Thought Leaders National Taxation

Advocates applauded as Canada zero-rates tax on face masks, shields

Cyndee Todgham Cherniak an early advocate of zero-rated PPE

Author: Canadian Accountant
Cyndee Todgham Cherniak
Cyndee Todgham Cherniak, founding lawyer of LexSage, advocated for zero-rated PPE last April.

TORONTO, Dec. 12, 2020 – Following efforts by tax and legal advocates for public health during the COVID-19 pandemic, Canadians can now buy face masks, respirators and face shields without paying sales tax. According to the Fall Economic Statement 2020, “In order to support public health during the COVID-19 pandemic, the Government proposes to temporarily relieve (i.e., zero rate) supplies of certain face masks and face shields from the Goods and Services Tax/Harmonized Sales Tax (GST/HST).” 

Cyndee Todgham Cherniak, the founding lawyer of LexSage, an international trade law and sales tax firm in Toronto, was an early advocate of zero-rating Personal Protective Equipment (PPE). Last April, Canadian Accountant published “Editorial: Canada should zero-rate PPE for GST/HST purposes” (the original version appeared on Mondaq).  “The April 28, 2020 Op-Ed made a difference,” says Todgham Cherniak. 

In her Op-Ed, Todgham Cherniak writes: “PPE and many other goods used in hospitals and the health care sector should never have been subject to GST/HST … Times have changed and who can provide exempt health care must change fundamentally.” 

Last August, the Canadian Bar Association took an active public role in a letter to former Finance Minister Bill Morneau: “Health care providers, front-line workers, doctors, dentists, seniors care homes, schools, universities and colleges and other businesses should not have to bear an unrecoverable GST/HST cost of PPE. Vulnerable people, including seniors and immune-comprised individuals, should not have to pay unrecoverable GST/HST on a necessity of life. In fact, nobody should have to pay GST/HST and other sales taxes on PPE as it is purchased to protect the health of the users and those they encounter.” 

As Todgham Cherniak explains, “starting December 6, 2020, certain medical use and non-medical use face marks/respirators and face shields will be zero-rated temporarily during the COVID-19 pandemic. This means that anyone in Canada who buys the zero-rated face masks, respirators and face shields does not need to pay GST/HST when they buy the permitted face masks and face shields. Zero-rating means that GST/HST is charged at a rate of zero per cent (it is like an exemption, but better for businesses who manufacture or sell these goods).” 

While it took many months for the Canadian government to act, the temporary tax measure will lower the cost of eligible face masks, respirators and face shields when sold to Canadians and organizations that cannot recover the sales tax. The new measure will also provide cash flow relief to businesses that must purchase large quantities of PPE, even if they are able to recover GST/HST through input tax credits. 

Congratulations to all those individuals and organizations who advocated for this worthy cause. 

By Canadian Accountant with files from the Government of Canada. Photo by Tai's Captures on Unsplash.

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