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GST/HST
Medical and Assistive Devices
W.C. Dobson CA
Health and Public Sector Specialist
Today’s Agenda
2008-2011: What’s new?
Our compliance interest in assistive devices
Comments on legislative policy intent
Overview on medical devices
Conditions limiting the zero rating
Services in respect of medical devices
Keeping your company compliant
Publications 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 methods
Leads from vendors
Impact of an audit: severe
The “default” rule: taxable unless zero rated
List of taxable goods: 2008 presentation
Your 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 Conditions
Zero-rated without conditions
Zero-rated with conditions:
Special design features
For use by an individual with a disability or
particular impairment
Can 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 Appliances
 Wheel Chair Ramps
 Hearing 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 purpose
 Deemed not a medical device
Medical Practitioner
 Physicians/surgeons and dentists only
Disability
 Activities 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 CRA
1-800-959-8287 – English
1-800-959-8296 – French
1-800-465-5770 – TTY
1-800-567-4692 - Québec
www.cra-arc.gc.ca
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