April 11th, 2024
Accounting offices and dentists/orthodontists
Recently, the Supreme Court of Canada dismissed an application for leave to appeal the Federal Court of Appeal’s decision in R. v. Dr. Kevin L. Davis Dentistry Professional Corp (2023 FCA 76). Remember that the Federal Court of Appeal (FCA) had upheld the Tax Court of Canada’s (TCC) ruling that the supply of orthodontic services is an exempt supply distinct from the zero-rated supply of orthodontic appliances, entitling the supplier, subject to certain conditions, to ITCs/ITRs on expenses incurred in order to make the zero-rated supply.
These rulings go against an earlier TCC decision in Dr. Brian Hurd Dentistry Professional Corporation v. The Queen (2017 TCC 142), where it had instead stated that the supply of an orthodontic appliance and an orthodontic service constituted a single, exempt supply of orthodontic treatment. This is good news for dentists who had been applying the CRA’s existing administrative position since 1991, which stated a similar conclusion, but which was recently under review and, it seems, was going to be applied prospectively in a much more restrictive manner.
