7 June 2013 Ministerial Correspondence 2013-0488841M4 - Medical expense

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Query on over-the counter products for METC

Position: Referral to folio

Reasons: Legislation

June 7, 2013

XXXXXXXXXX

Dear XXXXXXXXXX:

Thank you for your correspondence of May 3, 2013, about the application of the goods and services tax/harmonized sales tax (GST/HST) to vitamins and minerals bought under prescription.

You say you wrote to me in 2011 about the same matter, but did not get a response. I replied to you on September 19, 2011, at XXXXXXXXXX, which was the email address you gave the Canada Revenue Agency (CRA) in 2011. I regret that you did not receive my response.

You still wonder why the GST/HST is charged on vitamins and minerals prescribed for patients fitted with feeding tubes.

The CRA is responsible for administering the Excise Tax Act, which governs the application of the GST/HST. The GST/HST applies to most goods and services sold or provided in Canada, unless specific provisions in the Act allow for relief from this tax. Certain drugs and biologicals are zero-rated, which means they are taxed at 0%.

Under the Act, federally regulated consumer drugs are generally zero-rated if a prescription is required before they can be sold to a consumer. Drugs sold without a prescription are generally subject to the GST/HST. Drugs that are not regulated under federal legislation are zero-rated when supplied for human use if they are dispensed by a pharmacist on the prescription of a medical practitioner or an authorized individual for the personal consumption or use of the individual named in the prescription.

Most over-the-counter medications like sinus and nasal preparations, acetylsalicylic acid and acetaminophen, eye drops, vitamins and minerals, cold remedies, cough medicine, and medicated shampoos are available to the public without a prescription and are generally subject to the GST/HST. These over-the-counter products bought at a drugstore do not qualify for zero-rating, even if the consumer has a prescription for the product and shows it to the pharmacist, unless the product is a drug and is also dispensed by the pharmacist.

Similarly, the Income Tax Act does not allow over-the-counter products like vitamins and minerals as eligible medical expenses for the medical expense tax credit, because these products can be lawfully bought without a prescription and do not generally need the intervention of a medical practitioner to be lawfully bought. For more information on the medical expense tax credit, please see Income Tax Folio S1-F1-C1, Medical Expense Tax Credit, which is available at www.cra.gc.ca/tx/tchncl/ncmtx/fls/s1/f1.

There are no changes proposed to these rules at this time, and any change to the legislation is the responsibility of the Department of Finance Canada. I am therefore sending a copy of our correspondence to the Honourable James M. Flaherty, Minister of Finance, to make him aware of your concerns.

If you have more questions, or if you want to ask the CRA for a ruling on a specific product, please contact Mr. Colin MacEachern, Assistant Director of the Legislative Policy and Regulatory Affairs Program for the Atlantic Region, by writing to Ralston Building, 1557 Hollis Street, Post Office Box 638, Halifax NS  B3J 2T5, or by calling 902-426-6546. The CRA accepts collect calls. Mr. MacEachern is aware of our correspondence and will be pleased to help.

I appreciate the opportunity to respond to your concerns and trust that the information I have provided and the referral are helpful.

Yours sincerely,

Gail Shea, P.C., M.P.
Minister of National Revenue

c.c.: The Honourable James M. Flaherty‚ P.C.‚ M.P.
Minister of Finance
House of Commons
Ottawa ON K1A 0A6

Mr. Colin MacEachern
Assistant Director, Legislative Policy and
Regulatory Affairs Program for the Atlantic Region
Ralston Building
1557 Hollis Street
Post Office Box 638
Halifax NS B3J 2T5

Originator:
Mireille Arcand
Ministerial Correspondence Unit
Excise and GST/HST Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
613-960-6446