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: 183260
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
International English Language Testing System and Diplôme d'études en langue française
Thank you for your letter of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (the GST/HST) to supplies of services of instruction in preparation courses for the International English Language Testing System (the IELTS) and Diplôme d'études en langue française (the DELF) tests. We apologize for the delay in our response.
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 (the ETA) unless otherwise specified.
This letter is further to our letter dated [mm/dd/yyyy], from […][the Tax Services Office], which provided information on the tax status of supplies of tutoring and French/English language instruction. In your [subsequent] letter dated [mm/dd/yyyy], you requested a ruling on the supply of preparation courses for the IELTS and DELF tests. Our letter dated [mm/dd/yyyy], informed you that the Aboriginal Affairs and Educational Sectors Unit of the Excise and GST/HST Rulings Directorate at Headquarters in Ottawa would provide a reply to that specific question. Our reply is provided below.
The following information was provided in your letter and during our telephone conversation on [mm/dd/yyyy].
1. You are a sole-proprietor.
2. You are registered for GST/HST purposes.
3. You are not a school authority, a vocational school, a public college or a university as defined in the ETA.
4. In [yyyy], more than […]% of your business activity consisted of tutoring or teaching French or English as a second language.
5. You provide services of instructing individuals in preparation courses for the IELTS and the DELF tests that generally follows the IETLS or DELF textbook. Those services are provided to individuals who are in Canada.
6. The IELTS and the DELF preparation courses are not courses that are approved for credit by, or that follow a curriculum designated by, a school authority.
7. The service of instructing individuals in preparation courses for the IELTS and the DELF tests are stand-alone courses that include working through mock exams and completing exercises that assist the individuals in achieving the level they desire on the test. The preparation courses do not form part of a program of language instruction.
8. You do not provide the actual IELTS or the DELF tests at this time as you have not acquired the rights allowing you to administer the IELTS or the DELF tests.
RULING REQUESTED
You have asked the following question:
Is the service of instructing individuals in preparation courses for the IELTS and the DELF tests an exempt supply?
RULING GIVEN
Based on the facts set out above, as a GST/HST registrant, your supplies of a service of instructing individuals in preparation courses for the IELTS and the DELF tests are taxable supplies subject to tax at the applicable rate, depending on the province in which the supply is made.
EXPLANATION
Generally, most supplies of goods and services made in Canada are subject to the GST/HST, unless they are specifically identified as being exempt. Exempt supplies are listed in Schedule V and are not subject to the GST/HST.
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 preparation courses for the IELTS and the DELF tests are not courses that are 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 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 of a business established and operated primarily to provide instruction in languages.”
In order for a supply of a service of instruction to be exempt under section 11 of Part III of Schedule V, the service of instruction must be in a language course, and that course must form part of a program of second-language instruction in either English or French.
Generally, IELTS and DELF preparation courses focus on preparing the individual to write the IELTS or DELF exam. The preparation courses do not qualify as language courses and the service of instruction is not instruction in a second-language. Therefore, the service of instructing individuals in the preparation courses for the IELTS and the DELF tests are not language courses that form 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 individuals in preparation courses for the IELTS and the DELF tests under the circumstances described above, as a GST/HST registrant, your supplies of instructing individuals in the preparation courses for the IELTS and the DELF tests are taxable and subject to the GST/HST (unless otherwise zero-rated) 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 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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