GST for Orthodontists

GST denied by the Court to orthodontist

Dr. Brian Hurd Dentistry Professional Corp. vs. the Queen

In a 2017 Tax Court of Canada decision (Dr. Brian Hurd Dentistry Professional Corp.), the Court held that orthodontists are not entitled to 35% GST input tax credits (ITCs). This is against the CRA's administrative policy that has been in place since 1992. It recognizes that the orthodontists are providing both GST exempt supplies (dental services) and zero-rated supplies (orthodontic appliances).

The Tax Court ruled that orthodontists provide a single GST exempt supply of dental services, not two supplies (one exempt, one zero-rated).

This case will cause problems for orthodontists if the CRA decides to follow it. The decision was issued under the Tax Court's Informal Procedure, it is not a binding precedent. The CRA may reevaluate its GST policy to reach the correct legal result.

Orthodontists who follow the CRA's directive and continue to claim 35% ITCs are at risk of being reassessed and have all GST claimed disallowed. It is well established that one cannot rely on any CRA statement or publication, and so CRA auditors might choose to reassess the orthodontists.

Your trusted Chartered Accountant provides tax advice to orthodontists and dentists.