every invoice to that client.
Where This Is Decided
The practical conclusion, which follows from CRA's own framing. This section is our own analysis.
The interpretation says characterisation varies depending on the obligations and responsibilities agreed to by the parties[2]. That locates the answer in the agreement.
Which means the outcome is settled by a document, usually drafted for commercial reasons, often years before anyone asks the tax question.
Five features of an agreement bear on it.
What is being supplied, described in the operative clause. An agreement to provide qualified personnel says one thing; an agreement to provide care services says another.
Who directs the worker day to day, and whose policies and procedures apply.
Who is accountable for quality, including supervision, complaints and remediation.
How the fee is computed. Hourly rates per worker with a markup describe a supply of people; a fee for a defined service outcome describes something else.
Who carries professional liability and insurance for the work performed.
An agency whose contracts describe a supply of personnel while it argues it supplies care is contradicted by its own paperwork, which is the same failure this series identified in the financial intermediary article, where contracts written in the vocabulary of the exclusion did the Crown's work.
The instruction is to make the agreements describe what the business genuinely does, decided on commercial grounds, and then to treat the tax consistently with that.
What The Auditor Actually Examines
The enquiry in practice. This section is our own analysis.
The client agreements, and specifically what the operative clause says is being supplied.
Who directed the workers, evidenced by scheduling, supervision, policies and reporting lines.
Where clinical or professional accountability sat, including who handled complaints and who carried liability insurance.
How fees were computed, and whether the invoice describes hours of personnel or a service delivered.
Whether tax was charged consistently across clients, since inconsistent treatment on similar arrangements invites the question.
Place of supply, where clients are in more than one province.
Subcontractor registrations and invoices, supporting the agency's own credits.
Bank accounts against reported revenue, and cash movements, given the conduct the national project has reportedly uncovered.
The fifth item is worth isolating. An agency treating some clients as exempt and others as taxable has created a comparison the auditor does not have to construct, and should be able to explain what differs in the arrangements.
What Records Survive
Client agreements retained in the form actually used, with amendments, for each period.
A written classification analysis per client arrangement, prepared with an advisor and reviewed when terms change.
Evidence of who supervised and directed workers, including schedules, policies and escalation paths.
Complaint and incident records, showing who investigated and who remediated.
Professional liability insurance documentation, showing what is covered and for whom.
Verified subcontractor registration numbers, checked at engagement and periodically thereafter, with the date of each check.
Place of supply determinations for each client, with the basis recorded.
A complete list of bank accounts reconciled to reported revenue.
If You Use An Agency
A short section for the other side of the transaction, offered as our own.
Verify the agency's registration number, and re-verify it. Commentary reports credits denied on invalid subcontractor invoices, and reports CRA auditing the business that hired the agency.
Ask who is actually supplying the workers. If your agency subcontracts, your exposure runs through a chain you have not assessed.
Understand whether you can recover the tax. If your organisation makes exempt supplies, thirteen percent on a labour bill may be a real cost, and it belongs in the procurement decision.
Keep the invoices and the agreements together. A credit claim depends on documentation that meets the requirements, and staffing invoices are frequently thin.
Be alert to an agency that does not charge tax. It may be right, and it may be carrying an exposure that will not survive. Ask what its position is and on what basis.
Treat an unusually cheap rate as a question rather than a win. The reported conduct in this sector includes off-books labour and unremitted tax, and both make an agency cheaper until they do not.
What To Do
Do not accept that the question is settled in either direction. One court found a taxable placement service, another found an exempt nursing service, and CRA's own interpretation cites both.
Read your own agreements against the question. CRA says characterisation varies with the obligations and responsibilities agreed by the parties, which puts the answer in the contract.
Ask who is answerable if the work is inadequate. CRA's guidance turns on responsibility for provision and accountability for quality, and that question has an honest answer in every arrangement.
Be consistent across clients, or be able to explain the difference. Mixed treatment on similar arrangements is visible from the invoices alone.
Remember the liability does not depend on having charged. The tax is described as held in trust, and in A-Supreme the agency was held directly liable having not collected it.
Model the exposure against gross margin, not revenue. On our figures a four-year assessment can exceed several years of an agency's entire gross margin.
Verify subcontractor registrations if you subcontract. Your credits depend on their status, and reported failures in this sector run through chains.
