C.N.: 2867
Dear XXXXX:
This letter is in response to correspondence dated April 2, 1996, requesting clarification of the application of the Goods and Services Tax (GST) to the supply of items listed in the XXXXX.
Since insufficient information is available to provide a definitive ruling on each item, this letter provides general guidelines to assist you in determining the GST treatment of supplies listed in the XXXXX. We will gladly review any article for which the tax treatment remains unclear. Also, please note that the interpretations in this letter are based on the proposed amendments in the April 23, 1996 Ways and Means Motion. Although the changes are effective April 24, 1996, they do not become law until the resulting legislation receives Royal Assent.
Legislative Provisions
A Ways and Means Motion to amend the Excise Tax Act (ETA) affecting the GST was tabled in the House of Commons on April 23, 1996. In that Motion, both sections 2 and 30 of Part II to Schedule VI of the ETA ,which provide a zero-rated GST status for many articles supplied by your organization, are to be amended effective April 24, 1996.
The following relieving provisions have been included in the legislation to ensure that the blind community do not incur a greater GST burden than other Canadians merely because of their condition. However, the conditions for GST relief are limited to goods which are specially designed for the blind community.
The following guidelines are to be applied in respect of all sales made by the XXXXX after April 23, 1996.
Section 2: Communication Devices
As proposed in the Ways and Means Motion, section 2 of Part II to Schedule VI is to be amended as follows:
"A supply of a communication device, other than a device described in section 7, that is specially designed for use by an individual with a hearing, speech or vision impairment."
To satisfy this provision, supplies of communication devices must meet the two following criteria:
1) the article must be a communication device, and
2) the communication device must be "specially designed" for use by an individual with a vision impairment.
A "specially designed" communication device for the purposes of section 2, is a communication device which has specific design features which address the operator requirements that arise from an individual's vision impairment. These features must make it possible for the visually impaired person to use the device, or at the very least make it easier to use the device. (The excluded goods under section 7 are goods designed for use by deaf persons and do not affect this interpretation.)
Section 30: Specially Designed Articles Supplied by The XXXXX
Many other supplies may also qualify for a zero-rated GST status under section 30 of the same Part which reads as follows:
"A supply of any article that is specially designed for the use of blind individuals when the article is supplied for use by a blind individual to or by XXXXX any other bona fide institution or association for blind individuals or on the order or certificate of a medical practitioner."
For purposes of section 30, the Department considers "blind individuals " to be individuals with visual acuity of 20/200 or 20 degrees or less visual field in both eyes. Persons with this condition are often referred to as "legally blind" individuals or as individuals with 10% vision or less.
Please note that section 2 (discussed above) uses terminology that can be interpreted more liberally than that used in section 30. Section 2 refers to an "individual with a vision impairment" while section 30 refers to a "blind individual". The phrase "individual with a vision impairment" is wider and includes persons who have impaired vision (but who are not legally blind) as well as the legally blind. On the other hand Revenue Canada does not consider the mere requirement to wear corrective eyewear to be "vision impairment" for the purposes of section 2.
"Vision impairment" under section 2 is considered to include blind individuals and persons with reduced vision, where the vision is reduced to such a degree that the mere use of corrective eyewear is not sufficient for the individual to operate the communication devices if the devices did not have the special design features in question. Therefore when applying section 2 Revenue Canada has slightly more interpretive latitude.
Under section 30 two conditions must be met for a supply to qualify for zero-rating. The two conditions are:
1) the article must be "specially designed" for use by blind individuals, and
2) the article must be supplied by XXXXX other bona fide institution for the blind.
Condition One:
The article must be "specially designed" for use by blind individuals.
The Department considers an article that is "specially designed" to be an article designed for a specific application. As is the case with section 2, a specially designed good in the context of section 30 has design features which make it possible for blind persons to use the device, or at the very least make it easier to use the device.
Such an article satisfies the needs or wants specific to a blind individual. The specially designed features must be significant in that the features make the article recognizably different from similar goods without the features. General purpose items do not satisfy this requirement.
Condition Two:
The article must be supplied by XXXXX a bona fide institution or association for blind individuals, or on the order or certificate of a medical practitioner.
Under section 30, to be zero-rated, articles must be supplied by XXXXX a bona fide institution or association for the blind or be prescribed by a medical practitioner. Obviously, all articles supplied XXXXX satisfy the first part of this condition, so the following discussion focuses of whether the supply of the goods meet Condition One (the specially designed requirement) discussed above.
Sample applications of the aforementioned guidelines to supplies listed the XXXXX:
Books:
Large print books such as Eleanor's Big Print Cookbook, Large Print Dictionaries and Bibles are not considered to be specially designed for the blind. Large print books are supplied to the general public, for use by the elderly and other groups[.] These persons are not legally blind. Supplies of these books are taxable at a rate of 7% as they do not satisfy the "specially designed" requirement under section 30.
On the other hand, printed matter in Braille is considered to be "specially designed" for blind individuals. Supplies of books such as Braille Series 1992, meet the requirements of section 30 and are zero-rated for GST purposes.
Paper:
Similar to Braille series books, all Braille type paper is also considered "specially designed" for the use of blind individuals. The supply of Braille type paper is zero-rated under section 30.
However, thick and dark lined writing pads with generous spacing are not considered to satisfy the "specially designed" requirement of the provision. The supply of these goods is subject to the GST at 7%.
Canes:
The supply of white canes which are specially designed for use by blind individuals are zero-rated for GST purposes under section 30. The supply of other canes which are "specially designed" for use by an individual with a disability is also zero-rated pursuant to section 27 of the same Part.
However, the supply of generic canes without special design features is taxable at a rate of 7%.
