Federal Finance Minister Jim Flaherty proposed
today to exempt hospital parking from the GST. This will apply both to parking lots managed directly by hospitals, and to those managed by foundations. Interested parties have until February 24, 2014, to comment on the proposal.
This is a positive resolution to an issue that Imagine Canada has been working on, in partnership with umbrella organizations and individual hospital foundations, since the March 2013 federal budget. Hospitals and foundations will save $30 million annually.
The loss of hospital foundations’ existing tax exemption (proposed in Budget 2013) would have been a troubling precedent for the entire charitable sector. Forestalling this is a significant victory for all of us collectively.
What this means
Action on this file
- Hospital foundations that would have been required to absorb significant new GST costs, or pass these costs on to their patients, will not be required to collect and remit GST. Their exemption will be restored retroactive to March 21, 2013, and they will receive credits for any GST they have already remitted.
- For hospitals that previously remitted GST and have now gained a GST exemption for their parking operations, it means the ability to pass savings along to patients and their families, and/or to reinvest those savings in their mission. The exemption will take effect as of January 24, 2014.
- As tax measures take effect the date they are announced, these changes are immediately effective even though legislation has not yet been adopted.
In our summary of the 2013 federal budget
, Imagine Canada identified the proposed change that would require foundations to remit GST on parking facilities they operate. We were approached by and connected with a number of organizations and worked with them to gauge the effects of the budget measure. Had the budget measure gone forward, the estimated impact to charities was millions of dollars a year. We offered to work with affected organizations to seek a resolution, as one part of our sector losing tax exemptions would be a worrying development.
We initiated conversations with Minister Flaherty’s office. The unintended impact of the proposed change had not been anticipated, and the Minister’s policy advisors were open to potential solutions. Throughout the summer and autumn, we maintained frequent contact with both the Minister’s office and with the affected organizations. This coordinated advocacy effort kept the issue alive and reinforced the need for remedial action to be taken.
Background on this Budget 2013 provision
For the most part, charities that offer paid parking incidental to their operations, have not been required to charge or remit GST. This exemption never applied to hospitals that directly operate parking lots – they have always been required to collect and remit GST. However, in a number of cases across the country, hospital foundations have taken on the operation of parking facilities. As they are separate charities, they have been exempt from charging or remitting GST. Budget 2013 proposed to remove this exemption.
For more information, please contact Imagine Canada’s Public Policy team