2016 FCA 269
HER MAJESTY THE
The appellant, Alexander College Corp., seeks to
set aside the October 2, 2015 judgment of the Tax Court of Canada in Alexander
College Corp. v. HMQ, 2015 TCC 238, 258 A.C.W.S. (3d) 234 [Alexander
College], which confirmed an assessment for unpaid GST/HST on student fees charged
by the College in 2010. The Tax Court found that Alexander College was required
to collect and remit GST/HST as it did not fall within the applicable exemption
set out in paragraph 7 of Part III, Schedule V of the Excise Tax Act,
R.S.C., 1985, c. E-15 [the ETA]. For the reasons that follow, I believe
that the Tax Court incorrectly interpreted the ETA and that Alexander
College falls within the paragraph 7 exemption. I would accordingly allow this
appeal, with costs.
The Decision of the Tax Court in Alexander
Schedule V of the ETA sets out a long
list of exemptions from the requirement to charge and remit GST/HST. The
relevant exemption in the present case is in paragraph 7 of Part III, Schedule
V and covers certain types of educational services. It exempts:
7 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 for which credit may be obtained toward a
diploma or degree.
7 La fourniture, effectuée par une administration scolaire, un
collège public ou une université, d’un service consistant à donner à des
particuliers des cours ou des examens qui mènent à un diplôme.
It was common ground between the parties before
the Tax Court and remains undisputed before this Court that the only portion of
the foregoing exemption that might be applicable to Alexander College is the
term “university” as the appellant is a private for-profit
college. The term “university” is defined in subsection
123(1), Part IX of the ETA as follows:
university means a recognized
degree-granting institution or an organization that operates a college
affiliated with, or a research body of, such an institution.
université Institution reconnue qui décerne des diplômes, y compris
l’organisation qui administre une école affiliée à une telle institution ou
l’institut de recherche d’une telle institution.
Alexander College argues that it is a “university”, within the meaning of the foregoing
definition, because it is authorized to grant two-year associate degrees under provincial
legislation, namely British Columbia’s Degree Authorization Act, S.B.C.
2002, c. 24 [the Degree Authorization Act]. It also notes (and it is
undisputed) that in British Columbia at least some traditional universities
grant identical associate degrees and recognize Alexander College’s courses for
credit towards a four-year baccalaureate degree. Alexander College further
underscores that in British Columbia there are both public and privately-funded
universities as well as public and privately-funded colleges and vocational
schools (as is contemplated by the Degree Authorization Act; British
Columbia’s University Act, R.S.B.C. 1996, c. 468; British Columbia’s College
and Institute Act, R.S.B.C. 1996, c. 52 and several statutes applicable to
particular institutions, namely, Royal Roads University, Thompson Rivers
University, Trinity Western University and Sea to Sky University).
The Tax Court rejected Alexander College’s
assertion that it fell within the scope of the definition of a “university” for purposes of the ETA and held
that to come within the scope of that definition an institution needed to be
recognized as a university by the relevant provincial authorities and also needed
to grant degrees at least at the baccalaureate level. Because Alexander College
met neither criterion, the Tax Court found it did not fall within the applicable
exemption and was therefore required to collect and remit the disputed GST/HST.
The Tax Court offered several reasons in support of this conclusion.
First, the Tax Court held that the wording used
to define “university” in subsection 123(1)
of the ETA suggests a distinction between an
“institution” and colleges or research bodies associated with such an “institution”. Given this, the Tax Court concluded
that an “institution” must refer only to a “university”. Consequently, Alexander College would qualify
for the exemption only if it were a traditional degree-granting university. The
Tax Court found that Alexander College does not fit the traditional definition
of a “university” because it is subject to
constant third-party monitoring for the purposes of maintaining its capacity to
grant associate degrees, unlike traditional universities, which self-monitor (Alexander
College at paras. 51, 53, 62).
Second, the Tax Court reviewed the holdings of
this Court in Klassen v. R., 2007 FCA 339, 161 A.C.W.S. (3d) 1019 [Klassen]
and of the Tax Court in Zailo v. R., 2014 TCC 60, 238 A.C.W.S. (3d)
254 [Zailo], which determined that the distinguishing feature between a
university and a foreign college was the level of degree awarded. In both
cases, a university – for the purposes of the Income Tax Act, R.S.C.
