After more than 30 years, the Canada Revenue Agency (“CRA”) is revoking an administrative arrangement with the Canadian Dental Association that simplified claiming input tax credits (“ITCs”) for GST/HST registered dental practitioners who make both taxable zero-rated supplies (e.g., orthodontic appliances and cosmetic services) and tax-exempt supplies (e.g., dental and orthodontic services).
Per CRA Notice 339, the CRA is revoking its administrative arrangement as it moves towards a stricter adherence to the rules in the Excise Tax Act (“ETA”) – likely requiring more detailed records.
This shift appears to be a response to recent Court decisions holding that supplies of orthodontic appliances and orthodontic services are separate supplies – opening up the ability to claim ITCs (which we have written about here).
The changes take effect beginning as early as January 1, 2025!