CRA announces that its administrative arrangement regarding ITC claims by Orthodontic practices has been revoked

Under CRA’s arrangement made in 1991 with the Canadian Dental Association, a dentist registrant could, for each reporting period in a fiscal year, use an estimate up to a maximum of 35% of the total consideration charged for orthodontic treatments to represent the consideration for the supply of orthodontic appliances, and claim ITCs on that basis – but then, at the end of the fiscal year, was required to perform a reconciliation based on the actual amounts charged for orthodontic appliances, and adjust the ITC claims for the year accordingly.  Also, the charges for cosmetic services generated ITCs as well.

However, CRA now announced that this arrangement is revoked, effective for any fiscal year of a dentist that begins on or after January 1, 2025.

As result, dentists will now be expected to claim ITCs throughout the year based on their actual eligibility to do so without making estimates, i.e., on the basis of the extent that the input was acquired for consumption or use in the course of their commercial activities.

See more details under GST/HST Notices 339

This article is intended for general information purposes only and does not constitute professional advice.  Income tax law and regulation change frequently and the content on this article may no longer reflect the current state of the law. If you have any specific questions, you should consult a professional services advisor or email us for further advice.