GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, Ontario
K1A 0L5
XXXXX
Dear XXXXX
Thank you for your letter of October 22, 1997, concerning the application of the Goods and Services Tax (GST) Harmonized Sales Tax (HST) to certain supplies related to corrective eyewear made by your firm.
Interpretations Requested
Your firm makes supplies in Canada of, among other things, parts and accessories for prescription eyewear. Revenue Canada released in July of 1997 a draft Policy Statement P-211 entitled "Whether Parts for Prescription Eyewear (Partly Finished Lenses or Lens Blanks and Frames) are Specially Designed Parts For Purposes of Section 32 of Part II of Schedule VI to the Excise Tax Act".
1. In light of that draft Policy Statement, you would like to confirm the application of the GST to the supply of the following parts for frames: fronts, bridges, temples, temple tips, nose pieces, nose pads, screws, hinges, spring hinges and joints.
2. You would also like to know the application of the GST to supplies of the following prescription eyewear accessories: clip-ons, sun-clips and flip-ups. These goods are used by persons who wear corrective eyewear and desire protection from the sun's glare.
3. You would like to know the application of the GST to supplies of spectacle cases when imported. In your letter you make particular reference to Rule no. 5 of the General Interpretive Rules for the Harmonized System which provides that under certain circumstances a case or box for a product takes the status of the product it was designed to contain.
4. When lenses are imported and subject to further processing, you would like to know whether there is any GST/HST relief related to the supply of the services performed.
Interpretation Provided
The supply of fronts, bridges, temples, temple tips, nose pieces, nose pads, screws, hinges, spring hinges and joints is subject to the GST/HST at the prevailing rate.
The supply of "clip-ons", "sun clips" or "flip-ups" is zero-rated.
In general, the supply of spectacle cases, when supplied independently of the supply of the spectacles, is subject to the GST/HST at the prevailing rate.
Where a good (whether an imported or otherwise) under Part II of Schedule VI ("Medical and Assistive Devices") has a service performed upon it, GST/HST relief with respect to certain services may be available under section 34 of Part II of Schedule VI to the ETA. In this respect only the service of coating the corrective lens with a protective coating (an anti-glare coating for example) qualifies under section 34 for a zero-rated status. The supply of the services of grinding, edging and coating a lens is subject to the GST/HST at the prevailing rate.
Rationale and Background
Other Parts for Prescription Eyewear
The supply of prescription eyewear is zero-rated under section 9 of Part II of Schedule VI to the ETA when 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 where 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 purpose. Section 32 of the same Part provides a zero-rated status for the supply of a part, accessory or attachment that is specially designed for a property described in Part II. Therefore the supply of specially designed parts, accessories and attachments for zero-rated prescription eyewear is also zero-rated.
Many of the parts, accessories and attachments available for corrective eyewear can also be used as parts for non-corrective eyewear. They have no design features which make them specially designed for corrective eyewear. This applies in the case of fronts, bridges, temples, temple tips, nose pieces, nose pads, screws, hinges, spring hinges and joints. These parts are considered generic since they can also be incorporated into non-prescription eyewear and therefore are not specially designed for purposes of section 32. Further, these goods, as parts for frames e.g. as parts for parts (the frame), are not provided for under the provision.
However, the supply of these parts may be zero-rated when supplied in conjunction which a supply of a service of installing, maintaining, restoring, repairing or modifying a property described in, among other provisions section 9, which includes corrective eyewear. Also included under section 34 is any part for such a property (corrective eyeglasses) when supplied in conjunction with the service. Where the supply of a corrective eyeglasses repair service is made in conjunction with the supply of temple tips (or any other part not otherwise zero-rated), the supply of the temple tips or other parts is zero-rated regardless of whether they are specially designed or not.
This means that the supply of the these parts is only zero-rated when supplied under conditions which would only arise at the retail level. Purchases of these parts by retailers or other suppliers remain taxable because the purchase or the parts alone does not qualify for a zero-rated status
Sun-Clips, Clip-Ons and Flip-Ups
For purposes of section 32 discussed above, clip-ons, sun-clips and flip ups are considered specially designed accessories for zero-rated prescription eyewear. By their very nature, they are only for use with prescription eyewear and have no other purpose.
Importations of Spectacle Cases
Spectacle cases (or "eyeglass cases") also do not satisfy the specially designed criteria under section 32. They have no features which make them unique as cases for prescription eyeglasses (as opposed to cases for non-prescription eyewear).
The General Interpretive Rules for the Harmonized System which you quote in your letter are not an issue with respect to the GST/HST and importations of spectacle cases. The Only guidelines to follow in respect to the GST/HST are those legislative and administrative rules under the ETA. Therefore, where a shipment of eyeglass frames is accompanied by any number of cases, the importation of the frames is relieved of the GST/HST by virtue of the Policy Statement P-211 discussed above but the importation of the spectacles cases remains taxable.
The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the ETA, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST Memoranda Series, do not bind the Department with respect to a particular situation. For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST Memoranda Series.
Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9590.
Yours truly,
Ken Syer
Senior Rulings Officer
Municipalities and Health Care Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate
| c.c.: |
K. Syer
E. Vermes
Robert Smith, GOBI
R. McKain,, GOBI
XXXXX |
Encl.: GST Memorandum 1.4
Legislative References: 9, 32, 34, II/VI ETA
NCS Subject Code(s): 11860-2
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