13 August 1999 GST/HST Interpretation HQR0001784 - Application of GST/HST to Orthodontic Appliances

Dear Sir:

This is in reply to your letter of April 30, 1999 sent to our XXXXX which was forwarded to us for reply.

Interpretation Requested

You are requesting information regarding the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of the orthodontic products listed in your letter (see list on attached Appendix).

Interpretation Given

The supply of the orthodontic products listed in items in the attached Appendix are subject to the 7% GST or the 15% HST in the participating provinces of Newfoundland, New Brunswick, and Nova Scotia, at the time of their importation or supply in Canada.

We understand orthodontic appliances to be any number of devices which are designed to be applied to correct or prevent irregularities of the teeth or to correct or prevent a wide variety of abnormalities of the relations of teeth to surrounding parts such as jaw, face, facial muscles, joints, or other associated parts. Orthodontic appliances may be fabricated or assembled prior to being installed or they may be assembled directly in the patient's mouth. Section 11.1 of Part II of Schedule VI to the Excise Tax Act provides zero-rated status to the supply of an orthodontic appliance. Section 32 of that same Part provides zero-rated status to the supply of any part, attachment, or accessory that is specially designed for a zero-rated item.

Given the vast number of parts used to fabricate an orthodontic appliance and the difficulty in identifying those parts that are specially designed for orthodontic appliances, Revenue Canada, having worked in concert with the XXXXX has resolved the issue by adopting the following position:

a) all parts for orthodontic appliances imported into or purchased in Canada prior to their actual use will be treated as being subject to 7% GST or 15% HST; and

b) qualifying registered dentists, orthodontists, and dental suppliers acquiring the above parts either for resale or for use as parts in a zero-rated orthodontic appliance can recover the tax paid by claiming input tax credits where they meet the requirements for claiming input tax credits, such as documentary requirements.

This position greatly simplifies the administration of the GST/HST and is supported by both the XXXXX[.] Please note that specially designed parts do not include parts with alternative uses (unless the only alternative use is also as a specially designed part for another zero-rated medical device). Further, specially designed parts do not include goods which require further manufacture before being used in or incorporated into the orthodontic appliance, nor do they include materials such as powders and pastes. Materials which are used to make parts are not parts for the purposes of section 32 of Part II of Schedule VI.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, 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/HST Memoranda Series, do not bind the Department with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-6761.

Yours truly,

Susan Eastman
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division

Attachment: Appendix - Orthodontic Products

Appendix

Orthodontic Products

1. Orthodontic brackets (braces)

2. Orthodontic bands

3. Orthodontic archwires, wires, springs, hooks, stops, locks

4. Orthodontic elastomerics, chains, threads, separators

5. Orthodontic adhesives

6. Orthodontic headgear, facebows

7. Orthodontic retainers, lingual retainers, expansion screws

8. Orthodontic lip bumpers, palatal arch bars

9. Orthodontic instruments

10. Orthodontic plastics, impression material

11. Orthodontic supplies - brace guards, mixing bowls, archwire tubing, diamond burs, discs, mixing sticks, mixing brushes, mixing pads, cotton absorbers, x-ray film, dispotik trays, alginate, flavouring, cheek retractors, curing lights, acrylic resin, acrylic powders, pumice, prophy paste, et al.