File: 11860-2
C.N.: 3311
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Subject:
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Ruling Letter to the XXXXX XXXXX (Dec. 14/95) Regarding the Supply of Hospital Beds.
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During the ongoing quality assurance process we reviewed the above noted letter. Recent developments regarding the GST status of the supply of hospital beds were not available to the officer who wrote that letter and were accordingly not included in the ruling letter. This is to advise you of the developments and request that a supplementary letter be sent to the XXXXX XXXXX.
Section 4 of Part II of Schedule VI to the Excise Tax Act provides a zero-rated GST status (taxed at the rate of 0%) for the supply of the following:
"A supply of a hospital bed when the bed is supplied to a hospital authority or on the written order of a practitioner for use by an incapacitated individual."
There are two scenarios under which the supply of hospital beds can be zero-rated. Under the first scenario, the supply of hospital beds to institutions who are designated as "hospital authorities" as defined under section 123 of the Excise Tax Act (the Act) is zero-rated. Most traditional hospitals have been designated as hospital authorities under the Act. However, some institutions including many nursing homes are not considered to be hospital authorities and are not entitled to the benefits enjoyed by hospital authorities. The policy change in question will result in some of the inequity being addressed.
Until recently, under the second part of the provision, the Department only provided for supplies of hospital beds to be GST zero-rated when the supply was made to the incapacitated individual under the written order of a practitioner. The administration of this part of the provision has been reviewed and the restrictions eased.
Now the supply of a hospital bed no longer has to be made to the incapacitated individual to remain zero-rated. The supply now may be zero-rated when made to any recipient (including a nursing home) as long as the order for the bed is accompanied by a written order by a practitioner prescribing the hospital bed for a specific incapacitated individual (such as a patient or resident of a nursing home).
This change is retroactive. Nursing homes and similar establishments which may have paid the GST on the purchase of hospital beds prior to this announcement and who can substantiate that they were supplied under these zero-rated conditions may file a rebate claim under section 261 of the ETA for tax paid in error. Please be aware that rebate claims must be made within four years of when the tax was paid or remitted.
This policy has been approved by the Policy Review Committee and was added to the Policy Statement Database on November 12, 1995. Please advise the XXXXX XXXXX[.] If you would like to discuss this matter further, please contact Ken Syer at (613) 952-9590.
Enikö Vermes
Manager
Health Care, Goods and Services
GST Rulings and Interpretations
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