Citation: 2005TCC601
Date: 20050909
Docket: 2003-1556(GST)G
BETWEEN:
CAMP MINI-YO-WE INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Bonner, J.
[1] This is an appeal from an assessment under Part IX of the Excise Tax Act (the "Act") for the period October 1, 1999 to December 31, 2001.
[2] The Minister of National Revenue (the "Minister") made the assessment on the basis that Goods and Services Tax (GST) was exigible on fees charged by the Appellant, a charity, to persons attending its camp for children and youth. The issue in this appeal is whether the service supplied by the Appellant to campers was exempt under section 1 of Part V.1 of Schedule V to the Act or excluded from the exemption by paragraph (f). The service was treated by the Minister as single or indivisible and it was not suggested that the Minister was wrong in this regard.
[3] The principal legislative provisions under which the issue arises now follow. Subsection 165(1) reads:
165. (1) - Subject to this Part, every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax in respect of the supply calculated at the rate of 7% on the value of the consideration for the supply.
The term "taxable supply" is defined in subsection 123(1) of the Act as follows.
"taxable supply" means a supply that is made in the course of a commercial activity;
The term "commercial activity" is defined in subsection 123(1) as follows:
"commercial activity" of a person means
(a) a business carried on by the person (other than a business carried on without a reasonable expectation of profit by an individual, a personal trust or a partnership, all of the members of which are individuals), except to the extent to which the business involves the making of exempt supplies by the person,
...
The term "exempt supply" is defined in subsection 123(1) as follows:
"exempt supply" means a supply included in Schedule V;
[4] Section 1 of Part V.1 of Schedule V, in the form applicable at the relevant time reads in part:
1. - A supply made by a charity of any property or service, but not including a supply of
...
(f) a service involving, or a membership or other right entitling a person to, supervision or instruction in any recreational or athletic activity except where
(i) it could reasonably be expected, given the nature of the activity or the degree of relevant skill or ability required for participation in it, that such services, memberships or rights supplied by the charity would be provided primarily to children 14 years of age or under and the services are not supplied as part of, the membership is not in, or the right is not in respect of, a program involving overnight supervision throughout a substantial portion of the program, or
...
[5] In the French language version, the paragraph (f) exclusion from the general exemption of supplies made by charities, reads:
f) la fourniture d'un service de supervision ou d'enseignement dans le cadre d'une activité récréative ou sportive, ou un droit d'adhésion ou autre droit permettant à une personne de bénéficier d'un tel service, sauf si, selon le cas :
(i) il est raisonnable de s'attendre, compte tenu de la nature de l'activité ou du niveau d'aptitude ou de capacité nécessaire pour y participer, que ces services, droits d'adhésion ou autres droits fournis par l'organisme soient offerts principalement à des enfants de 14 ans et moins et qu'ils ne fassent pas partie ni ne se rapportent à un programme qui, en grande partie, comporte une surveillance de nuit.
[6] The question here is whether that exclusion applies in the circumstances of this case. The Appellant's contention is that its evangelical christian camp programmes are not excluded by subparagraph (f)(i).
[7] I turn now to a review of the facts. The service supplied by the Appellant was in furtherance of its mission. That mission was described in a camp presentation booklet as follows:
Mini-Yo-We is a Christian Camp whose mission is to present Jesus Christ and His message from the Word of God through an excellent camping program balancing spiritual teaching, fun and physical activity and year round discipleship of Staff and Campers in association with evangelical churches and ministries.
[8] The physical facilities offered at which the camp operated are described in the booklet as follows:
• Location: Mary Lake, Huntsville - Muskoka
• Layout of Land Area: 268 acres divided into 3 segments - Main Property, Deadman's Island and Northwoods
• Shoreline: 1250 m (4140 feet)
• Sites: Maintain and operate 4 sites (each with its own accommodations, dining room, kitchen and waterfront)
• Present Capacity: 350 Campers
[9] The activities offered to campers by the Appellant included archery, baseball, softball, basketball, broomball, cycling, Frisbee, golf, rollerblading, soccer, trampoline, canoeing, climbing walls and rock faces, cookouts, fire building, rope climbing, fishing, kyaking, sailing, word surfing, recreational swimming, drama, crafts, pottery and hiking. The selection of activities offered at a particular time varied according to the age group of the campers then in attendance.
