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
[Addressee]
Case Number: 127488
July 17, 2012
Dear [Client]:
Subject: GST/HST INTERPRETATION
[Corrective Eyewear]
Thank you for your letter of [mm/dd/yyyy] concerning the application of the Goods and Services Tax (GST) / Harmonized Sales Tax (HST) to corrective eyewear. We apologize for the delay in our response.
As you are aware, on March 29, 2012, the Government of Canada tabled the Economic Action Plan 2012 – A Plan for Jobs, Growth and Long-Term Prosperity in which a proposed amendment to the legislative provision relating to corrective eyeglasses and contact lenses was made. The amendment proposes to zero-rate (tax at the rate of 0%) corrective eyeglasses or contact lenses supplied under the authority of an assessment record produced by a person who is entitled under the laws of the province in which the person practices to produce the record authorizing the dispensing of corrective eyewear (Footnote 1) . The proposed amendment to the Excise Tax Act (ETA) received Royal Assent on June 29, 2012 and applies to supplies made after March 29, 2012 (Budget Day).
[…], you requested an interpretation to confirm the application of section 9 of Part II of Schedule VI as it read prior to the amendment and not the Canada Revenue Agency’s (CRA) interpretation of the amendment.
HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the ETA unless otherwise specified.
INTERPRETATION REQUESTED
In your letter of [dd/mm/yyyy], you indicate that recent amendments to B.C. Reg. 118/2010 Opticians Regulations to the Health Professions Act (B.C.) (the Opticians Regulations) now permit an optician to dispense corrective eyeglasses without a prescription and on the basis of an assessment record in certain circumstances. (The Opticians Regulation can be found at (http://www.gov.bc.ca). It is understood that an assessment record is produced by an independent automated refraction that is conducted by an optician without the involvement of an optometrist or a qualified medical practitioner.
As a result of the amendments to the legislation regulating opticians in British Columbia, you would like to know whether the CRA considers:
a) a supply of corrective eyewear without a prescription from an optometrist or a doctor in British Columbia to be a zero-rated supply; and
b) a supply of corrective eyewear based on an assessment record in British Columbia to be a zero-rated supply.
INTERPRETATION GIVEN
a) Is a supply of corrective eyewear without a prescription from an optometrist or a doctor in British Columbia a zero-rated supply?
The general rule in section 165 is that every recipient of a taxable supply made in Canada shall pay tax calculated at the rate of 5%, 12%, 13%, or 15% (depending on the place of supply) on the value of the consideration for the supply unless the supply is zero-rated. The tax rate in respect of a zero-rated supply is 0%. A zero-rated supply is a supply that is included in Schedule VI.
Section 9 of Part II of Schedule VI, as it read before the amendment, zero-rated a supply of eyeglasses or contact lenses when the eyeglasses or contact lenses were supplied, or were to be supplied, on the written order of an eye-care professional for the treatment or correction of a defect of vision of a consumer named in the order, and the eye-care professional is entitled under the laws of the province in which the professional practices to prescribe eyeglasses or contact lenses for such purposes.
Where a provision sets out specific conditions for a supply to be zero-rated, all of those conditions must be met. Where the supply of eyeglasses or contact lenses does not meet the conditions of being corrective in nature and supplied, or to be supplied, on the written order of an eye-care professional for use by a consumer named in the order, the supply of the eyeglasses will fall under the general rule pursuant to section 165 of the ETA.
The term “written order” is not defined in the ETA. For purposes of Part II of Schedule VI, the CRA takes a broad interpretation of the term “written order” and considers a written order to include a prescription. Note that persons who supply eyeglasses or contact lenses on a zero-rated basis must retain sufficient documentation to enable the CRA to verify that the sale of eyeglasses and contact lenses meet all of the requirements of section 9. Specifically, the documentation must demonstrate that the eyeglasses or contact lenses were supplied on the written order of an eye-care professional for use by a consumer named in the order.
According to the Opticians Regulations, an eye-care professional entitled under the laws of British Columbia to prescribe eyeglasses or contact lenses includes an optometrist or a medical practitioner authorized under the Health Professions Act (B.C.) but does not include an optician. Therefore, a supply in British Columbia of corrective eyewear (i.e., a sale of eyeglasses by an optician) without a written order from an optometrist or a medical practitioner in British Columbia, and made prior to the effective date of the amendment would be subject to the GST/HST at the rate of 12%.
b) Is a supply of corrective eyewear based on an assessment record in British Columbia a zero-rated supply?
As indicated above, section 9 of Part II of Schedule VI, as it read before the amendment, zero-rated the supply of eyeglasses or contact lenses if they were supplied, or were to be supplied, on the written order of an eye-care professional for the treatment or correction of a defect of vision of a consumer named in the order, and the eye-care professional is entitled, under the laws of the province in which the professional practices, to prescribe eyeglasses or contact lenses.
[…], you indicated that a supply of corrective eyeglasses supplied upon an assessment record is not zero-rated since the definition of the term “prescription” in Section 1 of the Opticians Regulations explicitly excludes an assessment record from being a prescription.
The wording of section 9 of Part II requires that a supply of corrective eyeglasses or contact lenses be supplied on the written order (and not a prescription) of an eye-care professional who is entitled in British Columbia to prescribe eyeglasses or contact lenses. Pursuant to the Opticians Regulations, an optician practicing in British Columbia is not entitled to prescribe eyeglasses or contact lenses for the treatment or correction of a defect of vision. As the requirements in section 9 of Part II have not been met, the supply in British Columbia of eyeglasses or contact lenses in these circumstances (i.e., prior to the effective date of the amendment) would be subject to the GST/HST at the rate of 12%.
[…] you indicated that as an optician practicing in British Columbia is not entitled to prescribe eyeglasses or contact lenses you did not require us to consider whether an assessment record constitutes a written order. Therefore, we have not provided an interpretation on this issue.
The foregoing comments represent our general views with respect to the subject matter of your inquiry. At your request, it does not take into account the amendments to section 9 of Part II of Schedule VI that are included in the Economic Action Plan 2012 – A Plan for Jobs, Growth and Long-Term Prosperity. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or our interpretive policy could affect this interpretation.
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 LL.B
Municipalities and Health Care Services Unit
Public Sector Bodies and Governments Division
Excise and GST/HST Rulings Directorate
FOOTNOTES
1 The proposed amendment to section 9 of Part II of Schedule VI is as follows: 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 such purpose.
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