23 June 2005 GST/HST Interpretation 41337 - Meaning of the Terms "Program" and "Recreational" for Purposes of 16/III/V to the Excise Tax Act

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your letter XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of instruction in continuing education courses. We apologize for the delay in our response.

As indicated in your request, in order to assist your client in determining the application of the GST to their supply of instruction in continuing education courses, you require an interpretation as to the meaning of certain terms under one of the exempting provisions contained in the Excise Tax Act (ETA).

Interpretation Requested

You requested an interpretation of the terms "program" and "recreational" for purposes of section 16 of Part III of Schedule V to the ETA.

Interpretation Given

Section 16 of Part III of Schedule V to the ETA provides exemption from the GST/HST for:

"A supply made by a school authority, public college or university of a service of instructing individuals in, or administering examinations in respect of, courses (other than courses in sports, games, hobbies or other recreational pursuits that are designed to be taken primarily for recreational purposes) that are part of a program that consists of two or more courses and that is subject to the review of, and is approved by, a council, board or committee of the school authority, college or university established to review and approve the course offerings of the school authority, college or university".

The above noted exempting provision is one of several for educational services contained in Part III of Schedule V to the ETA directed at reducing the GST/HST applicable to the costs of a student's education. Most of the provisions involve the supply of instruction by school authorities, public colleges or universities in courses leading to recognized certificates and diplomas. The exemption under section 16 of Part III of Schedule V to the ETA provides for the supply of instruction in non-credit type courses that are primarily non-recreational in nature and part of an approved program of instruction of a qualifying educational institution.

The terms "recreational" or "program" are not defined in the ETA. When examining the meaning of these terms, it is important to consider the context of the wording of the entire exempting provision, not merely the word in isolation. For example, instruction in a course, whether recreational or not, that is not part of an approved program would not qualify for exemption under the provision of section 16 of Part III of Schedule V to the ETA. Similarly, not all courses in an approved program will automatically have the same tax status.

RECREATIONAL:

A supply of a service of instructing individuals in courses in sports, games, hobbies or other recreational pursuits that are designed to be taken primarily (more than 50%) for recreational purposes is excluded from the exemption under section 16 of Part III of Schedule V to the ETA.

The Canada Revenue Agency (CRA) views a recreational activity as something designed to be an enjoyable diversion or pastime that occupies one's leisure time. A recreational course may be informative, but is mainly directed at satisfying the learner's desire for enjoyment or interest or, to enhance their social activities. Several factors may be examined in making a determination as to the status of a course including the objectives and subject matter of the course, marketing of the course, methods of teaching, evaluation and monitoring of participants, consideration and terms for payment, qualification of instructors, etc. An important factor is the design of the course being offered rather than the intention of the individual taking the course.

PROGRAM:

The supply of instruction in a course that is not excluded from section 16 of Part III of Schedule V to the ETA due to being recreational in nature must still meet the other requirements in the exempting provision. The course must be part of a program that consists of two or more courses and that is subject to the review and approval of a council, board or committee of the school authority, college or university established to review and approve their course(s). Workshops, conferences, retreats and seminars are generally not considered to be courses.

The CRA considers that a program should consist of a series of courses that usually have a common subject matter or purpose. The exempting provision is for the supply of instruction in a particular set of courses within a program offered by a qualifying educational institution, not the planned course or program of studies of an individual. It is not necessary that all the courses in a program be offered every year or semester, as long as the program includes two or more courses that are available from time to time. As well, a program need not be a recurring program but could be created to meet a need for a single year, provided it is made up of two or more courses.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Canada Revenue Agency with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at 613-952-0420.

Yours truly,

Debra Murphy
Charities, NPO & Educational Services Unit
Public Service Bodies & Governments Division
Excise and GST/HST Rulings Directorate

2005/06/15 — RITS 54494 — Volume Rebates and Price Adjustments