The Canada Revenue Agency clarified the GST/HST treatment of certain psychotherapy and counselling therapy services after legislative changes took effect on June 20, 2024.
The change means qualifying providers may no longer be required to charge GST/HST on covered psychotherapy or counselling therapy services.
For clients, the change can lower the after-tax cost of eligible services where GST/HST had previously been charged.
For providers, the issue is compliance. A provider needs to know whether the service and professional status fall within the exemption, because exempt supplies are treated differently from taxable supplies for GST/HST purposes.
The clarification is also relevant for input tax credits. Businesses making exempt supplies generally face different recovery rules for GST/HST paid on expenses than businesses making taxable supplies.
The useful point is not simply that therapy may be cheaper. It is that both providers and clients need to distinguish exempt counselling or psychotherapy services from other services that may still be taxable.