1985, c. 1 (5th Supp.) [the ITA] – was deemed to be an
institution that grants at least baccalaureate degrees. The Tax Court applied
this reasoning to Alexander College and held that only institutions offering baccalaureate
degrees or higher qualify as “recognized
degree-granting institution[s]”, within the scope of the definition of “university” contained in subsection 123(1) of the ETA
(Alexander College at paras. 65-68).
Third, the Tax Court reasoned that including
private colleges within the definition of “university”
would be illogical given the wording and structure of the provisions in the ETA.
More specifically, the Tax Court held that the “college
affiliated with” option under the definition of
“university” in subsection 123(1) of the ETA would be redundant
and absurd if the affiliated institution could be another college as it makes
no sense to speak of a college being affiliated with another college. The Tax
Court further held that the interpretation urged by Alexander College would
result in the paragraph 7 exemption offending the presumption against
tautology. It reasoned that such a reading would mean that private colleges
would be subsumed within “university”, whereas
public colleges would be segregated out. The Tax Court held that such a reading
would render Parliament’s choice to identify “public
college[s]” within the provision superfluous (Alexander College
at paras. 70-74).
Finally, the Tax Court offered in a footnote to
its Reasons the suggestion that the interpretation advanced by Alexander
College would offend the scheme of the ETA as it would result in the College
being exempt in terms of its supplies but not entitled to claim either input
tax credits or the public service body rebate. The Tax Court noted that “[t]his result seems contrary to the scheme of the ETA
which is structured so that an entity making taxable supplies is entitled to
claim input tax credits and an entity making exempt supplies such as a
university is entitled to a rebate” (Alexander College at footnote
This appeal raises a single question of
statutory interpretation. On a question of law like statutory interpretation in
the tax appeals context, the standard of review is correctness: Housen v.
Nikolaisen, 2002 SCC 33 at paras. 8-9,  2 S.C.R. 235; Redeemer
Foundation v. Minister of National Revenue, 2006 FCA 325 at para. 24, 354
N.R. 147 (affirmed without comment on this point in 2008 SCC 46,  2
S.C.R. 643); Bozzer v. Canada, 2011 FCA 186 at para. 3, 418 N.R. 377.
The appropriate methodology for statutory
interpretation is well-known; courts must read the words of an Act “in their entire context and in their grammatical and
ordinary sense harmoniously with the scheme of the Act, the object of the Act, and
the intention of Parliament”: Rizzo & Rizzo Shoes Ltd. (Re),
 1 S.C.R. 27 at para. 21, 154 D.L.R. (4th) 193; Bell
ExpressVu Limited Partnership v. Rex, 2002 SCC 42 at para. 26,  2
S.C.R. 559. This approach requires courts to consider the text, context and
purpose of the statutory provision.
While the foregoing approach applies to the
interpretation of tax statutes, the Supreme Court of Canada has indicated that it
is often appropriate to place greater emphasis on a textual interpretation when
interpreting a taxation provision given the “degree of
precision and detailed characteristics of many tax provisions”: A.Y.S.A.
Amateur Youth Soccer Assn. v. Canada Revenue Agency, 2007 SCC 42 at para.
16,  3 S.C.R. 217; Placer Dome Canada Ltd. v. Ontario (Minister of
Finance), 2006 SCC 20 at para. 23,  1 S.C.R. 715 [Placer Dome];
and Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54 at para. 11,
 2 S.C.R. 601 [Canada Trustco]. The Supreme Court of Canada
further instructs that if the text of a taxation provision gives rise to “more than one reasonable interpretation”, recourse
to a contextual and purposive analysis should be employed to resolve
ambiguities (Placer Dome at para. 23; Canada Trustco at para.
10). However, where a taxation provision “admits of no
ambiguity in its meaning or in its application to the facts, [the provision]
must simply be applied” (Placer Dome at para. 23).
Under the foregoing analytical framework, one
must ask whether the relevant provisions are ambiguous in that they are open to
more than one reasonable interpretation. In my view, this question must be
answered in the negative in the present appeal as the relevant provisions are
unambiguous and must be interpreted in the way Alexander College submits.
