Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
XXXXX
Case Number: 113941
Attention: XXXXX XXXXX
December 10, 2009
Dear XXXXX:
Subject:
GST/HST RULING
Tax Status of XXXXX
Thank you for your letter of XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to XXXXX.
HST applies at the rate of 13% in the participating provinces of Nova Scotia, New Brunswick, and Newfoundland and Labrador. GST applies at the rate of 5% in the remaining provinces and territories.
As announced in the 2009 Ontario Budget, the Government of Canada and the Province of Ontario have signed a Memorandum of Agreement (MOA) that provides the framework for the imposition of the HST in Ontario. The HST is proposed to come into effect in Ontario on July 1, 2010, at a rate of 13%, consisting of a 5% federal part (equivalent to the existing GST) and an 8% provincial part. The HST will use the same tax base and structure as the GST, with some exceptions.
On July 23, 2009, the Government of Canada and the Province of British Columbia signed an MOA that provides the framework for the imposition of the HST in British Columbia. The HST is proposed to come into effect in British Columbia on July 1, 2010, at a rate of 12%, consisting of a 5% federal part (equivalent to the existing GST) and a 7% provincial part. The HST will use the same tax base and structure as the GST, with some exceptions.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Statement of Facts
We understand that:
1. XXXXX is a portable biofeedback and monitoring system for rehabilitation. XXXXX.
2. XXXXX.
3. XXXXX is recognized by Health Canada as a "Class I" Medical Device.
4. XXXXX is composed of XXXXX:
1. XXXXX
2. XXXXX
3. XXXXX
4. XXXXX.
5. XXXXX:
* XXXXX.
* XXXXX.
6. XXXXX.
7. XXXXX sells XXXXX to Canadian customers based on orders solicited by an independent sales representative located in Canada.
8. XXXXX is a non-resident who is not registered for GST/HST purposes.
Ruling Requested
You would like to know whether XXXXX is zero-rated (taxable at a rate of 0%) for GST/HST purposes.
Ruling Given
Based on the facts set out above, we rule that XXXXX is not zero-rated and is therefore subject to GST/HST at a rate of 5%, or at a rate of 13% where the supply is made in a participating province (Nova Scotia, New Brunswick, and Newfoundland and Labrador).
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 Excise Tax Act, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
Explanation
The general rule in section 165 is that all supplies of goods and services made in Canada are subject to the GST/HST at the rate of 5% (or 13% for supplies made in a participating province). There are exceptions to this general rule, including one for medical devices that are specifically identified in Part II of Schedule VI to the ETA as being zero-rated. However, there is no provision in Part II of Schedule VI that would apply to XXXXX and therefore a supply of XXXXX made in Canada is subject to the general rule in section 165.
Importation of Goods into Canada
Section 212 provides that every person who is liable under the Customs Act to pay duty on goods, or would be so liable if the goods were subject to duty, shall pay GST at the rate of 5% on the value of the goods.
Subsection 212.1(2) imposes the provincial component of the HST at a rate of 8% in respect of non-commercial importations by residents of the participating provinces (Nova Scotia, New Brunswick, and Newfoundland and Labrador). This tax applies in addition to the tax imposed under section 212.
If the supply of a medical device is included in Part II of Schedule VI, that device may be imported on a non-taxable basis pursuant to section 6 of Schedule VII. However, the supply of XXXXX is not included in Part II of Schedule VI; therefore, it does not constitute a non-taxable importation for GST/HST purposes and will be subject to tax.
Other Issues
In your letter you indicate that you are looking for information on any disability-related Income Tax measures pertaining to XXXXX. In that regard, your request for information has been forwarded to the Income Tax Rulings Directorate for a response.
You have also requested a discussion regarding the importation of medical devices and ensuring the appropriate Customs clearance. Please note that this issue falls within the jurisdiction of the Canada Border Services Agency (CBSA). As such, a copy of your letter has been sent to CBSA. If you would like to discuss the importation of XXXXX, or any other Customs matter, CBSA can be reached at 1-800-461-9999.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-4289. 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,
Brian Olsen, CGA
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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