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XXXXX
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C.N.: 1739
XXXXX June 10, 1996
XXXXX
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Subject:
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Application of the GST to Certain Orthopaedic Braces or Orthotic Devices.
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This is in response to your e-mail request and package received by this office on May 23, 1996, regarding the application of the GST to supplies of certain medical devices.
You sent a memorandum accompanied by a package of manufacturer's literature for our examination. The memorandum makes a different request for assistance than your original e-mail. In the memo you requested assistance in determining the application of the GST to goods for which a registrant,XXXXX has requested rulings. This letter responds to that request.
Part II of Schedule VI to the Excise Tax Act (ETA) lists goods the supply of which is zero-rated by virtue of section 165 of the ETA. Sections 23 and 23.1 of that Part read as follows:
"23. The supply of a spinal or other orthopaedic brace."
"23.1 A supply of an orthotic device when the supply is made to a consumer on the written order of a practitioner."
As you probably know, a new section 23 being proposed in the Notice of Ways and Means Motion tabled in the House of Commons on April 23, 1996. This new section 23 is to replace both existing sections 23 and 23.1. The proposed new section 23 reads as follows:
"A supply of an orthotic or orthopaedic device that is made to order for an individual or is supplied on the written order of a medical practitioner for use by a consumer named in the order."
Under the proposed wording there will no longer be a need to differentiate between the orthopaedic and orthotic goods. This proposed new section 23 is to take effect on May 14, 1996, upon receiving Royal Assent.
Prior to the proposed amendments, a qualifying spinal or other orthopaedic brace under section 23 was required to be rigid in nature. This policy was based upon the policy under the old Federal Sales Tax (FST) which provided an exemption from the FST for "spinal and other orthopaedic braces".
In 1992, the Canadian International Trade Tribunal (CITT) determined that cervical spinal collars supplied by XXXXX were "spinal or orthopaedic braces" for FST purposes. In 1994, the CITT also determined that cradle arm slings supplied by XXXXX were spinal or orthopaedic braces. After consultation with the Department of Finance it was decided that Revenue Canada would allow both cervical spinal collars and cradle arm slings to be considered an orthopaedic brace for GST purposes under section 23 of Part II of Schedule VI. It was also decided that this zero-rated status would not be provided for any similar or related products. Therefore administratively, the effects of the two CITT appeals for GST purposes is limited to the goods at issue in the appeals.
For the purposes of section 23.1, orthotic devices are considered to include all other non-rigid devices to support or brace any portion of an individual's skeletal frame when worn by the individual. By the terms "rigid" and "non-rigid" we mean rigidity must be present in the product prior to application. Certain soft goods acquire rigidity when worn. They are also considered orthotic devices.
XXXXX
Based on this policy, it is our position that the application of the GST to the supply of the above-noted goods is as follows:
Sports Supports by XXXXX
1. XXXXX
The goods are understood to be hinged to provide limited movement for damaged knees. This hinge can be set to provide a limited amount of movement from XXXXX degrees movement to XXXXX degrees. This constriction of movement and inherent rigidity of design satisfies our requirement for "rigidity". The supply is zero-rated for GST purposes under section 23.
2. XXXXX with universal felt horseshoe buttress, Two Medial and 2 lateral spiral steel stays:
As per the manufacturer's literature these goods contain steel stays to enhance rigidity. The supply of all three goods is zero-rated under section 23.
3. XXXXX, 2 medial and 2 lateral spiral steel stays:
The description from the registrant does not fit with the information in the brochure. There is no mention of the steel stays in the brochure which are mentioned in the registrant's letter. Without the steel stays, the good is not rigid. Therefore the supply is considered an orthotic device under section 23.1.
4. XXXXX with medial and lateral spiral steel stays.
XXXXX is a variation on number XXXXX[.] The supply is zero-rated. We could not locate product XXXXX[.] If it is also a variation of XXXXX the supply is also zero-rated under section 23. You are advised to confirm with the registrant.
5. XXXXX with medial and lateral spiral steel stays. As per the manufacturer's literature the product is manufactured with a rigid neoprene buttress core. It is considered rigid. The supply is zero-rated under section 23.
6. XXXXX with enclosed tubular horseshoe buttress with medial and lateral spiral steel stays. The product is buttressed and contains steel stays as well. The supply is zero-rated under section 23.