More specifically, the paragraph 7 exemption
applies to “universities”. That term is conclusively
defined in subsection 123(1) of the ETA as Parliament used the word “means” in setting out the definition of “university” for the purposes of the ETA. As
Alexander College correctly notes, it is a well-accepted principle of statutory
interpretation that the use of the word “means”
in a statutory definition reflects Parliament’s intention that the definition be
exhaustive and therefore may well displace the ordinary meaning for a defined
term: Ruth Sullivan, Statutory Interpretation, 3rd ed.
(Toronto: Irwin Law Inc., 2016) at 79-80 [Sullivan]; Entertainment Software
Association v. Society of Composers, Authors and Music Publishers of Canada,
2012 SCC 34 at para. 42,  2 S.C.R. 231; Yellow Cab Ltd. v. Board of Industrial
Relations et al.,  2 S.C.R. 761 at page 768, 114 D.L.R. (3d) 427; Sheldon
Inwentash and Lynn Factor Charitable Foundation v. Canada, 2012 FCA 136 at
para. 28, 432 N.R. 338.
Thus, for the purposes of the ETA, it
matters neither how an ordinary person might understand the term “university” nor how that term might be defined in
provincial legislation. Rather, what is determinative is whether an institution
falls within the statutory definition in the ETA. That definition
provides in relevant part that a university means a “recognized
degree-granting institution” or an organization that operates a “college affiliated with […] such an institution”.
On its face, the English version of the first
portion of the definition of a “university” in
the ETA requires that an institution merely be recognized as one that is
empowered to grant degrees to qualify as a university.
The respondent argues that the French
version might be read in the same way or could be read as providing that it is
the institution as opposed to its degree-granting status that must be recognized
as the French version of the definition provides that a university means “institution reconnue qui décerne des
diplômes, y compris l’organisation qui administre une école affiliée à une
telle institution […]”. I
disagree as it is not clear for what the institution would be recognized other
than for its capacity to grant degrees in the French version of the provision; if
Parliament meant to convey the idea that what is required is that the
institution be recognized as a university, additional words would have been
required in the French text to add an expression like “comme telle” after the word
However, even if I were to assume that the
French text may also be read as suggested, the meaning that Alexander College
urges still must be adopted. When interpreting statutory provisions that appear
to differ in their French and English versions, courts often employ the shared
meaning rule. Under this rule “the meaning that is
shared by the French and English versions is presumed to be the meaning
intended by the legislature” (Sullivan at 98). The Supreme Court of
Canada in R. v. Daoust, 2004 SCC 6,  1 S.C.R. 217 [Daoust]
explained that applying the rule involves two steps. The first step is to
determine if there is a shared meaning between the two versions. The Court
stated that where one version is clear and the other might be ambiguous, as the
respondent argues is the case here, the shared meaning is the version that is “plain and not ambiguous” (Daoust at para. 28).
Once a common meaning is identified, the second step is to identify whether
that meaning is, “according to the ordinary rules of
statutory interpretation, consistent with Parliament’s intent” (Daoust
at para. 30). For example, a reviewing court should consider the scheme of the
legislation to determine if the shared meaning actually expresses the intention
of Parliament as reflected elsewhere in the statute: The Queen v. Cie Immobilière
BCN Ltée,  1 S.C.R. 865 at pages 872-874, 97 D.L.R. (3d) 238; Canada
(Attorney General) v. Frye, 2005 FCA 264 at para. 28, 141 A.C.W.S. (3d)
The singular meaning of the English version of
the definition, which states that a qualifying institution need merely be
recognized as one that is empowered to grant degrees, is encompassed in the
French definition, if it is equivocal. Therefore, applying the first step of
the shared meaning rule as per Daoust, the meaning of the English
definition must govern. I believe that this shared meaning is also consistent
with the broader scheme of the ETA and the intent of Parliament, which I
discuss in detail below.
Thus, contrary to what the Tax Court held, I
believe it would constitute an impermissible reading-in of additional elements
to limit the “university” definition to only those
institutions that are recognized as such under provincial law or to those that are
empowered to grant baccalaureate degrees or higher.
