The CRA has released GST Notice 339, revoking a long-standing administrative position that simplified dentists (and orthodontists) GST filings. Previously CRA had allowed dentists to claim a refund of GST paid on expenses based on an estimate of up to 35% of total fees charged for Orthodontic treatments on their monthly or quarterly GST filings with a requirement to then reconcile at the end of the year for the actual amount of appliance fees charged.
The administrative change is a likely response to several recent conflicting tax court cases on whether the CRA would still accept a dentist’s claim for GST refunds. In the most recent Supreme Court of Canada case Canada v. Dr. Kevin L. Davis Dentistry Professional Corporation allowed an Orthodontist to claim a refund for GST paid on expenses, known as input tax credits (“ITC”). While orthodontic services are exempt from GST, the appliances are considered zero-rated which entitled the dentist to claim a GST refund based on the percentage of appliance fees compared to total orthodontic fees.
Practically speaking, this just means more accounting for monthly or quarterly GST filers. Annual GST filers are not affected by this change.
The good news is that this GST notice confirms that dentists and orthodontists can continue claiming GST refunds on orthodontic appliances which has been a debatable topic over the last few years!
