1 April 1997 GST/HST Interpretation HQR0000583 - Application of the GST to the Sale of Medical or Surgical Prosthesis

                                                                        GST Rulings and Interpretations
Municipalties and Health Care Services
25 McArthur Road - Tower C
Vanier, Ontario
XXXXX                                                                                 K1A 0L5
XXXXX                                                                                 Case: HQR0000583
XXXXX                                                                                 Registration No: N/A

Dear XXXXX

Thank you for your letter of March 3, 1997 (with attachments) concerning the application of the Goods and Services Tax (GST) to the sale of the subject devices to your patients.

Our understanding of the facts, (the transactions and the purpose of the transactions) is as follows:

Statement of Facts

XXXXX

Ruling Given

Based on the facts set out above, we rule that the XXXXX device does not meet the zero-rating provision of section 25 of Part II of Schedule VI to the Excise Tax Act (ETA) and is therefore taxable at the rate of 7 percent.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection or appeal, that there are no relevant changes in the future to the Excise Tax Act, its interpretation or administrative policy and that you have fully described all necessary facts and transactions for which you requested a ruling.

Explanation

Section 25 of Part II of Schedule VI to the ETA reads, in part, as follows:

"A supply of a medical or surgical or surgical prosthesis....."

This provision is unconditional, which allows all types of prosthesis to be sold on a zero-rated basis throughout the distribution chain.In order for a medial or surgical device to qualify as a "medical or surgical prosthesis" pursuant to section 25 of Part II of Schedule VI to the Act it has to meet the following criterion:

1. It must be a substitute for a missing body part.

Larousse. defines prosthesis as "an artificial device to replace a missing body part".

Dorland's Illustrated Medical Dictionary, defines prosthesis as "an artificial substitute for a missing body part, such as an arm or leg, eye or tooth, used for functional or cosmetic reasons or both".

The XXXXX device is not a substitute for a missing body part, as such, it does not meet the definition of "prosthesis". Consequently, it does not meet the zero-rating provision of section 25 of Part II of Schedule to the Act and is taxable at the rate of 7 percent.

Should you have any further questions or require clarification on the above or any other Excise/GST matter, please do not hesitate to contact me at (613) 952-9264.

Yours truly,

Lance G. Dixon
Rulings and Interpetations

c.c.:      K. Syer

c.c.:      M. Place

Legal References:                   Excise Tax Act

Authority:                               Part II of Schedule VI

Reference:                               Section 25

b.c.c.:   Assistant Director, Verification & Enforcement