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: 178892
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Supply of […] Device
Thank you for your fax of August 3, 2016, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of the […] Device. We apologize for the delay in our response.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. 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 following from your fax, your website […] and a telephone conversation of August 31, 2016:
1. […] (the Corporation) is a designer and manufacturer of supplies […] for the medical and scientific industry. The Corporation is registered for GST/HST purposes.
2. The Corporation sells medical devices and hospital equipment to hospitals […] in Canada.
3. The Corporation sells the […] (the Device).
4. The Device is a […][description of how the device is used].
5. The Device is a […][description on the benefits of using this device].
6. The Device is used by technicians, nurses, medical practitioners […].
7. The Corporation sells the Device under the following names and specifications: […]
RULING REQUESTED
You would like to know if the supply of the Device is zero-rated.
RULING GIVEN
Based on the facts set out above, we rule that the supply of the Device is zero-rated, pursuant to section 21.3 of Part II of Schedule VI.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (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.
EXPLANATION
Generally most supplies of property and services made in Canada are subject to the GST/HST, pursuant to section 165, unless they are specifically relieved under the ETA. For instance, supplies of medical devices that are specifically identified in Part II of Schedule VI are zero-rated (taxed at the rate of 0%). If a supply of a medical device is not included in Part II of Schedule VI, then the supply would be subject to tax at the applicable rate, depending on the province in which the supply is made, unless another provision in the ETA applies to zero-rate or exempt the supply.
It is a question of fact whether a specific item meets the criteria listed in a specific zero-rating provision.
Section 21.3 of Part II of Schedule VI zero-rates a supply of a lancet. We consider the Device to be similar to a lancet and to meet the criteria of being a lancet.
Section 1.1 of Part II of Schedule VI requires that for the purposes of zero-rating the supply of any medical or assistive device listed in Part II of Schedule VI, other than in section 33 of Part II of Schedule VI (Footnote 1) , the medical or assistive device must be designed for human use or for assisting an individual with a disability or impairment. In the case of supplies of the Device, section 1.1 of Part II of Schedule VI does not interfere with the zero-rating provided pursuant to section 21.3 of Part II of Schedule VI.
In addition, section 1.2 of Part II of Schedule VI provides that a cosmetic service supply (as defined in section 1 of Part II of Schedule V), and any supply of property or service that is in respect of a cosmetic service supply, that is not made for medical or reconstructive purposes, is not zero-rated under Part II of Schedule VI. A “cosmetic service supply” is defined in section 1 of Part II of Schedule V to mean “a supply of property or a service that is made for cosmetic purposes and not for medical or reconstructive purposes”. In the case of supplies of the Device, section 1.2 of Part II of Schedule VI does not interfere with the zero-rating provided pursuant to section 21.3 of Part II of Schedule VI.
Therefore, the supply of the Device is zero-rated pursuant to section 21.3 of Part II of Schedule VI.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-7935. Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
John Ware
Health Care Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
FOOTNOTES
1 Section 33 of Part II of Schedule VI zero-rates a supply of an animal that is or is to be specially trained to assist an individual with a disability or impairment with a problem arising from the disability or impairment, or a supply of a service of training an individual to use the animal, if the supply is made to or by an organization that is operated for the purpose of supplying such specially trained animals to individuals with the disability or impairment.
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