Indeed, the respondent did not rely on the
latter argument before this Court and, in my view, was well-advised to abandon
it as the argument stems from the decisions in Klassen and Zailo,
which are wholly inapplicable to the ETA. As noted, both cases arose
under the ITA. The provisions in the ITA that were at issue in Klassen
and Zailo are fundamentally different from those in the ETA.
Klassen and Zailo
dealt with the income deduction for tuition fees and the education credit provided
for in paragraphs 118.5(1)(b) and 118.6(1)(b) of the ITA, which
apply to claims concerning “universit[ies] outside Canada”.
However, unlike the ETA, the ITA contains no definition of “university”. Moreover, the ITA casts the
comparable deduction and credit for Canadian institutions in paragraphs
118.5(1)(a)(i), 118.5(1)(c)(i) and 118.6(1)(c) more
broadly and makes them applicable not only to universities, but also to “college[s] or other educational institution[s] providing
courses at a post-secondary school level”. Based on this distinction, this
Court and the Tax Court found that a foreign university means an institution
granting degrees at the baccalaureate level or higher. Given the entirely
different statutory context, this holding is inapplicable under the ETA.
Thus, there is no reason to interpret the term “degree” in subsection 123(1) of the ETA as being
limited to baccalaureate degrees or higher. In the absence of a definition of “degree” in the ETA, regard should be given to
how the term is defined in provincial legislation as the provinces determine what
degrees may be granted by which institutions through their jurisdiction over
education. As noted, in British Columbia, the relevant legislation provides for
associate degrees, which may be granted both by universities and certain colleges.
Thus, to come within the definition of a “university”
for purposes of the ETA, the institution must be empowered to grant
degrees as the same are defined in the relevant provincial legislation.
However, one cannot go on to also tie the
definition of a “university” for purposes of the
ETA to how that term is defined in provincial legislation as the ETA
defines the term “university”. Had Parliament
wished to define a “university” for the purposes
of the ETA to mean only those institutions which are granted such status
under provincial law, it would have been easy for it to have so defined the
term or to have left it undefined. Parliament chose not to do this but rather
elected to tie the definition of a “university” to
an institution’s recognized ability to grant degrees.
Thus, to come within the definition of “university” within the meaning of subsection 123(1),
Part IX of the ETA all that is required is that the institution be
empowered to grant degrees by a relevant authority such as the province of
British Columbia. Alexander College is so authorized. It therefore follows that
Alexander College falls within the scope of the exemption in paragraph 7 of Part
III, Schedule V of the ETA.
Resort to a contextual and purposive analysis to
discern the meaning of “university” for purposes
of these provisions in the ETA leads to the same result for several
In the first place, as both parties concur, the
final reason offered by the Tax Court in footnote 22 to its Reasons is without
merit as private universities – which are several in number in British Columbia
– find themselves in precisely the same position that Alexander College would
be in if it were found to be a “university”
within the meaning of subsection 123(1) of the ETA. More specifically,
these private universities are exempt in terms of enumerated supplies but are
not entitled to claim either input tax credits or the public service body
rebate. Thus, a similar result in the case of private colleges like Alexander
College cannot be said to be contrary to the scheme of the ETA.
Secondly, contrary to what the Tax Court found,
there is no reason to view the second portion of the definition of “university” that incorporates affiliated colleges
and research bodies as circumscribing the term
“institution” to only mean universities as so recognized under
provincial legislation. There is nothing necessarily anomalous in a college
being affiliated with another college, and there was no evidence before the Tax
Court to indicate whether such affiliations have actually occurred. There is
accordingly nothing absurd in understanding a “university”
to include a degree-granting college because it is possible that such a college
might well be affiliated with another college.
Moreover, the term “institution”
is used broadly elsewhere in the ETA and thus conflicts with the
narrowing of the term in the “university”
definition adopted by the Tax Court.
