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, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 174191
[Addressee]
Dear [Client]:
Subject: GST/HST RULING
Application of GST/HST to maintenance services on a residential elevator
Thank you for your [correspondence] of September 24, 2014, […], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to maintenance services on a residential elevator installed in your home.
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 Governments of New Brunswick and Newfoundland and Labrador have proposed to increase the rate of the HST in those provinces from 13% to 15%, effective July 1, 2016. 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 the facts as follows:
1. […]. In [yyyy], you purchased a townhouse in […][City], Ontario that had a residential elevator already installed.
2. The elevator was replaced in [mm] 2009 with an elevator from […][the Company]. You did not pay the GST on the purchase and installation of the elevator.
3. You have not made any modifications to the elevator that was installed in 2009.
4. The elevator has the following features:
a. it serves three floors;
b. it has regular flooring;
c. standard control panels and call station that have not been adjusted;
d. standard handrails;
e. door and floor frames that are flush mounted;
f. it does not have key-controlled continuous pressure buttons;
g. maximum capacity is 750 pounds;
h. accordion doors that must be manually opened and closed; and
i. the clearance between the landing edge and platform is very small.
5. The elevator has a sump pit and sump pump that requires servicing twice a year.
6. The charge for the maintenance services performed by […][the supplier] is $[…] per year.
RULING REQUESTED
You would like to know whether the charge for the maintenance services performed on the residential elevator installed in your home is subject to the HST.
RULING GIVEN
Based on the facts set out above, we rule that the supply of maintenance services performed on the residential elevator in your home is a taxable supply subject to the HST on the consideration for the supply.
EXPLANATION
In general, all supplies made in Canada are taxable unless a provision in the ETA applies to exempt the supply from GST/HST. Exempt supplies are listed in Schedule V and include supplies of certain health care services.
Taxable supplies may be subject to GST/HST at the rate of 5%, 13%, 14%, or 15% (depending on the province in which the supply is made), or they may be zero-rated and therefore taxable at 0%. Zero-rated supplies are listed in Schedule VI and include supplies of prescription drugs and supplies of certain medical and assistive devices.
[…], you state that HST is not charged on the purchase of commonly-used items that assist in your balance and the safety of your mobility such as wheelchairs, walkers, canes, etc. As such, you are asking why HST is levied on the servicing of a residential elevator that also assists with the safety of your mobility as it helps prevent the risk of falls and injuries if you were to use the stairs.
Whether the supply of a good or service is exempt from GST/HST or zero-rated is not dependent on whether the good or service is commonly used or acquired by a person with a disability. For a supply of a good or a service to be relieved of GST/HST, there must be a specific exemption or a zero-rating provision in the ETA for that particular supply. For example, there are provisions in the ETA that zero-rate supplies of wheelchairs and walkers, and canes (Footnote 1) . Without such an exemption or zero-rating provision, the supply of the property or service is generally subject to GST/HST. Therefore, not all goods or services commonly used or acquired by a person with a disability are relieved from GST/HST.
In general terms, sections 2 to 41 of Part II of Schedule VI zero-rate the supply of certain medical and assistive devices, specially designed parts, accessories or attachments for, and the installation, repair and maintenance of, such devices. The zero-rating provisions in Part II of Schedule VI only apply to supplies of medical and assistive devices that are designed for human use and designed for assisting individuals with a disability or impairment.
In addition, each provision in Part II may or may not have conditions that must be met for a supply of a medical and assistive device to be zero-rated. For example, supplies of artificial teeth or hearing aids are zero-rated in their own right with no outstanding conditions. In contrast, supplies of other devices are zero-rated only when certain conditions are met. The most common conditions for zero-rating a supply of a medical and assistive device include a device being:
* specially designed for use by an individual with a (specified) disability;
* supplied on the written order of a specified professional (Footnote 2) ; and
* for use by a consumer with a (specified) disability.
Further to the zero-rating of supplies of certain medical and assistive devices, section 32 of Part II of Schedule VI zero-rates a supply of a part, accessory or attachment that is specially designed for a device described in Part II of Schedule VI.
