Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 242596
Dear [Client]:
Subject: GST/HST RULING
Tax Status of Lymphedema Compression Garments
Thank you for your fax of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to lymphedema compression garments.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand that:
1. […] (the “Client”), suffers from primary congenital lymphedema (also known as “Milroy’s Disease”) in both legs and has been using an intermittent compression pump since puberty.
2. […].
3. The Client’s physician provided a written letter prescribing that she purchase […][Product 1] with […][Product 2] for use at a pressure level of 30-40 mm/hg for approximately 2 hours per day to treat her condition.
4. The […][Products’] website indicates that [Product 1] and [Product 2] are designed for use together as the [] in treatment of various lymphatic and vascular conditions.
RULING REQUESTED
You would like to know whether a supply of the [Products] is zero-rated under Part II of Schedule VI to the ETA.
RULING GIVEN
Based on the facts set out above, we rule that the supply of the […][Products] is zero-rated pursuant to section 21.1 of Part II of Schedule V to the ETA as it is supplied on the written order of a physician for use by a consumer named in the order.
EXPLANATION
Generally, all supplies of property and services made in Canada are taxable unless an exemption from the GST/HST applies. Taxable supplies are supplies made in the course of a commercial activity and may be taxable at the rate of 0% (zero-rated supplies), 5%, 13%, or 15% on the value of the consideration for the supply depending on the province in which the supply is made. Exempt supplies are not subject to the GST/HST and are included in Schedule V. Zero-rated supplies are included in Schedule VI. Part II of Schedule VI contains provisions that zero-rate supplies of a range of medical and assistive devices.
Section 21.1 of Part II of Schedule VI zero-rates the supply of certain devices used in treating lymphedema, provided the supply meets certain conditions. In order to meet the conditions for zero-rating under section 21.1, the supply must be one of an extremity pump, an intermittent pressure pump, or a similar device, the device must be designed for human use in the treatment of lymphedema, and the supply must be made on the written order of a specified professional for use by a consumer named in the order.
The CRA considers extremity pumps and intermittent pressure pumps to be devices that are designed to mimic the lymphatic system. These pumps are generally attached to a garment, such as a ‘cuff’ or a ‘sleeve’, made up of a number of chambers that are inflated and released by the pump in sequential movements to stimulate the flow of lymph fluid out of the affected area of the body. [Product 1] with the [Product 2] meet these criteria, and would therefore constitute an intermittent pressure pump for purposes of section 21.1.
Given that the remaining conditions for zero-rating have been met, the […][Products], […][are] zero-rated pursuant to section 21.1 of Part II of Schedule VI.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 343-573-6088. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Kate Portner Gartke
Health Care Sectors Unit
Legislative Policy and Regulatory Affairs Branch, GST/HST Rulings Directorate Division
GST/HST Rulings Directorate
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