Do not relabel a staffing supply as consulting. Commentary identifies that specifically as an incorrect approach CRA looks for.
Check place of supply if you bill across provinces. A rate error is systematic across every invoice to that client.
If you are correcting a historical position, take advice on the route. This series has described the disclosure programme separately, and its terms depend on who moves first.
The Limits Of This Analysis
Several caveats matter. This is not tax advice; two courts have reached different conclusions on similar facts and CRA's own guidance says the answer depends on the particular arrangement, which is precisely the situation requiring advice on specific facts. Everything is stated as verified in August 2026 and requires confirmation. We have read neither Santa Cabrini Hospital nor A-Supreme, and describe both from a CRA interpretation and professional commentary; we did not obtain the reasoning of either. One CRA source relied on is archived and dates from 2013. The CRA interpretation cited states expressly that it is not a ruling, does not bind the Agency in a particular situation, and may be affected by future changes to the legislation or to interpretative policy. We have reported a direct conflict between sources on whether staffing supplies admit of any exemption, and have not resolved it. The description of CRA's control-based position dates from 2013, is a commentator's characterisation, and the same source noted the position was then untested and its legality far from certain. We have not verified any statutory provision against the Act, and have not examined the exclusions in the same Part of the Schedule that this series addressed elsewhere. We have not described the mechanics restricting input tax credit recovery for exempt suppliers, nor the public service body rebate regimes that may apply to some clients. We have not examined the consequences of the deemed trust characterisation. All arithmetic is our own, applies an illustrative rate to hypothetical billings and an assumed margin, and is illustrative only. The alignment-of-interests analysis, the subcontractor chain discussion, the contract features list, the client-side guidance and the audit examination structure are our own. This article does not address employment standards or licensing obligations for staffing agencies, worker classification for source deduction purposes, provincial payroll taxes, or the position of workers themselves.
Frequently Asked Questions
Is a staffing agency's supply taxable or exempt?
What distinguishes the two?
We never charged tax because we thought we were exempt. Where does that leave us?
How large can this get?
We are the client, not the agency. Are we exposed?
Why has nobody in our sector tested this?
References
- Canada Revenue Agency. Excise and GST/HST News No. 89, Summer 2013, on a supply of personnel made by a placement agency being generally subject to the GST/HST at the applicable rate depending on the place of supply, unlike a supply of nursing services which may be exempt; and on a company that is responsible for the provision of nursing services to the patients or residents of a facility and accountable for the quality of nursing care provided potentially having made an exempt supply of a nursing service rendered by a registered or licensed nurse to an individual, where the service is provided within a nurse-patient relationship. Note: a CRA primary publication carrying the Agency's archived content notice and dating from 2013. canada.ca — Excise and GST/HST News No. 89
- Canada Revenue Agency GST/HST Interpretation 245855 (28 March 2024), Nurse Placement Agencies, as reproduced by a tax interpretations service, on the characterisation of arrangements involving staffing agencies varying depending on the obligations and responsibilities agreed to by the parties, with the supply potentially being a supply of personnel or a nursing service, and the tax status varying with the particular circumstances of each situation; on the Federal Court of Appeal in Santa Cabrini Hospital v. Her Majesty The Queen, 2016 FCA 207, concluding that the object of the agreement between the parties was the supply of nurses and that the agency provided a taxable placement service; on the Tax Court of Canada in A-Supreme determining that the supply provided by the agency was the exempt supply of nursing services; on factors indicating that an agency is supplying an exempt nursing service under section 6 of Part II of Schedule V, provided the supply is not excluded by sections 1.1 or 1.2 of that Part; and on the interpretation not being a ruling and not binding CRA with respect to a particular situation, with future changes to the legislation, regulations or CRA's interpretative policy potentially affecting it. Note: accessed through a secondary reproduction; we have read neither judgment. taxinterpretations.com — 245855
