Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 14th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 142568
Dear [Client]:
Subject: GST/HST RULING
Mattress covers and Pillow covers
Thank you for your fax of March 20, 2012, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies of […] mattress covers and pillow covers. We apologize for the delay in our response.
The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand that:
1. […]
2. The mattress covers and pillow covers are 100% natural textile […], sustainable, breathable and comfortable, and act as a barrier to dust mites. The fabric improves sleep […]. The mattress covers and pillow covers are waterproof, soft, and silent.
3. Use of the mattress covers and pillow covers can improve and help prevent dermatologic and respiratory allergies.
4. The mattress covers and pillow covers are eco-friendly products, through cleaning savings of electrical consumption and water.
5. […][Description of the benefits of this product]
RULING REQUESTED
You would like to know if supplies (i.e., sales) of […] mattress covers and pillow covers are zero-rated (taxable at 0%).
RULING GIVEN
Based on the facts set out above, we rule that that supplies of […] mattress covers and pillow covers are not zero-rated. Rather, supplies of […] mattress covers and pillow covers are subject to GST/HST at the applicable rate (5%, 13%, 14% or 15%) depending on the place of supply.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
EXPLANATION
Schedule II of Part VI describes various Medical and Assistive Devices which are zero-rated when supplied (i.e., sold).
For instance, Section 4 of Part II of Schedule VI zero-rates a supply of a hospital bed, if the bed is supplied to the operator of a health care facility (as defined in section 1 of Part II of Schedule V) or on the written order of a specified professional for use by an incapacitated individual named in the order.
Section 32 of Part II of Schedule VI zero-rates a supply of a part, accessory or attachment that is specially designed for a property described in Part II. In this case, however, there is no indication that the products are specially designed for hospital beds.
Section 37 of Part II of Schedule VI zero-rates a supply of an incontinence product that is specially designed for use by an individual with a disability. Examples of incontinence products that may be zero-rated supplies under this section include underpads, underwear, and chair and other seat covers (i.e., lift chair, recliner, wheelchair cushion, car seat, and scooter covers).
To determine whether an incontinence product is specially designed for use by an individual with a disability, the Canada Revenue Agency (CRA) will consider the design features of the incontinence product and whether these features will assist an individual in coping with incontinence. The manner in which an incontinence product is marketed is not a predominant factor the CRA considers when making a determination.
To be an incontinence product specially designed for use by an individual with a disability, the product must be designed to absorb leakages, reduce odours, control bacteria, maintain dryness, and protect the individual against skin irritation. As such, the product must be designed using high-absorbency materials and generally have a sealed edge to ensure leakage protection. The fact that a product is reusable or disposable, or can be used by an individual who does not have a disability is insufficient in its own right to determine that a product is not an incontinence product specially designed for use by an individual with a disability.
Generally, incontinence products that do not have all of the design features outlined above are not considered to be specially designed for use by an individual with a disability and are therefore not zero-rated supplies under section 37 of Part II of Schedule VI.
In this case, though the mattress covers and pillow covers have the benefit of being waterproof, there is no indication that they are specially designed for use by an individual with a disability. As well, these products would not be considered incontinence products since the waterproof feature is for the protection of the mattress rather than of the person; as well, the waterproof feature is just one of several benefits of these products to help in the overall apparent goal of providing a healthy sleep experience.
As there is no indication that the supplies of […] mattress covers and pillow covers meet the qualifying criteria of the zero-rating provisions above, and since there are no other zero-rating provisions that may apply, the supply of these products is subject to GST/HST at the applicable rate.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-4390. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
John Ware
Health Care Sectors Unit
Public Sector Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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