CRA Relaxes Guidelines on Required Documentation for Zero-Rate Prescription Eyewear

The supply of eyeglasses and contact lenses is zero-rated when supplied under the written order (i.e., a prescription) of an eye care professional. The required documentation to support this zero-rating was challenged at the Tax Court of Canada in Contact Lens King Inc. v. The Queen (2020 TCC 71), where it was found that a supplier must obtain and retain a prescription to supply eyewear on a zero-rated basis.

In Excise and GST/HST News – No. 113 in March 2023, the Canada Revenue Agency (CRA) noted that “the simplest way for a supplier to demonstrate that a supply of contact lenses or eyeglasses was made to a consumer pursuant to a valid prescription or assessment record would be to retain a copy of those documents.” However, the CRA also recognized that obtaining a copy of a prescription is not always feasible and indicated that it was willing to accept alternative documentation substantiating that a valid prescription or assessment record existed when the supply was made.

At the same time, the CRA requested feedback on the proposed alternative documentary requirements to support zero-rated supplies of prescription eyewear. Based on this feedback, including representations made by Ryan, the CRA has relaxed its guidelines with respect to these alternative documentary requirements. Under the updated position, instead of keeping a copy of the prescription or assessment record, a supplier may retain the following information:

• Prescription or assessment record issue date
• Issuing eyecare professional’s name
• Prescription or assessment record details (e.g., sphere, cylinder, axis, base curve, or pupillary distance values and any additional lens recommendations)

The revised documentary requirements can be found in Excise and GST/HST News – No. 119.

If you have any questions about the application of GST/HST to prescription eyewear, please do not hesitate to contact Ryan TaxDirect® at 1.800.667.1600 or taxdirect@ryan.com.