Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 147956r
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
[…][Supply of services of instruction/training in the Program using Method A]
Thank you for your letter of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (“GST”)/Harmonized Sales Tax (“HST”) to supplies of […][services of instruction/training in the program using Method A].
The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (“ETA”) unless otherwise specified.
STATEMENT OF FACTS
We understand that the following statement of facts applies to your situation.
1. […] (the “Corporation”) is located in […][City 1, Province 1]. The Corporation is not a registered charity within the meaning of the Income Tax Act and it is not a non-profit organization for GST/HST purposes. It is registered for GST/HST purposes.
2. One of the programs that the Corporation provides is […] (the “Program”) using […][Method A]. The Program is described on the Corporation’s website […].
3. The Program is promoted on the Corporation’s website as providing its students with the following long-term benefits: “[…].”
4. The Corporation’s promotional material maintains that its method “[…].”
5. The Program is open to all children in the […] age group and is not specifically designed to assist individuals with a disorder or disability.
6. Families who enroll their children in the Program must complete a […][registration form] and pay a […][registration fee], along with a […][fee for supplies]. […][Information about other fees].
7. […][Description of program stages and testing]
8. Participants must […][purchase specific training materials]
9. The Program is not approved for credit by a school authority in [Province 1] and completion of the Program is not a requirement for admittance into a course that is approved for credit by a school authority in [Province 1].
RULING REQUESTED
You would like us to reconsider the previous ruling provided to you, dated [mm/dd/yyyy], which stated that the Corporation’s supplies of services of training using [Method A] are taxable.
RULING GIVEN
Based on the facts set out above, we rule that the Corporation’s supply of services of instruction/training in the Program using [Method A] is subject to the GST/HST.
EXPLANATION
Paragraph 9(a) of Part III of Schedule V to the ETA exempts “a supply of a service of tutoring or instructing an individual in a course that is approved for credit by, or that follows a curriculum designated by, a school authority.” “School authority” is a term defined by the ETA, as meaning “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 operated.”
As a result, it is not the provincial curriculum which is the basis for determining if a particular supply of tutoring is exempt. Rather, there must be a relationship evident between the tutoring and a course offered by a school authority. In other words, in the case of tutors, the exemption applies to tutors who help students learn the material of a course offered at an elementary or secondary school in the province in which the tutors work.
We have taken the position that paragraph 9(a) of Part III of Schedule V can also apply to tutoring or instruction in material from lower grades or in general concepts dealing with the specific, relevant subject matter of a credit course in order to assist a student to understand material contained in a high school credit course. In order for the exemption to apply to such a case, it must be evident that there is a connection or relationship between the supply of instruction or tutoring in question, and the credit course(s) offered by a school authority.
The clause “…or that follows a curriculum designated by, a school authority” refers, in part, to situations where, for lower grades, there may not be course “credits” but there will be a “curriculum”. Since, for example, reading skills are generally part of an elementary school’s curriculum, tutoring or instruction in effective reading skills, for the purpose of assisting children meet the requirements of their school curriculum, will generally meet the requirements of this paragraph where children enrolled in elementary grades are concerned.
The Canada Revenue Agency (“CRA”) takes the position that tutoring in matters such as “study habits”, “research skills”, “note taking”, and “test taking” is too broad to be considered to be relating to the specific, relevant subject matter of any particular school’s course. For the same reason, the CRA takes the position that a tutoring service provider that promotes its method as a brain development program is too broad to be considered to be relating to the specific, relevant subject matter of any particular school’s course.
Common characteristics of tutoring services that are not exempt pursuant to paragraph 9(a) of Part III of Schedule V include:
* the tutor has negligible interaction with the student because the tutoring method is based on self-learning exercises, or activities (e.g., games) that strengthen a variety of cognitive skills.
* the tutoring program provides a series of levels of attainment which every student must complete without consideration of the student’s specific needs in respect of a school authority’s course or curriculum.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the CRA is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-957-1175. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Dwight Kostjuk
Aboriginal Affairs and Educational Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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