The only provision that could pertain to a supply of a residential elevator is section 14 of Part II which zero-rates a supply of a chair, walker, wheelchair lift or similar aid to locomotion, with or without wheels, including motive power and wheel assemblies therefor, that is specially designed to be operated by an individual with a disability for locomotion of the individual.
Maintenance services
Moreover, section 34 of Part II of Schedule VI, in part, zero-rates a supply of a service of installing, maintaining, restoring, repairing or modifying a property the supply of which is included in any of sections 2 to 32 and 37 to 41 of Part II of Schedule VI, or any part for such a property if the part is supplied in conjunction with the service.
Therefore, in order for the maintenance service of a residential elevator to be zero-rated under section 34 of Part II of Schedule VI, the supply of the residential elevator must be zero-rated under section 14 of Part II of Schedule VI.
The conditions in section 14 require that the residential elevator must be a wheelchair lift or similar aid to locomotion and must be “specially designed” for use by an individual with a disability for locomotion of the individual. To be “specially designed” evidence must be provided outlining the characteristics that demonstrate the elevator was designed for use by an individual with a disability for locomotion of the individual and not for use by the general population. Thus, the elevator must have features that distinguish it from an ordinary passenger elevator. For an elevator to be “specially designed” the design specifications or details of the elevator must include some of the following features:
* the width of the platform is set to accommodate the turning radius of a wheelchair (unless it is a flow through elevator);
* accessibility to the operating control panel and call stations is adjusted for an individual in a wheelchair;
* the elevator contains:
* appropriate handgrips or handrails for use by an individual in a wheelchair
* anti-skid or similar flooring
* key-controlled continuous pressure buttons
* flush mount door and floor frames are installed allowing for easy entry and exit from the cab;
* the clearance between the landing edge and the platform is appropriately set to prevent the wheelchair from getting caught;
* accordion doors are removed and light curtains or similar closure are installed;
* two to five levels are served; and
* the maximum capacity is 1000 pounds.
The elevator must have sufficient features that distinguish it from an ordinary elevator for purposes of the zero-rating provision. It is not sufficient that the elevator only be used by a person with a disability. It must be specially designed to be operated by an individual with a disability for locomotion of the individual.
From our review of the brochure for the elevator, we found no evidence that the elevator installed in your residence has enough features to distinguish it from an ordinary passenger lift or elevator. There is no reference to the elevator being particularly suitable for assisting individuals with a disability for locomotion. Also, the elevator's design specifications and details do not indicate that it is specially designed to be operated by an individual with a disability for locomotion of the individual.
Based on the above, it is our view that the residential elevator in your home does not meet in the requirements in section 14 of Part II of Schedule VI. We understand that you did not pay GST on the purchase of installation of the elevator in your home in 2009. However, based on the criteria in the brochure, it is our view that the supply of the elevator was a taxable supply subject to the GST at the rate of 5%, regardless of the fact that GST was not charged on its sale.
Since the supply of the residential elevator in your home is not a zero-rated supply, the requirements in section 34 of Part II of Schedule VI are not met and the supply of a maintenance service performed on your elevator is subject to HST at the rate of 13% on the consideration charged by [the supplier].
We understand your concern that the maintenance services on your residential elevator should be zero-rated under the ETA as you believe the servicing of a commonly-used product that assists with the safety of your mobility should be relieved from GST/HST. The Canada Revenue Agency (CRA) is responsible for the administration of the ETA and its Regulations, as passed by Parliament. An amendment to the ETA would be required to treat the supply of the maintenance services as a zero-rated supply. Legislative amendments are a matter of tax policy, which falls within the responsibility of the Department of Finance. We have advised officials of that Department of your concern regarding the tax status of this device and related maintenance services.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the CRA is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-7952. 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,
Alison Jones
Health Care Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
FOOTNOTES
1 Sections 14 and 27 of Part II of Schedule VI, respectively.
2 Section 1 of Part II of Schedule VI defines a “specified professional” to include a doctor, physiotherapist, occupational therapist or a registered nurse.
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