Clocks and Watches:
Clocks and watches that have Braille markings as a feature such as the vibrating alarm clock, the Lorus vibrating alarm, or the Arsa Ladies Braille pendant watches, are "specially designed" for use of blind individuals. The supply of these goods is zero-rated.
The supply of clocks or watches with large display numbers or talking clocks are taxable at a rate of 7%.
Games:
Games specially designed with Braille markings (including Braille playing cards) are zero-rated for GST purposes. XXXXX includes games that are specially designed for blind individuals, such as games with notches, high relief areas or pegs to hold pieces in place. The supply of these games is also zero-rated. Also zero-rated are supplies XXXXX of beeping balls and raised dot dice or dominoes. On the other hand, the supply of large print games, puzzles and games on tape are taxable at a rate of 7%.
Lifestyle aids:
To determine whether articles in this category are specially designed for a blind individual for the purposes of section 30, the extent to which the articles are modified, altered or adapted must be examined. The following questions may assist in determining the proper tax treatment of such supplies:
1) Are the modifications or adaptations substantive, such that the product cannot easily be returned to its original condition?
2) As modified, is the use of the product restricted to use by blind individuals?
Where the answer is negative to either question, the supply of the product may be subject to the GST at 7%.
For example, a kettle with Braille markings in its interior, or a word processor with Braille strips fastened to its keys are not specially designed for the purposes of section 30. The modifications are not substantive nor do they restrict the product's use to the blind community. The supply of these goods, as modified would be subject to the GST at 7%. Instead the Braille strips themselves or the Braille kit itself qualifies for zero-rating.
Notwithstanding the above, certain specialty products have special built-in features which are designed to accommodate only blind individuals. Such items including the Mahler liquid level indicator, the RNIB liquid level indicator, Braille clothing tags, do-dots, Braille greeting cards and the Braille dymo tapewriter would not be useful to the general public. The supply of these goods is zero-rated under section 30 when supplied by the XXXXX[.] We understand that many products are manufactured with these markings as standard features. For example, an appliance manufacturer may make only one model of kettle. This kettle may have the markings for the blind but the manufacturer does not promote the product as designed for use by the blind and the kettles are marketed through the general channels. The supply of such kettles is subject to the GST at 7%.
Writing and Calculating Aids:
To determine whether writing and calculating aids are specially designed for the purposes of section 30, each item and its features must be examined to determine whether the features of the product are specially designed.
Supplies such as a manual Perkins brailler, a jumbo dot Perkins brailler or the relevant brailler dust cover are items that are specially designed and are zero-rated for GST purposes under section 30.
On the other hand, such items as the "60 inch tape measure" although useful to a blind individual are considered to be general purpose and not specially designed for blind individuals. The supply of the tape measure is subject to the GST at 7%.
Vision Aids:
Many low tech assistive devices such as magnifying products may be multi- purpose items readily available in the community. Some magnifying products for example are for use in hobby activities while others are of such strength and design that they are only for use by blind individuals. Only supplies of magnifying products which are of sufficient strength that they would only be used by blind individuals and which have other design features which could satisfy the "specially designed" requirement qualify for zero-rating under section 30. Supplies of the remaining goods are subject to the GST at 7%.
Sun glasses are not specially designed for the purposes of section 30 and the supply is therefore taxable at a rate of 7%.
Recording Equipment:
Supplies of "recording equipment" listed in the XXXXX must meet the criteria outlined in either section 2 or 30 of Part II to qualify as a GST zero-rated supply.
Supplies of recording equipment that has been specially adapted to 4 track recording for use by individuals with vision impairment, are zero-rated as communication devices pursuant to section 2 of Part II to Schedule VI quoted above.
Health and Medical Aids:
The provisions of the Excise Tax Act which provide a zero-rated status for the health and medical aids in this section were not included in the April 23, 1996, Ways and Means Motion discussed on page 1 of this letter. There are no proposed amendments to these provisions. The conditions for GST relief of these goods have not changed since the implementation of the GST on January 1, 1991.
Sections 21, 28 and 32 of Part II to Schedule VI to the Act zero-rate supplies of the following:
21. "A supply of an insulin infusion pump or an insulin syringe."
28. "A supply of a blood glucose monitor or meter.
32. "A supply of a part, accessory or attachment that is specially designed for a property described in this Part."
These provisions provide a zero-rated status for the supply of insulin pumps, syringes, blood glucose monitors or meters and specially designed accessories or attachments therefor.
The "Morris Watt Insulin Gauge", the "Insulin Needle XXXXX Magnifier", the Count-A-Dose 100, the Count-A-Dose 50 and the IDMXXXXX Guide qualify as accessories under section 32 because they are understood to be specially designed accessories for insulin syringes. Supplies of the One Touch Glucose Monitor and the Touch'n'Talk Module are zero-rated under section 28 quoted above.
Supplies of the remaining goods are subject to the GST at 7%.
Crafts:
All the articles listed under "crafts" are taxable at a rate of 7% as they are not specially designed for the use of blind individuals and are for use of the general public.
This interpretation is valid or in effect provided the interpretation or administrative policy with respect to the Excise Tax Act and the Ways and Means Motion of April 23, 1996, does not change. While we trust that our comments are of assistance to you we would advise that they do not constitute a GST ruling and are, therefore not binding upon the Department in respect of any particular fact situation.
If you require additional information or wish to discuss this further, please contact Enikö Vermes, Manager, MUSH Unit at (613) 954-5127 or Ken Syer, Senior Policy Officer, at (613) 952-9590.
Yours truly
J.A. Venne
Director
Special Sectors
GST Rulings and Interpretations
c.c.: K. Syer
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