The rules for determining which naturopathic sales are taxable are complex – certainly not ideal for a profession that just wants to heal! This page summarizes those rules and provides some rules of thumb to consider.
Remember, even if something is taxable you only charge GST/HST if you’re registered for GST/HST.
The basic rules
In general, all goods and services are taxable unless specifically exempted. For a naturopathic service to be exempt, the Canada Revenue Agency (CRA) has stated the following criteria must be met:
Within the scope of practice – The service must be within the scope of practice for an ND, which varies by province. Generally, most services provided in a clinical setting would qualify.
ND-patient relationship – There must be an established or ongoing relationship involving personal interaction with an individual. That means programs delivered online or to a group aren’t exempt and are taxable.
ND or equivalent – The naturopath must be licensed in that province if it’s a regulated province, or have the equivalent qualifications. For those of you in a non-regulated province, graduating from a CNME-accredited school and passing the NPLEX is considered equivalent.
For health-care purposes – The service needs to be for the purpose of maintaining or improving health. For example, work performed on behalf of an insurance or legal firm generally wouldn’t be exempt and would be taxable.
Not a cosmetic service – This criterion trips up a lot of NDs because of the broad way the CRA thinks of cosmetic services. See our guidance below for more information.
Rules of thumb
You should always double-check with your accountant, but here are some good rules of thumb for which naturopathic goods and services are taxable and which aren’t:
Non-taxable sales:
Most naturopathic services performed by an ND for a patient in a clinical setting
IVs and injections for non-cosmetic purposes
Administrative fees related to any of the above (e.g., cancellation fees)
Taxable sales:
Supplements
Commissions on supplement sales (e.g., paid to you by your clinic or an online pharmacy)
Any cosmetic service (including treatment of most acne conditions)
Sale of merchandise
Work performed on behalf of an insurance or legal firm
Most group or online programs
Supplement sales and commissions
Sales of supplements and commission you receive from the sale of supplements are taxable sales
If you sell supplements directly to your patients, you need to charge and collect GST/HST if you’re registered. The good news is that you can receive a refund of the GST/HST you paid when you bought the supplements in the first place.
If you receive commission from supplement sales, you need to charge and collect GST/HST on those payments. This applies whether the commission is coming from your clinic, an online pharmacy or anything else. You need to provide your GST/HST number to the other party so they know to remit GST/HST to you.
For example
Your patient buys $100 of fish oil from your Ontario clinic and you receive a 10% ($10) commission. If you’re registered for HST, you need to collect $11.30 ($10 plus $1.30 HST). Out of that, the $10 is your revenue and the $1.30 needs to be remitted to the CRA.
Your patient in Ontario buys $100 of magnesium from an online pharmacy and you receive a 10% ($10) commission. If you’re registered for HST, you’ll need to give the online pharmacy your 9-digit Business Number through your profile. The online pharmacy will pay you $11.30 ($10 plus $1.30 HST). Out of that the $10 is your revenue and the $1.30 needs to be remitted to the CRA.
Labs
There are two sides to consider for labs: your payment to a lab-test provider, and your charge to the patient.
Payments to lab-test providers are non-taxable only if that service is normally provided in a hospital. So routine blood work is non-taxable, but food sensitivity tests are taxable.
When you charge a patient for interpreting lab results or pass on the fee a lab charged you, GST/HST doesn’t apply to those charges as long as all the other criteria are met.
For example
You order a blood test for your patient in Ontario. The lab charges you $100 and no HST applies. You then charge the patient a $50 fee for the patient visit, plus $100 for the test you ordered. No HST applies to the $150 you charge the patient.
You order a food sensitivity test for your patient in Ontario. The lab charges you $100 plus 13% HST, for a total of $113. You then charge the patient a $50 fee for the patient visit, plus $113 for the test you ordered. No HST applies to the $163 you charge the patient.
IV therapy
We see a lot of misinformation around IV therapy and whether it’s taxable or not. Fortunately, the CRA has set out relatively simple criteria. To be non-taxable, the IV therapy needs to be for non-cosmetic purposes and it has to be within the scope of practice for an ND, which varies by province. As long as the treatment meets those two criteria, the sale is non-taxable.
That means in most cases, you should not be charging GST/HST on IV treatments.
Cosmetic services
Regardless of all the other criteria, any cosmetic service - which is broader than you think - is taxable. According to Canadian legislation, a service is considered cosmetic unless it’s for medical or reconstructive purposes.
Things like hair loss, cosmetic acupuncture and most acne treatments would be considered cosmetic and subject to GST/HST.
Acne vulgaris (common acne)
Treatments for acne are generally viewed as being cosmetic in nature. The only exception is if the treatment is to correct a deformity arising from disfiguring acne. If this is the case, you should be able to demonstrate in your patient notes that the patient has severe, persistent and disfiguring acne.
What about cases where the patient has acne caused by other underlying healthy conditions?
Deciding if the treatment is taxable or non-taxable must be determined on a case-by-case basis
If you're audited, the CRA will look at the primary purpose of the treatment to determine if tax should apply
If the primary purpose is acne, (as opposed to an underlying health condition) it's considered cosmetic unless the patient has "severe, persistent and disfiguring acne"
How do you determine what the primary purpose of the treatment is?
If a patient presents with acne as their chief complaint but you're treating the underlying health issue, the CRA would still argue the primary purpose is acne and therefore cosmetic
That's different than if the patient presented with the underlying issue to begin with
In almost all court cases and interpretations, (i.e. cases where businesses/individuals were audited and the case went to court) acne treatments were found to be a taxable activity. It's not impossible, but very hard to disprove acne treatments are cosmetic since the tax definition of cosmetic - especially for acne - is so wide.
Weight loss programs
While weight loss in and of itself may be viewed as cosmetic, in our view, providing a weight-loss program that improves a patient’s health is not cosmetic. To ensure these treatments are considered non-cosmetic, you should keep patient notes identifying the underlying medical condition you are treating.