No GST on Psychotherapy Services

Summary#

This bill changes the federal Excise Tax Act to stop charging the goods and services tax (GST) on psychotherapy services. It adds “psychotherapy services” to the list of exempt health services and updates the definition of “practitioner” to include psychotherapists (Part II of Schedule V, s.1 and s.7(j.1)).

• Ends GST/HST on psychotherapy when provided by a recognized practitioner (Bill, Part II of Schedule V, s.1; s.7(j.1)).
• Lowers the price paid by clients by the amount of GST/HST that would have applied.
• Aligns psychotherapy with other exempt health professions like psychology and physiotherapy (Bill, Part II of Schedule V, s.7).
• Applies only when the provider meets the Act’s “practitioner” test (licensing/certification rules apply) (Bill, Part II of Schedule V, s.1).
• Does not change insurance coverage or clinical standards; it is a tax change only.

What it means for you#

• Households (patients)

  • You would no longer pay GST (5%) on psychotherapy. In HST provinces, you would not pay the full HST (e.g., ON 13%; NS/NB/NL/PEI 15%), because exempt supplies are not taxable under HST either (Bill, Part II of Schedule V, s.7(j.1)).
  • Savings equal the tax that would have been charged. Example: a $150 session in Ontario would drop by $19.50 when HST no longer applies.
  • The bill does not expand public coverage or private insurance. It only removes sales tax (Bill text).

• Workers (psychotherapists and mental health providers)

  • If you meet the “practitioner” definition for psychotherapy, you would stop charging GST/HST on psychotherapy services (Bill, Part II of Schedule V, s.1; s.7(j.1)).
  • Exempt supplies do not generate input tax credits on related business costs (e.g., rent, supplies). You would no longer claim GST/HST back on those inputs (Excise Tax Act, s.123(1) and s.169).
  • You may need to update invoices, point-of-sale settings, and CRA filings to reflect exempt status.

• Clinics and businesses

  • Clinics must stop charging GST/HST on psychotherapy provided by qualifying practitioners and keep records to show exemption (Bill, Part II of Schedule V, s.7(j.1)).
  • Mixed practices (some taxable, some exempt services) must track costs and claims carefully, since input tax credits are limited for exempt activities (Excise Tax Act, s.123(1) and s.169).

• Governments

  • The federal government and HST-participating provinces would forgo GST/HST revenue from psychotherapy services. Size of impact is not provided in the bill.

• Timing

  • The bill does not set a delayed start. The change would take effect when it becomes law (no later date stated in the bill).

Expenses#

Estimated net cost: Data unavailable.

• No fiscal note or official revenue estimate is provided in the bill text.
• Fiscal impact mechanism: foregone GST/HST revenue from psychotherapy services that become exempt (Bill, Part II of Schedule V, s.7(j.1)).
• Data unavailable.

Proponents' View#

• Reduces the cost of mental health care by the tax rate currently applied to psychotherapy (5% GST; 13–15% HST in participating provinces) (Bill, Part II of Schedule V, s.7(j.1)).
• Aligns psychotherapy with other regulated health services already exempt, such as psychology and physiotherapy, improving tax fairness across professions (Bill, Part II of Schedule V, s.7).
• Simplifies billing for patients and providers by making psychotherapy uniformly tax-exempt when delivered by a practitioner (Bill, Part II of Schedule V, s.1; s.7(j.1)).
• May improve access by lowering out-of-pocket prices for clients who pay privately for care (price drop equals previously charged GST/HST). Assumption: price sensitivity affects demand; no quantified estimate provided.

Opponents' View#

• Reduces federal and HST-partner provincial revenues. No estimate is provided, so budget impact is uncertain (Data unavailable).
• Exemption applies only when the provider meets the “practitioner” definition. Differences in provincial regulation could create uneven application and confusion for patients (Bill, Part II of Schedule V, s.1).
• Providers of exempt services cannot claim input tax credits on related costs, which could raise provider operating costs and offset some savings if passed through to prices (Excise Tax Act, s.123(1) and s.169). Magnitude not quantified.
• Compliance and enforcement risks: distinguishing exempt psychotherapy from non-exempt services (e.g., general coaching) may be challenging, especially in mixed practices (Bill, Part II of Schedule V, s.7(j.1)).