28 February 2019 CBA Roundtable, Q.2

All the conditions for exemption of an organization’s memberships under both ss. 17 and 18 of Sched. V, Pt. VI of Schedule VI are met.

1. If both Forms GST23 and GST24, are not completed but the organization acts as though it had made the elections and charges GST/HST on its memberships, will the CRA accept the elections as having been made?
2. If the organization completes only one of the GST23 and the GST24 forms, will CRA accept both elections as having been made, so that the organization should charge GST/HST and can claim ITCs?
3. Both the GST23 and the GST24 purport to allow the election to be revoked, without apparent legislative basis. Can a revocation be legally valid?

CRA responded:

(a) … In general, the CRA would accept that an election was made under section 17 or 18 even though the organization did not complete the required form, if the organization has always acted as though it had made the election in question.

(b) … If a particular supply meets the requirements of both sections 17 and 18, the supplier must make an election under both sections to ensure that the supply will not be exempt under either of these sections.

… [However] sections 17 and 18 are generally mutually exclusive and would not apply to the same supply of a membership. The benefits typically conferred by a professional membership that is exempt under section 18, such as the right to use a certain title or the right to practice certain otherwise restricted acts, would not be allowable benefits under section 17.

(c) … It would be unwieldy to require a supplier to complete a separate form in respect of every supply. Therefore, the Minister has approved a form that will allow a supplier to make an election indefinitely, until the supplier chooses that it no longer wants the election to apply … [by] complet[ing] Section D of the relevant form. … On completion of Section D, the supplier is no longer considered to have made an election in respect of any supplies of memberships as of the effective date of the revocation.

As such, the CRA considers a revocation to be legally valid if Section D on Form GST23 or Form GST24 is duly completed, signed by a person authorized to sign on behalf of the organization, and kept in the organization’s files for six years from the end of the year to which the election relates.

Regarding the elections under Sched. V, Pt. VI, ss. 18 and 17 for those exemptions not to apply, CRA stated:

In general, the CRA would accept that an election was made under section 17 or 18 even though the organization did not complete the required form, if the organization has always acted as though it had made the election in question.

Unsurprisingly, CRA stated that a fresh election is not required for each membership supply, and explained that the signed election is regarded as having a continuing effect respecting all future supplies until the election is revoked by completing Part D of the form.