GST/HST Health Measures

Effective February 27, 2008, the Budget will extend GST/HST exempt status to a range of health care services, prescription drugs and medical devices.

GST/HST exempt status will apply to supplies of specially designed training to assist individuals to cope with a disability or disorder if:

• the training is supplied by a government;
• the cost of training is fully or partially reimbursed under a government program, or
• a health professional whose services are GST/HST exempt prescribes the training to allow the patient to better cope with the disability or disorder.

All supplies of drugs to final consumers will be zero-rated when they are prescribed by health professionals who are authorized to prescribe such drugs under provincial or territorial legislation. The zero-rating is effective for all supplies made after February 26, 2008, as well as supplies made on or before February 26, 2008, if the GST/HST was neither charged nor collected.

Effective February 27, 2008, the following medical and assistive devices are zero-rated:

• devices for neuromuscular stimulation or standing therapy rescribed by a medical practitioner;
• chairs for use by individuals with a disability prescribed by medical practitioner;
• chest wall oscillation systems for use in airway clearance therapy, and
• service animals supplied by recognized organizations that are trained to assist individuals with a disability or impairment.

GST/HST Treatment of Long-Term Care Facilities

The Budget clarifies the GST/HST treatment of long-term residential care facilities to ensure the GST New Residential Rental Property Rebate and GST/HST exempt status will apply to such facilities on going forward basis.

The current exemption for residential units supplied to individuals will be replaced with a requirement that possession or use of the residential units be given to individuals for the purpose of their occupancy as a place of residence. This relieving provision may also apply to transactions on or before February 26, 2008, when specific legislative requirements have been met.

GST/HST Treatment of Property Leases for Wind and Solar Power Equipmen

Effective February 27, 2008, GST/HST will not apply on payments for a supply of a right of entry or use to generate or evaluate the feasibility of generating electricity from the sun or wind. This proposal also applies to supplies made under such arrangements before February 26, 2008, but only with respect to amounts that become payable subsequent to February 26, 2008.

Tobacco Excise Duties

The Budget proposes a number of changes to enhance tobacco taxation enforcement and compliance:

• possession and importation of tobacco manufacturing equipment will be limited to persons holding a licence to manufacture tobacco products;
• all manufactured tobacco of 50 grams or less will be subject to duties applicable to 50 gram packages;
• the rate of duty on tobacco sticks will be increased effective February 27, 2008, to equate to the rate applied on cigarettes, and
• the current rule allowing Canadian producers of tobacco products to pre-pay the duty on tobacco intended for sale at duty free shops will be extended to foreign producers.

Excise Duty on Imitation Spirits

Imitation spirits derived from a brewing process will now have varying excise duty treatment based on their alcohol content. Previously all such spirits received the favourable excise duty treatment afforded beer. Effective February 27, 2008, imitation spirits having an alcohol content of 11.9% or less will continue to be taxed in a manner similar to beer. However, when the alcohol content exceeds 11.9% imitation spirits will be taxed in the same manner as regular spirits (excise duty of $11.696 per litre of absolute alcohol). Additionally, producers and importers of imitation spirits with an alcohol content above 11.9% will be required to operate under a spirits rather than beer licence.

Aboriginal Tax Policy

Currently there are 30 sales tax arrangements in place whereby self-governing Aboriginal groups levy a sales tax within their settlement lands. In addition there are 13 arrangements for Aboriginal groups levying a personal income tax on residents in their settlement lands. The Government continues to encourage the exercise of direct taxation powers by Aboriginal groups.