[10] Typically the campers arrived at camp on Sunday afternoons and remained there for a week. The campers were not left on their own. During their stay at the camp the campers were under the supervision of the camp staff. The campers were, of course, given instruction in the use of the sporting goods and equipment furnished by the camp for their use.
[11] One must not be led by the last few paragraphs to a conclusion that the service offered by the Appellant to campers was precisely the same as that offered by a typical secular summer camp organization. The Appellant was established and operated to fulfill the mission set out above. Thus, the brochure published by the Appellant emphasized:
• Relationships - the gospel and Christian values and morals are effectively shared through the lives and words of the staff as they live, learn and play with their campers
• Experiential Learning - use the camping activities as living illustrations of Christian living, faith principles and values, example faith on the ropes course
[12] Religious indoctrination was interwoven with all aspects of daily life at the camp. For example a child having successfully scaled a rope attached to a pole might expect to find a religious message attached at the top of the pole to which the rope was affixed. Children engaged in sailing were encouraged to contemplate similarities between the unseen wind which propelled the boat and the unseen presence of the almighty.
[13] Staff at the camp were expected to share a common religious belief. Volunteer staff were considered to be "the principal messengers of the Gospel to campers". The witness Ankenmann, an executive director of the camp for 7 years, indicated that directors were expected to lead a godly life.
[14] The daily schedule for girls, which I take to be illustrative of the extent to which camp activities were suffused with the Christian message, reads:
7:00 Staff Prayer Time
7:30 Campers Rise/Sr. Staff Prayer
8:15 Flag Raising
8:30 Breakfast
9:30 Impact
10:45 lst Instruction
11:55 2nd Instruction
1:00 Lunch
2:00 Rest/Truck/Cabin Clean Up
3:15 CYOA/Special Day
4:30 Cabin Time/Special Day
6:00 Dinner
7:00 Section Time
8:00 Campfire
9:15 Mini's Devos
9:45 Yo's Devos
10:00 We's Devos
11:00 Staff Lights Out
[15] Grace was said at meals. The impact period involved worship and teaching. The first and second instruction periods involved sports and crafts. The 2:00 p.m. period was as I understand it, essentially free time. "CYOA" stands for choose your own activity such as canoeing. The 7:00 p.m. period often involved group activities such as baseball and soccer. Devos were, of course, religious devotions.
[16] The question whether the service supplied by the Appellant to campers falls within the paragraph (f) exception to the general exemption of supplies made by charities is complicated by a difference between a literal reading of the wording of the English version and that of the French version. Both versions are equally authentic. The English version speaks of a service "involving" supervision or instruction in any recreational or athletic activity. The French version, as I read it, speaks of a service "of" supervision or teaching in the field of recreational or sporting activity.
[17] In other words the French version looks to the nature of the service itself; the English looks to that which is involved in the service. The Appellant argues that:
In reconciling differences between the French and the English versions of a statute their "shared meaning" should be sought. an interpretation which can reconcile with both versions can provide such a shared meaning.
I agree in principle with that argument.
[18] The proper approach to interpretation in cases where there are differences between the English and French versions of a statutory provision was considered by the Federal Court of Appeal in Perrier Group of Canada v. Canada, [1996] 1 F.C. 586. At page 596 Linden J.A. said:
An analysis of the French version of the legislation is most helpful. Subsection 18(1) of the Constitution Act. 1982 [Schedule B. CanadaAct 1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44]] states that the French and English versions of an Act are equally authoritative. This statement requires that, where the ordinary meanings of the French and English versions of a statute seem to point in different directions, the Court is obliged to choose an interpretation that best reconciles the wording used in both. MacGuigan J.A. commented on this obligation in Nitrochem Inc. and Deputy M.N.R. (Customs and Excise) as follows:
With respect to the reconciliation of English and French texts, a judge's responsibility is not to seek some primary instance of ordinary usage in one language to which the meaning in the other language must be made to conform, but rather to try to grasp the whole meaning in both languages.