For example, the word
“institution” is often used in relation to a
“financial institution” in Part IX of the ETA, which is defined
in section 149 to include virtually any person engaged in a financial services
business. Similarly, a “public institution” is
defined in subsection 123(1), Part IX of the ETA as follows:
public institution means a
registered charity (within the meaning assigned by subsection 248(1) of the Income
Tax Act) that is a school authority, a public college, a university, a
hospital authority or a local authority determined under paragraph (b)
of the definition municipality to be a municipality.
institution publique Organisme de bienfaisance enregistré, au
sens du paragraphe 248(1) de la Loi de l’impôt sur le revenu, qui est
une administration scolaire, un collège public, une université, une
administration hospitalière ou une administration locale qui a le statut de
municipalité aux termes de l’alinéa b) de la définition de
This definition includes much more than a
single type of institution. Likewise, subsection 68.26(a) of the ETA
provides for a partial rebate of Part VI tax to “a
school, university or other similar educational institution”. Once
again, the term “institution” is used broadly in
this context to mean any type of organization.
Given the broad way the term “institution” is used elsewhere in the ETA, there
is no reason to circumscribe it in the definition of “university”
in subsection 123(1).
Thirdly, contrary to what the Tax Court found, reading
the “university” definition as including a
private degree-granting college does not render the listing of a public college
in paragraph 7 of Part III, Schedule V of the ETA superfluous and thus
the interpretation of Alexander College does not offend the presumption against
tautology. There is considerable overlap between the various educational
suppliers who are covered by the exemptions in Part III, Schedule V of the ETA
and, therefore, nothing tautological about a supplier coming within more than
one definition in the Schedule.
Indeed, this overlap is apparent in the
definition of a university, itself. Encompassed within the definition, as
noted, are affiliated colleges. These colleges may well be publicly-funded and,
if so, are twice mentioned in the provisions – once in the paragraph 7
exemption as a “public college” and again as
coming within the definition of “university” in
subsection 123(1) of the ETA as an affiliated college.
Another example of a similar overlap arises out
of the definitions for “public college” and “vocational school”. They are defined as follows:
Part IX Goods and Services Tax, Division I
Partie IX Taxe sur les produits et services, Section I
123(1) In section 121, this Part and Schedules V to X,
123(1) Les définitions qui suivent s’appliquent à l’article 121, à
la présente partie et aux annexes V à X.
public college means an
organization that operates a post-secondary college or post-secondary
collège public Institution qui administre un collège d’enseignement
postsecondaire ou un institut technique d’enseignement postsecondaire qui, à
la fois :
(a) that receives from a government or a municipality funds
that are paid for the purpose of assisting the organization in the ongoing
provision of educational services to the general public, and
reçoit d’un gouvernement ou d’une municipalité des fonds destinés à l’aider à
offrir des services d’enseignement au public de façon continue;
(b) the primary purpose of which is to provide programs of
instruction in one or more fields of vocational, technical or general
pour principal objet d’offrir des programmes de formation professionnelle, technique
Schedule V Exempt Supplies
Annexe V Fournitures exonérées
PART III Educational Services
Partie III, Services d’enseignement
1 In this Part,
1 Les définitions qui suivent s’appliquent à la présente partie.
vocational school means an
organization that is established and operated primarily to provide students
with correspondence courses, or instruction in courses, that develop or
enhance students’ occupational skills.
école de formation professionnelle Institution établie et administrée
principalement pour offrir des cours par correspondance ou des cours de
formation qui permettent à l’étudiant d’acquérir ou d’améliorer une
Both “public colleges”
and “vocational schools” are listed separately
in the exemptions in Part III of Schedule V to the ETA. For example,
paragraph 8 provides:
8 A supply, other than a zero-rated supply, made by a government,
a school authority, a vocational school, a public college or a university of
a service of instructing individuals in, or administering examinations in
respect of, courses leading to certificates, diplomas, licences or similar
documents, or classes or ratings in respect of licences, that attest to the
competence of individuals to practise or perform a trade or vocation, except
where the supplier has made an election under this section in prescribed form
containing prescribed information.
8 La fourniture, sauf une fourniture détaxée, effectuée par un
gouvernement, une administration scolaire, une école de formation
professionnelle, un collège public ou une université, d’un service consistant
à donner à des particuliers des cours ou des examens qui mènent à des
certificats, diplômes, permis ou documents semblables, ou à des classes ou
des grades conférés par un permis, attestant la compétence de particuliers
dans l’exercice d’un métier, sauf si le fournisseur a fait un choix en
application du présent article en la forme déterminée par le ministre et
contenant les renseignements requis par celui-ci.
An institution that receives public funding and
operates primarily to provide vocational programming at the post-secondary
level would qualify as both a public college and a vocational school.
