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, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 181651
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Instructing individuals in the four elements of the International English Language Testing System test
Thank you for your letter received on [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to instruction in preparation courses for the International English Language Testing System test (IELTS test). We apologize for the delay in responding.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. 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
The following information was provided in your fax of [mm/dd/yyyy], and during our telephone conversation on [mm/dd/yyyy]:
1. […] (the Business) was established to provide tutorials on the IELTS test on a one-on-one or one-on-two basis to individuals who are in Canada to prepare them to write the IELTS test.
2. The provision of tutoring services is the only business activity of the Business.
3. The Business is registered for GST/HST purposes.
4. The Business is not a school authority, a vocational school, a public college, a university, or a charity as defined in the ETA.
5. The Business’s clients are individuals who want to reach a certain level (obtain a specific mark or higher) on the IELTS test so they can apply to go to university.
6. The tutoring services provided by the Business consists of the specific elements on the IELTS test, which are, listening, reading, writing and speaking.
7. The Business uses material that it develops plus material purchased that is specific to the IELTS test when providing tutoring services to its clients.
8. The Business does not provide the IELTS test.
9. The Business has been charging and collecting the GST/HST on its tutoring services since registering for the GST/HST.
RULING REQUESTED
You would like to know whether by the Business’s supplies of tutoring services provided to individuals who are in Canada to prepare them to write the IELTS test are taxable for purposes of the GST/HST.
RULING GIVEN
Based on the facts set out above, we rule that the Business’s supplies of tutoring services provided to individuals who are in Canada to prepare them to write the IELTS test are taxable supplies subject to tax at the applicable rate, depending on the province in which the supply is made.
EXPLANATION
Paragraph 9(a) of Part III of Schedule V 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. As the tutoring for the IELTS test is not a course that is approved for credit by, or that follow a curriculum designated by, a school authority, section 9(a) does not apply to the aforementioned supplies of instruction.
Section 11 of Part III of Schedule V, in part, exempts “a supply of a service of instructing individuals in, or administering examinations in respect of, language courses that form part of a program of second-language instruction in either English or French, if the supply is made…in the course a business established and operated primarily to provide instruction in languages.”
In order for the supply of a service of instruction to be exempt under section 11 of Part III of Schedule V, the service must be a service of instruction in a language course that forms part of a program of second-language instruction. Tutoring individuals in the elements of the IELTS test in preparation to write that test is not a service of instructing individuals in a language course that forms part of a program of second-language instruction.
As there are no other provisions in the ETA to exempt supplies of a service of instructing/tutoring individuals in preparation for the IELTS test under the circumstances described above, your supplies of instructing/tutoring individuals in preparation for the IELTS test are taxable.
As a GST/HST registrant, you are required to charge, collect and remit the GST/HST (unless otherwise zero-rated) on taxable supplies at the applicable rate for the province in which the supply is made.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling given in this letter provided that: none of the issues discussed in the ruling 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 613-670-7946. 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,
K. Bennett
Aboriginal Affairs and Educational Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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