7. XXXXX with steel hinge. The goods are buttressed and therefore satisfy the rigidity requirement. The supply is zero-rated under section 23.
8. XXXXX with steel hinge on each side of the knee. These goods are not rigid. They are considered to be orthotic devices under section 23.1.
9. XXXXX with steel hinge 18 inches long.
Appears not to meet the rigidity requirements. The supply is zero-rated under section 23.1.
10. XXXXX with steel hinge
The product does not appear to be rigid. It is considered an orthotic device under section 23.1.
11. XXXXX with steel hinges
Device does not meet our rigidity requirements. The supply is an orthotic device under section 23.1.
12. XXXXX with aluminum stays.
Product XXXXX contains aluminum stays and is therefore rigid. This product is zero-rated under section 23. The remaining items are not rigid and are considered orthotic devices under section 23.1.
13. XXXXX with steel stays.
Contains steel stays for rigidity. The supply is zero-rated under section 23.
14. XXXXX for the back.
Parts. Inserts for braces. On the assumption that XXXXX and XXXXX are parts for XXXXX above, the supply of these parts qualify for zero-rating under section 32 of Part II of Schedule VI. Part XXXXX is a part for XXXXX which is a variation on XXXXX[.] The supply of XXXXX is zero-rated under section 32 as well.
15. XXXXX with steel stays.
Does not meet our rigidity requirements. They are considered to be orthotic devices under section 23.1.
16. XXXXX with adjustable steel hinges.
This group of goods is composed of rigid parts that, when assembled, comprise an orthopaedic brace, the supply of which is zero-rated under section 23.
17. XXXXX
The product is rigid and is considered to be an orthopaedic brace under section 23.
XXXXX
1. XXXXX all with metal stays.
The product is manufactured with preformed metal stays. The product meets the rigidity requirement. The supply is zero-rated under section 23.
2. XXXXX all with metal stays.
The splints contains an aluminum spoon for support. Therefore it meets the rigidity requirements. The supply is zero-rated under section 23.
3. XXXXX with metal stays.
Product contains adjustable stays. Stays provide the product with rigidity. The supply is zero-rated under section 23.
4. XXXXX (whole ankle brace is a splint).
The product is rigid. The supply is zero-rated under section 23.
5. XXXXX with steel stays.
No evidence of rigidity. The goods are considered to be orthotic devices under section 23.1.
6. XXXXX with steel hinges.
No evidence that the products are rigid. The are considered to be orthotic devices under section 23.1.
XXXXX
1. All Cervical Collar products.
The supply of cervical collars is zero-rated under section 23.
2. All Clavicle Splint products.
None of these goods appear to be rigid. However, the XXXXX incorporates a cradle arm sling. As discussed above, the supply of cradle arm slings is zero-rated under section 23. Therefore the supply of the XXXXX is zero-rated under section 23 while others are orthotic devices under section 23.1.
3. All Shoulder Immobilizer products
The supply all shoulder immobilizer products which incorporate a cradle arm sling are zero-rated as per the policy discussion above. This includes model numbers XXXXX. The remaining models: numbers XXXXX are considered orthotic devices under section 23.1.
4. All Arm Sling products.
All these product are cradle arm slings. The supply of all these products is zero-rated under section 23.
5. XXXXX (According to the registrant, these are the only elbow products not zero-rated.)
From the literature it appears that XXXXX and the XXXXX are rigid. The supply of these goods is zero-rated under section 23. The remaining goods (the XXXXX are flexible in nature and are considered to be orthotic devices under section 23.1.
6. XXXXX (According to the registrant wrist splints are all zero-rated except models XXXXX[).] These goods are all rigid. The XXXXX series goods noted as taxable in the registrant's incoming letter contain neoprene supports which, in our opinion, allow the goods to be considered rigid as well. XXXXX has a movable dorsal stay which may be rigid as well. You are advised to confirm this with the registrant.
7. Finger Splint products.
The finger splint products meet the rigidity requirement. The supply of these goods is zero-rated under section 23.
8. Rib belts.
These goods do not appear to be rigid. They are considered orthotic devices under section 23.1.
9. Abdominal binders (According to the registrant models XXXXX have been ruled to be taxable, the rest were considered zero-rated.)