There is thus no absurdity in the overlap of
educational suppliers and no impermissible redundancy in understanding the term “university” in subsection 123(1) of the ETA
to include a college merely because a “public college”
is separately listed in paragraph 7 of Part III, Schedule V to the ETA.
Fourthly, the exemptions, which cover school authorities,
public colleges, universities and vocational schools, demonstrate an intent to
exempt all forms of education from the requirement to charge and remit GST/HST
if there is some governmental input into the quality of the programs offered.
The definitions of “school authority” and “university” in subsection 123(1), Part IX of
the ETA build in the requirement to provide instruction to a
provincially-regulated standard. The former provides:
school authority means an
organization that operates an elementary or secondary school in which it
provides instruction that meets the standards of educational instruction
established by the government of the province in which the school is
administration scolaire Institution qui administre une école
primaire ou secondaire dont le programme d’études est conforme aux normes en
matière d’enseignement établies par le gouvernement de la province où l’école
Similarly, the university definition
requires recognition of the degree-granting status of the institution.
In the case of public colleges, governmental
oversight over the quality of the programming is accomplished through the
requirement that the institutions receive public funding. Finally, the
exemptions relating to vocational schools outlined in paragraphs 6 and 8 of
Part III of Schedule V contain within them the requirement that the courses
offered lead to recognized accreditations. In addition to paragraph 8,
reproduced above, paragraph 6 exempts:
6 A supply of
6 La fourniture, effectuée par une association professionnelle, un
gouvernement, une école de formation professionnelle, une université, un
collège public ou un organisme de réglementation, des services ou certificats
suivants, sauf si le fournisseur fait un choix en application du présent
article, en la forme déterminée par le ministre et contenant les
renseignements requis par celui-ci :
(a) a service of instructing individuals in courses leading
to, or for the purpose of maintaining or upgrading, a professional or trade
accreditation or designation recognized by a regulatory body, or
service consistant à donner à des particuliers des cours qui mènent à une
accréditation ou à un titre professionnel reconnus par l’organisme ou qui
permettent de conserver ou d’améliorer une telle accréditation ou un tel
(b) a certificate, or a service of administering an
examination, in respect of a course, or in respect of an accreditation or
designation described in paragraph (a),
certificat, ou un service consistant à donner un examen, concernant un cours,
une accréditation ou un titre mentionné à l’alinéa a).
where the supply is made by a professional or trade association,
government, vocational school, university or public college or by the
regulatory body, except where the supplier has made an election under this
section in prescribed form containing prescribed information.
This intent is reflected in what the Minister of
Finance stated when the provisions were being debated before Parliament. Schedule
V to the ETA was adopted in 1990 along with other amendments. In respect
of the suite of amendments that concerned the taxation of educational services,
the Minister of Finance stated as follows:
Madam Speaker, there is no tax on education.
There is no GST on educational services. That is a simple part of the
(House of Commons Debates, 34th Parl.
2d sess., Vol. 8 (11 May 1990) at 1271 (Hon. Michael Wilson, Minister of
It is consistent with this purpose that private
colleges like Alexander College be exempt from the requirement to collect and
Finally, as Alexander College convincingly
argues, the interpretation offered by the Tax Court leads to an absurd result.
Students taking the same courses at a British Columbia university and Alexander
College or pursuing associate degrees at the two institutions would be subject
to different tax treatment. Under the Tax Court’s interpretation, students would
not have to pay GST/HST on their course fees in the former case while in the
latter they would. There is no principled basis for such differentiation and,
for the reasons discussed above, such a result is not required under a textual,
contextual or purposive reading of the relevant provisions. Rather, when
properly read, the provisions in issue lead to the conclusion that Alexander
College falls within the exemption in paragraph 7 of Part III, Schedule
V of the ETA.
It therefore follows that I would allow this
appeal with costs, set aside the judgment of the Tax Court, and, making the
decision that the Tax Court ought to have made, would allow the appeal in
2012-3854(GST)G with costs and vacate the assessment dated July 4, 2011 for the
reporting period from July 1, 2010 to September 30, 2010.
“Mary J.L. Gleason”
Johanne Gauthier J.A”
David Stratas J.A.”