GST/HST Notices - Notice 295
May 2016

1. What does the amendment propose to change?

Insulin is used in the treatment of diabetes and is currently zero-rated as a drug, pursuant to Part I of Schedule VI to the Act. Insulin infusion pumps and insulin syringes are currently included in the list of zero-rated medical and assistive devices found in Part II of Schedule VI to the Act. These devices are used to inject insulin for the treatment of diabetes.

Insulin pens are also used to inject insulin, and are an alternative to infusion pumps or syringes. A pre-filled, disposable insulin pen would be zero-rated as a drug. However, a refillable insulin pen is not, in and of itself, considered to be a drug. Rather, it is a device that is used to inject insulin in the same manner as an insulin syringe or insulin pump.

The proposed amendment to the Act would add insulin pens and insulin pen needles to the list of GST/HST zero-rated medical and assistive devices. This change would apply to any supply of insulin pens and insulin pen needles made after March 22, 2016 and to any supply that was made on or before March 22, 2016 unless an amount was charged, collected or remitted as or on account of the GST/HST under Part IX of the Act in respect of the supply.

2. What does zero-rated mean?

Zero-rated means that no GST/HST is charged when the product is supplied, as the tax rate is 0%. However, a GST/HST registrant can claim an input tax credit for the GST/HST paid or payable on purchases and expenses made to provide zero-rated supplies, when all necessary conditions are met.

3. Can suppliers stop charging GST/HST on insulin pens and insulin pen needles before the amendment receives royal assent?

Yes, in accordance with the proposed amendment, suppliers can stop charging GST/HST on supplies of insulin pens and insulin pen needles made as of March 23, 2016. The proposed measure also applies to such supplies made on or before March 22, 2016, in respect of which GST/HST was not charged, collected or remitted. This proposed measure is subject to parliamentary approval. However, consistent with its standard practice, the CRA is administering this measure on the basis of Bill C-15.

4. What should I do if a supplier charged me GST/HST on insulin pens or insulin pen needles supplied on or after March 23, 2016?

A supplier who has charged or collected GST/HST on insulin pens or insulin pen needles supplied on or after March 23, 2016, must include that amount in the calculation of net tax on their GST/HST return, and remit that net tax if there is a balance owing, according to the regular rules.

If the proposed amendment becomes law, you may then contact the supplier, who may choose to adjust the amount charged, or refund or credit the amount collected. If so, the supplier must provide you with a credit note for the amount. Alternatively, you can file a rebate claim with the CRA for the tax paid in error by using Form GST189, General Application for Rebate of the GST/HST.

The CRA cannot pay a rebate for tax paid in error prior to proposed legislation becoming law.

5. What should I do if a supplier charged me GST/HST on insulin pens or insulin pen needles supplied on or before March 22, 2016?

For supplies made on or before March 22, 2016, the proposed amendment only applies to supplies where there was no amount charged, collected or remitted on account of GST/HST. If a supplier charged or collected GST/HST on a supply of insulin pens or insulin pen needles made on or before March 22, 2016, the supplier must include that tax amount in the calculation of net tax on their GST/HST return, and remit that net tax if there is a balance owing, according to the regular rules.

Therefore, where tax was charged for these supplies, you are not able to ask the supplier for an adjustment, or if you paid tax to the supplier, to ask the supplier for a refund or credit. You would also not be entitled to claim a rebate for tax paid in error.

6. How will the proposed amendment apply in provinces that have a provincial sales tax?

The proposed amendment only applies for GST/HST purposes. This means that although a supplier in a province that has a provincial sales tax may stop charging GST on a supply of insulin pens or insulin pen needles in accordance with the proposed amendment, provincial sales tax may still apply to such sales. Any questions relating to the provincial sales tax should be addressed to the province in question.

Further information