13 October 2006 GST/HST Ruling 83311 - XXXXX Jerky XXXXX

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.

Dear XXXXX:

This is in reply to the facsimile message XXXXX from XXXXX and further to our telephone conversation XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the XXXXX Air Loss Mattress (the XXXXX mattress). XXXXX we advised that the supply of the mattress (invoiced on April 21, 2006) was subject to the 7% GST/HST.

All legislative references are to the Excise Tax Act (ETA) and the regulations therein, unless otherwise specified.

Effective July 1, 2006, the rate of the GST has been reduced from 7% to 6% and the rate of the HST from 15% to 14%. The new rates apply to supplies for which the GST/HST is paid on or after July 1, 2006, without having become payable before that date. Specific transitional rules apply to certain supplies, for example, real property. For more information on the transitional rules for the reduction of the GST/HST rate, please refer to Reduction in the Rate of the GST/HST - Questions and Answers (http://www.cra-arc.gc.ca/agency/budget/2006/gstrateqa-e.html) on the Canada Revenue Agency (CRA) Web site.

According to the information previously provided by XXXXX we understand that the XXXXX mattress was purchased in XXXXX and the GST/HST was charged in the amount of $XXXXX. After further review and research of the qualities and features of the XXXXX mattress and in consideration of the additional information you provided in our telephone conversation, we have revised our position regarding the tax status of this mattress. XXXXX.

Statement of Facts

On the basis of the information provided and our additional research, our understanding of the facts is as follows:

•   The XXXXX mattress has features designed for individuals who are confined to beds for extended periods of time, which help to alleviate the effects of bedsores that occur in these situations.

•   The XXXXX mattress is typically used by hospitals as a component of a hospital bed in providing inpatient accommodation.

•   The XXXXX mattress is committed by design for use with hospital beds in that its inflated dimensions of 35 inches wide and 80 inches long match typical hospital bed frames. The dimensions of hospital bed frames are slightly smaller then the 'twin' sized residential bed frame (which is the smallest residential bed for adult use). As such, the XXXXX mattress is not reasonably expected to have an alternate use; i.e., with a residential bed frame.

•   The power cord for the XXXXX mattress's air cells has features that meet certain standards set by the XXXXX for the power cord's use in a hospital. It is referred to as "hospital grade plug".

•   The supplier of the mattress, XXXXX, advertises this mattress to the health care market, and sells it almost exclusively to hospitals and personal care homes. On occasion, the supplier will sell the XXXXX individuals to individuals for use in their homes. The individuals using the XXXXX mattress in their homes are patients who are confined to the bed and as a result, require the mattress for therapeutic purposes.

•   The XXXXX mattress was purchased for use XXXXX with a hospital bed in the home, and is the same mattress XXXXX used while in the hospital.

Ruling Requested

You would like to know whether sale of the XXXXX mattress is zero-rated, i.e., subject to the 0% GST/HST.

Ruling Given

Based on the facts set out above, we rule that the sale of the XXXXX mattress is zero-rated; i.e., subject to 0% GST/HST, pursuant to section 32 of Part II of Schedule VI.

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Goods and Services Tax Rulings. We are bound by this ruling provided that none of the above issues is 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

The general rule under the ETA is that all supplies of goods and services are subject to the 6% GST (or to the 14% HST for supplies made in New Brunswick, Newfoundland and Labrador, and Nova Scotia), with a limited number of exceptions. These exceptions include specific supplies described in Schedule VI, which applies the tax at a rate of 0%. A limited number of medical devices are identified in Part II of Schedule VI. For instance, pursuant to section 32 of that Part, the supply of a part, accessory or attachment that is specially designed for a property described in that Part is zero-rated. A hospital bed is described in section 4 of that Part. On the basis of the facts set out above, we consider the XXXXX mattress to be a part that is specially designed for a hospital bed and therefore the sale of this mattress is zero-rated; i.e., subject to 0% GST/HST.

Additional Information

If you paid an amount as GST/HST on a supply that should have been zero-rated, you can request a refund or credit of the amount from the supplier or alternatively, you can apply for a rebate from the CRA under section 261. If the supplier refunds or credits the tax, it must do so within two years after the day the amount was charged or collected and it must provide you with a credit note containing prescribed information. If instead you choose to apply for the rebate from the CRA, you must complete and submit the attached GST189 General Application for Rebate of Goods and Services Tax (GST)/Harmonized Sales Tax (HST) application form. The time limit to apply for this rebate is two years after the day you paid the tax.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-6761.

Yours truly,

Susan Eastman
Municipalities and Healthcare Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

2006/09/21 — RITS 43690 — Independent Medical Examinations and Other Independent Assessments