- Mondaq. (2023, June). Determining the Taxability of a Supply for GST/HST Purposes, on the Tax Court of Canada decision in A-Supreme Nursing & Home Care Services Inc. v. The King, 2023 TCC 39, involving a CRA audit of a staffing agency supplying healthcare workers and resulting in a reassessment for over $1,000,000 in GST/HST; on the main issue being whether the appellant provided a taxable or exempt supply when supplying nurses and personal support workers to nursing homes and long-term care facilities, with CRA arguing that the appellant should have charged tax for the placement of nurses as a taxable supply; on the agreement between the appellant and its clients being for the provision of staff who carry out nursing services, with the dominant element of the supply in question; on the exempting provision covering a supply of a nursing service rendered to an individual by a registered nurse, registered nursing assistant, licensed or registered practical nurse or registered psychiatric nurse, if rendered within a nurse-patient relationship; and on GST/HST being considered held in trust for the government when charged as a deemed trust amount, with the taxpayer responsible for collecting, withholding and remitting it, and the agency in that case being held by CRA directly liable having not done so. Note: professional commentary published through a syndication service. mondaq.com
- Mackisen CPA. CRA GST/HST Staffing Agency and Recruitment Audit, on this industry being heavily targeted because staffing involves intermediary services, workers may be employees or independent contractors, place-of-supply rules vary by province, billing structures differ, credits can be large, cross-border recruitment adds complexity, and many staffing firms rely on subcontractors whose registration numbers may be invalid; on common issues including tax not charged on placement or recruitment fees, wrong rate due to out-of-province clients, invalid subcontractor invoices leading to denied credits, HR consulting used to avoid tax which the source describes as incorrect, and reimbursements improperly treated; and on the assertion that all staffing and recruitment services are taxable with no exemptions, with CRA audits focusing on accuracy rather than eligibility. Note: a commercial accounting firm publication; the assertion that no exemptions exist conflicts with CRA's own guidance and with the Tax Court decision described above, and we have not resolved that conflict. mackisen.com
- Tax & Trade Blog. (2013). Nurse Staffing Agencies Come Under the GST Gun, on CRA's position that where a staffing agency's responsibility is limited to providing registered or licensed nurses to a facility so that the facility may satisfy its own staffing requirements, with the nurses subject to the control of the operator of the facility, the services rendered by the agency are taxable and not exempt; and on the observation at the time that CRA's position had not yet been challenged in the Tax Court and that its legality was far from certain. Note: a Canadian tax practice publication dating from 2013; a commentator's characterisation of CRA's position, since overtaken in part by subsequent litigation. taxandtradelaw.com
- Wilson Vukelich LLP. Tax Court of Canada Addresses Whether Health Care Staffing Companies Need to Remit GST/HST, on CRA having engaged in targeted audits in recent years assessing health care staffing companies for alleged unremitted tax; on those companies having historically not billed or collected tax on the understanding that the supply was exempt as they were providing health care services; on CRA challenging that position and assessing on the basis that they were providing staffing services rather than health care services; and on the taxpayer in A-Supreme having placed nurses in long-term care facilities and nursing homes while maintaining it was exempt. Note: a Canadian law firm publication. wvllp.ca
- Jeremy Scott Law. CRA GST/HST Project — Use of Staffing Agencies, on CRA having ramped up audits of staffing agencies and of businesses that contract these agencies; on a national GST/HST project on staffing agencies having revealed many types of non-compliance related to income tax and GST/HST; on commonly reported issues including hiring people off the books, failing to report bank accounts and paying workers under the table; and on CRA focusing on transactions between staffing agencies and their clients, including false invoices and sham transactions. Note: a Canadian tax law firm publication. jeremyscott.ca
- Rotfleisch & Samulovitch PC. CRA Directing Tax Audit Attention to Staffing Agencies, on a typical scenario in which an employer that is a registrant hires temporary labour workers through a third-party staffing agency, which charges the employer for the cost of the workers plus tax, allowing the employer to claim credits based on the invoices provided, after which the agency absconds without remitting the tax; on the variant in which the agency hires a subcontractor to provide the labour and the subcontractor later disappears with the tax; on other common issues including using multiple bank accounts while reporting revenues from only some of them, and unreported cash transactions; and on CRA generally commencing an audit of the business that hired the staffing agency as well as the agency itself. Note: a Canadian tax law firm publication. canadiantaxamnesty.ca
This article is provided for general informational purposes and is not tax advice. The authors have read neither judgment described and rely on a CRA interpretation and professional commentary. One CRA source is archived and dates from 2013; the interpretation cited states it is not a ruling and does not bind the Agency. A direct conflict between sources on whether any exemption is available is reported and not resolved. All arithmetic is the authors' own and is illustrative only.