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: 156889
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Tax status of […][dental loupe]
Thank you for your letter of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to a product called the […][dental loupe].
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 the following:
1. […][The Corporation] is in the business of selling a medical device called the dental loupe.
2. A loupe is a small magnification device used to see small details more closely. Unlike a magnifying glass, a loupe does not have an attached handle, and its focusing lens(es) are contained in an opaque cylinder or cone or fold into an enclosing housing that protects the lenses when not in use. Loupes are also called “hand lenses”.
3. The Corporation sells the product mainly to dentists as many dentists use loupes to better scrutinize things in their patients’ mouths in order to make a better diagnosis, for example, to determine how far a crack proceeds along the surface of a tooth. Loupes are also used in order to perform on a more precise level; while dentists drill teeth on a millimetre scale, magnification can enlarge the dentists’ view of the teeth, perhaps making it easier to inspect teeth for decay or see things that ordinarily would not be seen without magnification. Because dentists use both of their hands while performing dental procedures, dental loupes are binocular and take on the form of a pair of glasses.
4. Some dentists have a defect in vision and have been prescribed eyeglasses by an eye care professional to treat or correct that defect. In such cases, the prescription as supplied on the written order of an eye care professional is inserted in the [dental loupe]. Depending on the nature of the prescription, it can also be inserted into the loupe itself, however, in most cases it is inserted in the glasses. The prescription is inserted in the glasses to enable the dentist to continue wearing loupes even when talking to the patient or just not using the loupe.
5. Currently, GST/HST is being charged by the Corporation for loupes manufactured with and without prescription.
6. The Corporation only builds in prescriptions in the glasses based on the written prescriptions by an eye care professional.
RULING REQUESTED
You would like to know whether supplies (i.e., sales) of the [dental loupe] with a prescription built in to the glasses are zero-rated (taxable at 0%).
RULING GIVEN
Based on the facts set out above, we rule that supplies of the [dental loupe], with or without prescription lenses, are not zero-rated pursuant to Section 9 of Part II of Schedule VI. Rather, supplies of [dental loupes] are subject to GST/HST at the applicable rate (5%, 13%, 14% or 15%) based 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
Section 9 of Part II of Schedule VI zero-rates a supply of eyeglasses or contact lenses if the eyeglasses or contact lenses are, or are to be, supplied under the authority of a prescription prepared, or an assessment record produced, by a person for the treatment or correction of a defect of vision of a consumer named in the prescription or assessment record and the person is entitled under the laws of the province in which the person practises to prescribe eyeglasses or contact lenses, or to produce an assessment record to be used for the dispensing of eyeglasses or contact lenses, for the treatment or correction of the defect of vision of the consumer.
Although a component of the device might be integrated lenses when there is a prescription, the device as a whole does not constitute eyeglasses for purposes of section 9 of Part II of Schedule VI. It is more so a magnifier with vision correction built in. Therefore, section 9 would not apply to zero-rate the [dental loupe].
In addition, section 9 would not apply generally since dentists would not be considered “consumers” of the [dental loupe], as required for this zero-rating provision to apply. Subsection 123(1) defines a “consumer” of property or a service as a particular individual who acquires or imports the property or service for the particular individual's personal consumption, use or enjoyment or the personal consumption, use or enjoyment of any other individual at the particular individual's expense, but does not include an individual who acquires or imports the property or service for consumption, use or supply in the course of commercial activities of the individual or other activities in the course of which the individual makes exempt supplies.
Dentists would not be considered “consumers” because the [dental loupe] would generally be for consumption, use or supply in the course of commercial activities of the individual dentists or other activities in the course of which the dentists make exempt supplies, rather than for their personal consumption, use or enjoyment.
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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