There is no evidence that these products meet any of the rigidity requirements under section 23. Therefore it is our opinion that the abdominal binders are orthotic devices for purposes of section 23.1.
10. Lumbosacral Support Products.
These goods are orthotic devices for purposes of section 23.1.
11. Catheter Leg Strap.
This product is a catheter for persons with a an incontinence problem. It is our opinion that the supply of the product is zero-rated under subparagraph 2(d)(i) of the Medical Devices (GST) Regulations pursuant to section 31 of Part II of Schedule VI to the ETA.
12. Knee Immobilizers.
These goods do not a appear to be rigid. They are considered to be orthotic devices under section 23.1.
13. Ankle Supports.
The XXXXX are all rigid. The supply of these goods is zero-rated under section 23. The remaining two types, the XXXXX and the XXXXX are not rigid. They are considered to be orthotic devices under section 23.1.
14. XXXXX[.] It is our understanding the XXXXX shoes are designed to aid mobility for person's who have had a foot operation or, as per the manufacturer's literature, they are suitable for person's with diabetes or arthritis. They are not designed to immobilize a foot to facilitate healing. They are not considered to be either orthopaedic braces or orthotic devices for GST purposes. Further, XXXXX shoes do not qualify under paragraph 2(c) of the Medical Devices (GST) Regulations as "footwear that is specially designed for an individual who has a crippled or deformed foot or other similar disability". The supply of XXXXX shoes is taxable at 7%.
Casts are generally not pre-manufactured goods but are constructed around a damaged part of a person's body. Nevertheless, plaster of Paris casts or casts constructed of other materials (all which rigidly immobilize parts of a person's body) are orthopaedic braces for the purposes of section 23. Cast boots are considered to be a qualifying accessory for casts under section 32.
15. Traction Units.
Traction units are not orthopaedic braces for GST purposes. They operate under the principles of traction which involves pulling an object, in this case, the person's head. They do not brace in the manner that the goods considered orthopaedic braces discussed above do. Nor are they orthotic devices for the same reasons. The supply of the traction units is subject to the GST at 7%.
XXXXX Products:
1. Ankle Braces
Of the four types of XXXXX ankle braces, only the Ankle Brace XXXXX appears to have any elements of rigidity. The product incorporates steel springs which reinforce both sides of the ankle. The supply of the this product is zero-rated under section 23. The remaining three types of ankle braces appear to be flexible. Therefore they are considered to be orthotic devices under section 23.1.
2. Back Brace
This product is reinforced with steel springs. The supply is zero-rated under section 23.
3. Tennis Elbow Brace
This product does not appear to be rigid. It is considered an orthotic device under section 23.1
4. Hinged Knee Brace with universal buttress and hinges on each side.
From the information provided, it is difficult to determine whether the good is rigid or not. You will have to research this matter further.
5. Patella Stabilizer Knee Brace with universal buttress and metal stays.
6. Wraparound Knee brace with metal stays.
These products (numbers 5 and 6) are reinforced by steel springs and are therefore considered to be rigid. The supply is zero-rated under section 23.
7. XXXXX metal hinge on one side.
There does not appear to be any descriptive literature in your submission regarding this product. We suggest that you apply the principles enunciated at the beginning of this letter to determine whether the goods are orthopaedic braces or orthotic devices.
8. Neck Brace XXXXX
There is no Neck Brace XXXXX described in the accompanying literature. Therefore we cannot provide an opinion. You are advised to request the required information from the registrant and determine the GST status of the supply based on the principles expressed above.
9. Wrist brace XXXXX and XXXXX
Based upon the information provided it is difficult to determine the characteristics of the good in question. It does not appear to be rigid, however, you are advised to determine the GST status based upon the cases discussed above.
Under the proposed new section 23 the issue of whether a good is an orthopaedic brace of an orthotic device will no longer be an issue because both classes of goods will be subject to the same conditions. Please be advised that due to the administrative difficulties surrounding the application of sections 23 and 23.1, it is our opinion that administrative tolerance should be exercised when determining any GST assessment.
This represents our views of the goods in question as best as it can be determined from the information provided. If you would like to discuss this matter further, please contact Ken A/Senior Policy Officer, at (613) 952-9590.
Yours truly,
Enikö Vermes
Manager
MUSH Unit
GST Rulings and Interpretations
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