Drugs and Biologicals
As a rule, drugs and biologicals are subject to GST and QST if they are considered to be drugs and are intended for human use. However, some are zero-rated if they meet certain criteria.
As a rule, drugs and biologicals intended for human use are zero-rated if they meet any of the following criteria:
- They are federally controlled under the Food and Drugs Act, the Food and Drug Regulations and the Narcotic Control Regulations.
- They are dispensed by a physician or dentist to an individual or under a prescription issued by a physician, dentist or authorized individual.
- They are authorized under the Food and Drug Regulations for use in emergency treatment.
Some drugs intended for human use are zero-rated throughout the production and distribution chain regardless of who acquires them. They may also be imported into Canada or brought into Québec tax-free if the person who officially does so meets the requirements set by Health Canada.
Such products include:
- drugs included in schedules C and D to the Food and Drugs Act, such as:
- blood derivatives,
- immunizing agents,
- monoclonal antibodies,
- interferon, and
- allergenic substances used for the treatment or diagnosis of allergic or immunological diseases;
- drugs and other substances listed in the schedule to Part G of the Food and Drug Regulations, such as amphetamines and methamphetamines, some barbiturates and certain anabolic steroids and their derivatives;
- drugs containing a narcotic included in the schedule to the Narcotic Control Regulations, except for drugs that may be sold without a prescription under the Controlled Drugs and Substances Act and the regulations made pursuant to it, such as codeine and morphine;
- erythrityl tetranitrate;
- isosorbide dinitrate;
- quinidine and its salts;
- medical oxygen;
- epinephrine and its salts; and
- naloxone and its salts.
Hospitals and other health-care institutions buy many types of gas intended for medical use. Oxygen, which is commonly used during surgery, is considered a controlled drug and is zero-rated. Consequently, suppliers of this gas do not have to collect GST and QST even when the recipient is a health-care institution.
All sales of gas to hospitals (except for sales of unconditionally zero-rated gas such as oxygen) are taxable. However, as in the case of sales of medical equipment, hospitals may obtain a rebate equal to 83% of the GST and 51.5% of the QST they paid on such gas.