Questions and Answers on the Proposed GST/HST Treatment of Supplies of Naloxone

GST/HST Notices - Notice 305
April 2017

1. What does the amendment propose to change?

The Excise Tax Act (the Act) contains provisions that zero-rate a broad range of drugs and substances that are regulated under federal legislation. Prescription drugs and certain non-prescription drugs that are used to treat life-threatening conditions are relieved (zero-rated) from the goods and services tax/harmonized sales tax (GST/HST).

Naloxone (including its salts, such as naloxone hydrochloride) is a drug used to treat opioid (e.g., fentanyl) overdose. Prior to March 22, 2016, naloxone was only available by prescription and it was zero-rated for GST/HST purposes as a prescription drug. On March 22, 2016, Health Canada removed the requirement for a prescription when naloxone is indicated for emergency use for opioid overdose. As such, supplies of naloxone where a prescription was not required no longer qualified for GST/HST relief.

The proposed amendment to the Act would add naloxone (and its salts) to the list of zero-rated non-prescription drugs that are used to treat life-threatening conditions. 

This change would apply to any supply or importation of naloxone made after March 22, 2017 and to supplies and importations made after March 21, 2016 and on or before March 22, 2017 where no amount was charged, collected, remitted or paid as or on account of tax under Part IX of the Act in respect of the supply or the importation.  

2. What does zero-rated mean?

Zero-rated means that no GST/HST is charged when the product is supplied, as the tax rate is 0%. However, a GST/HST registrant can claim an input tax credit for the GST/HST paid or payable on purchases and expenses made to provide zero-rated supplies, when all necessary conditions are met.

3. Can suppliers stop charging GST/HST on naloxone before the amendment receives Royal Assent?

Yes, suppliers can stop charging GST/HST on supplies of naloxone in accordance with the proposed amendment as of March 22, 2017. This proposed measure is subject to parliamentary approval. However, consistent with its standard practice, the CRA is administering this measure on the basis of the proposed amendment.

4. What should I do if a supplier charges me GST/HST on naloxone supplied after March 22, 2017?

A supplier who has charged or collected GST/HST on naloxone supplied after March 22, 2017, must include that tax amount in the calculation of their net tax on their GST/HST return, and remit that net tax if there is a balance owing, according to the regular rules.

If the proposed amendment becomes law, you may then contact the supplier, who may choose to adjust the amount charged, or refund or credit the amount collected. If so, the supplier must provide you with a credit note for the amount. Alternatively, you can file a rebate claim with the CRA for the amount paid in error as or on account of tax by using Form GST189, General Application for Rebate of the GST/HST.

However, the CRA cannot pay a rebate for an amount paid in error as or on account of tax unless the  proposed legislation becomes law.

5. What should I do if a supplier charged me GST/HST on naloxone supplied after March 21, 2016 and on or before March 22, 2017?

For supplies made after March 21, 2016, and on or before March 22, 2017, the proposed amendment would only apply to supplies where there was no amount charged, collected, remitted or paid on account of GST/HST. If a supplier charged or collected GST/HST on a supply of naloxone during that period of time the supplier must include that tax amount in the calculation of net tax on their GST/HST return, and remit that net tax if there is a balance owing, according to the regular rules.

Therefore, where GST/HST was charged for these supplies, you are not able to ask the supplier for an adjustment, or if you paid GST/HST to the supplier, to ask the supplier for a refund or credit. You would also not be entitled to claim a rebate for an amount paid in error as or on account of tax.

6. How will the proposed amendment apply to the importation of naloxone?

Zero-rated drugs are also relieved of the tax when they are imported. As a result of the proposed amendment, all importations of naloxone made after March 22, 2017 would be non-taxable importations. Importations of naloxone made after March 21, 2016 and on or before March 22, 2017 would also be non-taxable importations unless an amount was paid as or on account of tax under Part IX of the Act.

7. How will the proposed amendment apply in provinces that have a provincial sales tax?

The proposed amendment only applies for GST/HST purposes. This means that although a supplier in a province that has a provincial sales tax may stop charging GST on a supply of naloxone in accordance with the proposed amendment, provincial sales tax may still apply to such sales. Any questions relating to the provincial sales tax should be addressed to the province in question.

Further information

All GST/HST technical publications are available on the CRA website at cra.gc.ca/gsthsttech.

To make a GST/HST enquiry by telephone:

• for general GST/HST enquiries, call Business Enquiries at 1-800-959-5525
• for technical GST/HST enquiries, call GST/HST Rulings at 1-800-959-8287

If you are located in Quebec, call Revenu Québec at 1-800-567-4692 or visit their website at revenuquebec.ca.

If you are a selected listed financial institution (whether or not you are located in Quebec) and require information on the GST/HST or the QST, go to cra.gc.ca/slfi or

• for general GST/HST or QST enquiries, call Business Enquiries at 1-800-959-5525
• for technical GST/HST or QST enquiries, call GST/HST Rulings SLFI at 1-855-666-5166