GST/HST Medical and Assistive Devices W.C. Dobson CA Health and Public Sector Specialist.
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Transcript of GST/HST Medical and Assistive Devices W.C. Dobson CA Health and Public Sector Specialist.
GST/HST Medical and Assistive Devices
W.C. Dobson CAHealth and Public Sector Specialist
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Today’s Agenda
2008-2011: What’s new?Our compliance interest in assistive devicesComments on legislative policy intentOverview on medical devicesConditions limiting the zero ratingServices in respect of medical devicesKeeping your company compliantPublications and help
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2008-2011: What’s new?
Quiet on the Legislative Front HST in Ontario Transitional Rules New Place of Supply Rules New GST/HST Directorate at CRA• Focus on risk assessment• Pre-assessment clearing• Post payment audit
Onboarding Ontario Auditors
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Compliance Programs
Our mandate and methodsLeads from vendorsImpact of an audit: severeThe “default” rule: taxable unless zero ratedList of taxable goods: 2008 presentationYour interests: a level playing field
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The Policy Intent
Emphasis is on nature of the device and its relationship to a chronic illness, disease or disability of an individual.
Only devices specially designed for use by an individual with a chronic illness, disease or disability qualify for zero-rating.
Many of these devices are conditionally zero-rated: only when sold to a consumer on the order of a physician.
If a device has other potential uses it is generally denied GST/HST relief.
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Overview of Medical Devices
Part II of Schedule VI lists certain medical and assistive devices that are zero-rated when supplied in Canada.
Schedule VII of the Excise Tax Act allows many of the medical and assistive devices listed in Part II of Schedule VI to be imported on a non-taxable basis.
Institutions, retailers, etc. pay the GST/HST on importations of medical devices where zero-rated status is conditional on a written order from a physician for use by a consumer named in the order
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Limiting ConditionsZero-rated without conditions
Zero-rated with conditions:
Special design featuresFor use by an individual with a disability or
particular impairmentCan be used in the residence of an
individual Only when supplied on the written order of
a medical practitioner for use by a consumer named in the order
Conditions for zero-rating may include one or more of the above
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Zero-Rated Without Conditions
Example:Orthodontic AppliancesWheel Chair RampsHearing Aids
Zero Rated through the chain of distribution
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Zero Rated with Conditions
Specially Designed
Precise term to ensure only devices made to address the specific medical conditions relating to a disability are zero-rated.
“Specially” imposes a restriction on the word “designed” which excludes general purpose goods from zero-rating.
Relates to the intention of the original designer or manufacturer as to the ultimate use of the device as reflected in the qualities and features
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Zero Rated with Conditions (2)In respect of cosmetic procedures
No medical or reconstructive purposeDeemed not a medical device
Medical PractitionerPhysicians/surgeons and dentists only
DisabilityActivities of daily living
For “Use” by an individual/consumer Individual/consumer must operate device
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Services
Services of installing, maintaining, restoring, repairing or modifying a zero-rated device
Would include, for example, a contract for maintenance services for a home use dialysis machine
Does not include warranties or insurance
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Maintaining Compliance
The Importance of a ruling
Internal controls
Creating a level playing field
A longer term relationship
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Help
CRA web site:Search “medical device’Memorandum 4.2 Medical Devices
Contact CRA1-800-959-8287 – English1-800-959-8296 – French
1-800-465-5770 – TTY1-800-567-4692 - Québec
www.cra-arc.gc.ca