[19] The Appellant argues:
...the application of the French version reconciles with both the French and English versions. That is "the service of instruction or supervision in recreation or athletics" involves supervision or instruction in recreation or athletics. The corollary is not true. That is, a service that involves supervision or instruction in recreation or athletics is not necessarily the service of supervision or instruction in recreation or athletics. Thus, the shared meaning is not "involving" but "of".
In my view the "best reconciliation of the wording used in both" versions is not found by a process which results, as the Appellant's does, in what is, in effect, the outright rejection of one version.
[20]However, any difficulty occasioned by the difference between the two versions is more theoretical than real when addressing the question whether the service supplied by the Appellant falls within the language of the paragraph (f) exclusion. I am of the opinion that, contrary to the Appellant's submissions, the service provided by the Appellant to campers falls squarely within the language of both the French and English versions of paragraph (f). That service is one of supervision and teaching in the field of recreation and sports because that is exactly what is involved in the service and is the predominant element of the service. The nature of the service supplied by the Appellant is not altered either by the religious purpose underlying the Appellant's operation or by the inclusion of periods of prayer, reflection and indoctrination.
[21]In context, the presence of a charitable purpose, in this case a religious purpose, underlying supplies falling within the opening words of section 1 of Part V.I of schedule V is a given. The paragraph (f) exclusion does not come into play at all except in the case of a supply made by a charity. The statutory framework must be kept in mind.
[22]That framework requires consideration of the nature of organizations whose activities are treated by the legislation as capable of falling within paragraph (f). The word "charity" is defined at section 123 of the Act as a registered charity within the meaning of section 248 of the Income Tax Act. Section 248 defines "registered charity" as:
(a) a charitable organization, private foundation or public foundation, within the meanings assigned by subsection 149.1(1), that is resident in Canada and was either created or established in Canada or, (emphasis added)
(b) ...
that has applied to the Minister in prescribed form for registration and that is at that time registered as a charitable organization, private foundation or public foundation;
[23]Subsection 149.1(1) of the Income Tax Act defines "charitable organization" as follows:
"charitable organization" means an organization, whether or not incorporated,
(a) all the resources of which are devoted to charitable activities carried on by the organization itself, (emphasis added)
As I see it, the charitable (religious) purpose which underlies the Appellant's activities cannot be considered to remove the activities from the ambit of paragraph (f) unless that purpose and measures adopted to carry it out are so all pervasive that the nature of the service supplied is changed from that of a children's summer camp where supervision or instruction in recreational or athletic activities predominate to something else. The purpose does not effect such a change here. The service supplied was that of a summer camp, and not, for example, that of a religious school offering a period or two of gymnastics.
[24]Section 138 of the Act provides:
For the purposes of this Part, where
(a) a particular property or service is supplied together with any other property or service for a single consideration, and
(b) it may reasonably be regarded that the provision of the other property or service is incidental to the provision of the particular property or service
the other property or service shall be deemed to form part of the particular property or service so supplied.
Counsel for the Appellant argued that religious training constituted the "particular" service or primary service supplied together with an incidental service, namely, camping. In support of this argument, counsel again relied on the Appellant's purpose. The argument is simply not supported by the evidence. I repeat, the Appellant operated a summer camp not a religious school. Obviously, it was the children's camping experience for which fees were paid.
[25]I turn finally to the decision of this Court in Camp Kahquah Corporation Limited. v. The Queen, [1998] G.S.T.C. 100. The Appellant relied heavily on that case and made extensive submissions regarding the desirability of having the decisions of this Court follow a consistent course. In my view Kahquah is distinguishable. It appears to rest on findings that the provision of recreational facilities and instruction was part of and incidental to the taxpayer's religious purpose and that the supply was therefore not a supply of supervision or instruction in the field of recreation or sports as required by the legislation there under consideration. On the evidence before me I have been unable to make the same findings.
[26]For the foregoing reasons, I have concluded that the service offered by the Appellant falls within the paragraph (f) exception to the general exemption of supplies made by charities.
[27]The Respondent conceded at the outset that the penalty must be vacated. On the main issue the Appellant fails. Success being divided each party shall bear its own costs.
Signed at Toronto, Ontario, this 9th day of September 2005.
Michael J. Bonner
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