Subsection 286(1)
Cases
Contact Lens King Inc. v. Canada, 2022 FCA 154
The zero-rating for contact lenses in Sched. VI, Pt. II, s. 9 required that the contact lenses be supplied under the authority of a prescription by an authorized practitioner, but did not explicitly require that the supplier obtain and retain copies of such prescriptions. LeBlanc JA, contrary to the Tax Court, found that no such requirement should be inferred. However, he found that the supplier (a U.S. corporation that apparently did not require any confirmation of the prescription other than that implicit in the notion that most customers would not be able to provide the contact lens particulars without having first received a prescription) was required to establish the prescriptions’ “existence by means of sufficient and credible evidence” (para. 7, TaxIntepretations translation), which it had not done.
In further finding that s. 286(1) did not require the appellant to obtain and retain copies of the prescriptions, LeBlanc JA stated (at para. 68):
[T]he Act does not dictate the precise content of the records referred to in subsection 286(1). …Whether a person covered by this provision has kept adequate records is a question of fact. An incomplete record in the eyes of the Minister is not in itself fatal, as the taxpayer can ultimately establish, by means of sufficient and credible evidence, the validity of the claims against the Notice of Assessment under challenge.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Schedules - Schedule VI - Part II - Section 9 | a requirement to make supplies pursuant to a prescription did not require obtaining a copy of the prescription | 462 |
| Tax Topics - Income Tax Act - Section 230 - Subsection 230(1) | taxpayer flexibility to determine corroborative documents | 103 |
| Tax Topics - Statutory Interpretation - Inserting Words | not role of courts to add words | 134 |
See Also
Contact Lens King Inc. v. The Queen, 2020 TCC 71, aff'd on other grounds 2022 CAF 154
The appellant, a GST/HST registered U.S. corporation, sold and delivered contact lenses (typically replacement contact lenses) to Canadian consumers without verifying that they had a matching prescription. In finding that such sales were not zero-rated under Sched. VI, Pt. II, s. 9 (which requires inter alia that the contract lenses “are, or are to be, supplied under the authority of a prescription prepared … by [a qualified practitioner] for the treatment or correction of a defect of vision,” Smith J stated (at para. 69, TaxInterpretations translation):
[I]t is not sufficient … that the appellant's website inform the consumer of the need for a valid prescription. The appellant must itself obtain a copy of the prescription … from which it can be concluded that the consumer has a prescription "for the treatment or correction of a defect of vision."
Before so concluding, and after having referred to s. 286(1), he stated (at paras. 65-66):
This Court has repeatedly pronounced on the obligation to maintain records in relation to zero-rated supplies … .
In light of this well-established jurisprudence, I must conclude that the appellant has not complied with the requirements of section 9 and subsection 286(1) and that, without a copy of the written prescription … there is no way for the appellant, and consequently no way for the Minister, to ensure that the essential requirements of section 9 have been met.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Schedules - Schedule VI - Part II - Section 9 | on-line sales of contact lenses were not zero-rated given failure to copy purchasers’ prescriptions | 151 |