At the 2018 CBA Roundtable, Q.5 regarding Brian Hurd, and CRA’s administrative arrangement to allow 35% input tax credits to orthodontal practices, CRA indicated that it would prospectively phase-out that administrative arrangement and that it was preparing a publication discussing ITC availability to dentists and orthodontists.
Davis Dentistry (under appeal), which effectively applied that administrative practice to the orthodontic practice of a professional corporation even though it (contrary to the stated CRA requirement) did not show an allocation in its invoices between the two supply components, conflicted with Brian Hurd.
Regarding the status of its review, CRA stated:
[T]he CRA will wait for the decision of the Federal Court of Appeal before taking any more steps in regard to the 35% ITC administrative arrangement.
In the meanwhile, the administrative arrangement will remain in effect until further notice. The administrative arrangement continues to apply where a dentist or dental corporation follows the terms of the arrangement: the dentist identified the two separate supplies, for example, the invoice issued to the patient identifies the consideration for the supply of the orthodontic appliance or artificial tooth separately from the consideration for the supply of the dental service, and the ITC claim relates to mixed-use purchases (to make both taxable and exempt supplies) such as overhead and general operating expenses and certain direct expenses or inputs (for example, personal property such as arch wires used exclusively to fabricate orthodontic appliances). The administrative arrangement does not include ITCs for capital property.
