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May 18, 2005
Dear Colleagues:
It has come to the attention of the Board of Directors of the Association of Dental Technologists of Ontario (ADTO) that there is some confusion regarding the application of the Goods and Services Tax (GST) to dental appliances. As all goods manufactured by an RDT are considered taxable, whether zero-rated or not, all dental laboratories should be registered for GST and file returns with Canada Revenue Agency.
As most of you know, the majority of dental appliances are considered to be zero-rated under the Excise Tax Act (ETA) and therefore, most RDT's do not charge GST for their services. However, please be advised that not all appliances fabricated by RDT's are considered to be zero-rated. Based on this information, the Board of Directors of the ADTO asked the chartered accounting firm of Jarvis Ryan Associates to research the issue with Canada Revenue Agency (CRA). The following is information received from the CRA:
Zero-rated supplies are taxable supplies that are listed in Schedule VI to the Excise Tax Act (ETA) and are subject to the GST/GST at the rate of zero percent on the consideration for the supply. Since zero-rated supplies are taxable supplies, a registrant is entitled to claim an input tax credit (ITC) for the GST/HST paid or payable on any property or service to the extent that it is consumed, used or supplied in the course of providing zero-rated supplies. In order for goods or services to qualify for zero-rating, they must satisfy the requirements of Schedule VI to the ETA.
Medical and assistive devices (which include dental appliances), is located in Part II of Schedule VI to the ETA. Only devices contained within the listing within Part II are zero-rated for GST/HST purposes.
Section 11 of Part II of Schedule VI unconditionally zero-rates the supply of "artificial teeth".
Artificial teeth have been defined by the CRA as teeth that are fabricated for use as substitutes for natural teeth. Although they can be made of various materials, they are usually made of porcelain or resin. The artificial teeth must be anatomical in nature, must duplicate the forms of natural teeth, and must be fabricated for the use as a substitute for natural teeth.
The term "artificial teeth" includes crowns, bridges and dentures. Crowns that are fabricated to replace 50% or more of existing teeth are considered to qualify for zero-rating. Some of these crowns are referred to by dental laboratories and dentists as partial crowns or veneers. In addition, crowns are often referred to as caps. Other goods that are fabricated to replace natural teeth are referred to as onlays. As long as such onlays meet the 50% criterion mentioned above, they are also considered to be artificial teeth. The term implants is also used for certain goods that are fabricated to replace natural teeth. Such implants are also viewed as artificial teeth.
Inlays are not considered to be artificial teeth and therefore, are subject to GST at the rate if 7% or 15% HST where applicable. Denture liners and reliners are viewed as accessories that are specially designed for dentures and are unconditionally zero-rated under section 32 of Part II of Schedule VI to the ETA as parts, accessories or attachments that are specially designed for a property described in this Part.
There is no zero-rating provision found within Schedule VI to the ETA that applies to bleaching trays prepared from an impression to be used for teeth whitening, which would be considered as being for cosmetic purposes, nor to mouth guards used to protect teeth from accidental breakage or to prevent teeth grinding. Any supply of these items would be taxable at a rate of 7% GST or 15% HST where applicable.
For further information, please do not hesitate to contact our office at 416-742-ADTO (2386)
Toll Free 1-877-788-ADTO (2386), your accountant or the GST/HST department of Canada Revenue Agency at 1-800-959-8287.
Yours very truly,
Association of Dental Technologists of Ontario
Stephen DeLuca, RDT
ADTO President
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