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On November 30, 2020, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, released Supporting Canadians and Fighting COVID-19: Fall Economic Statement 2020 (the “Economic Statement”).
To support public health during the COVID‑19 pandemic, the Economic Statement announced that the supply of certain medical and non‑medical face masks and face shields are temporarily zero‑rated. This means that GST/HST is notionally charged to the customer at 0% and the vendor can continue to claim input tax credits. To qualify for zero‑rating, the face mask or face shield must meet certain specifications. This measure is proposed to be effective for supplies made after December 6, 2020 and will remain in effect “until their use is no longer broadly recommended by public health officials for the COVID-19 pandemic.”
This measure will lower the cost of eligible face masks and face shields when sold to individual consumers, charities, hospitals, schools or other entities that cannot fully recover the GST/HST. Even for businesses that can recover the GST/HST, this measure will provide some cash flow relief.
Businesses that sell face masks and face shields should consider whether their product is eligible for zero‑rating.
If you would like to discuss these measures, please contact a member of the Miller Thomson LLP Sales, Commodity and Indirect Tax Group.