GST/HST Memorandum 20-1 "School Authorities - Elementary and Secondary Schools" December 2019

Range of school authorities

4. A school authority may operate a publicly funded elementary or secondary school or a private elementary or secondary school (regardless of whether it was established and is operated on a non-profit or for-profit basis). In addition, a school authority may be a non-profit organization (NPO), a public institution, a government or a board of education established by provincial legislation.

Scope of exclusion for kindergarten programs

Example 1

Children in Province A must be 4 years old by December 31 in order to enter their first year of elementary school. By contrast, children in Province B must be 5 years old by December 31 in order to enter their first year of elementary school. The elementary schools in Province A and Province B are school authorities in their respective provinces.

In addition, Province B operates a kindergarten program for children who do not meet the requirement of being 5 years old by December 31. The kindergarten program is not considered to be part of the elementary school program in Province B.

Regardless of the fact that the age requirement for enrollment in a school authority in Province A and Province B differs, children enrolled in an elementary school operated by a school authority and in courses that are at the elementary level of education in Province A or Province B meet the definition of elementary or secondary school student.

However, the kindergarten program does not meet the standards of educational instruction established by the government at the elementary level in Province B. Therefore, the children enrolled in the kindergarten program in Province B do not meet the definition of elementary or secondary school student.

Test is based on intent

10. ... Since the wording is “provided primarily for” rather than “provided primarily to”, this condition will be satisfied as long as the course is provided with the intent that primarily elementary or secondary school students will be taking the course.

Exclusion for some kindergarten programs

12. It is important to note that although the government of a province may have established educational standards for kindergarten programs offered within the province, those programs may still not form part of the elementary school program. Where an organization operates a kindergarten independently from an elementary school, the kindergarten program may fall under a provincial early childhood learning program that is not part of the elementary school program. Such programs may, however, be exempt under other provisions of the Act, such as section 1 of Part IV of Schedule V, which exempts a supply of child care services the primary purpose of which is to provide care and supervision to children 14 years of age or under for periods normally less than 24 hours per day.

Exemption can extend to on-line instruction

70. The exempt supplies described under sections 2, 7, 8, 11 and 16 of Part III of Schedule V may also be made where a school authority makes an online supply of a service of instructing individuals in courses via the Internet as opposed to a traditional classroom setting where the conditions of the respective section are met. As well, section 18 of Part V of Schedule VI may also apply to zero-rate an online supply of a service of instructing non‑resident individuals.

71. It can, however, be difficult to determine whether a supply made online is the supply of a service (and thus possibly exempt under section 2, 7, 8, 11 or 16 of Part III of Schedule V or zero‑rated under section 18 of Part V of Schedule VI) or of intangible personal property as this determination is based on a number of factors, as well as the specific facts of the particular case. Refer to GST/HST Technical Information Bulletin B-090, GST/HST and Electronic Commerce, for information on determining whether a supply made online is a supply of a service or of intangible personal property.

Meaning of extra‑curricular activities

14. The Act does not define the term extra‑curricular activity. For purposes of section 3 of Part III of Schedule V, the Canada Revenue Agency (CRA) views extra‑curricular activities to be activities that do not generally take place during regular school hours, are not part of a school curriculum, and are not requirements to complete any course. The CRA does not stipulate the type of activity that qualifies; however, it must be an activity that is organized under the authority and responsibility of the school authority.

15. For purposes of section 3 of Part III of Schedule V, extra‑curricular activities can also include activities that are supplied to students by a student council or a school club, provided the council or club is part of the school authority (that is, it is not a separate legal entity) and the activities can be said to take place subject to the authority and responsibility of the school authority.

16. An extra‑curricular activity is generally considered to take place under the authority and responsibility of the school authority if persons employed by or under contract with the school authority, or volunteers reporting to the school authority, supervise and control the activity.

17. The exemption under section 3 of Part III of Schedule V does not apply to supplies made by third parties to elementary or secondary school students. Although the exemption under section 3 applies to supplies of food and beverages, it does not apply to supplies of other tangible personal property such as class rings and school sweaters. Such supplies would be subject to the GST/HST unless exempt under another provision of the Act.

Example of school-sponsored dance

Example 3

A school authority organizes a school dance primarily for the students of the school. Students are allowed to bring a guest. … The school authority’s principal provides a budget to the student council, which is part of the school authority, to provide decorations and authorizes the student council to sell the tickets to the students during school hours.

Admission … to the dance is exempt under section 3 … .

Example of shop student providing repair services

Example 4

A school authority supplies auto repair services that are performed by students as part of their instruction in an auto‑body course.

As the auto repair services are supplied by a school authority and performed by students in the ordinary course of the instruction of those students, the services are exempt under section 4 of Part III of Schedule V.

Distinction between instruction and admission to a seminar

62. A school authority may offer seminars, activities or other events to its students or members of the general public; however, such events are generally not considered to be a supply of instruction in courses for GST/HST purposes.

63. The supply of instruction in courses is a service for GST/HST purposes and is exempt from the GST/HST if it meets the requirements set out in Part III of Schedule V or zero‑rated if it meets the requirements set out in section 18 of Part V of Schedule VI.

64. By contrast, the supply of an admission to a seminar, activity or event is a supply of intangible personal property for GST/HST purposes and may be subject to the GST/HST. …

68. The following are some of the factors that generally indicate that a given supply is a supply of a service of instruction:

• The activity involves the provision of systematic instruction.
• The supplier monitors or supervises the participant’s progress or learning.
• The supplier assesses the participant’s progress during the course of the activity and provides ongoing support, feedback and guidance to the participant.
• The supplier may be available to assist the participant with the subject matter at a time and location different from the time and place in which the activity occurs.
• The supplier assesses the participant’s competency upon completion of the activity by requiring the participant to formally demonstrate the knowledge acquired. If the competency is not achieved, the activity may have to be repeated.
• The participant is required to invest time and effort outside of the activity in order to complete assignments, read course material, etc.
• The participant may be required to successfully complete verified prerequisites before taking part in the activity.
• The participant may be required to successfully complete the activity before being permitted to participate in another activity.
• The activity is part of a series of activities leading to a formal recognition of skills, such as a diploma, degree or licence.
• The activity may be part of a program that consists of a series of 2 or more related activities.
• The activity occurs at set intervals over an extended period of time (for example, weeks or months).
• The activity does not include the provision of rights or, if there is a provision of rights, they are incidental to or part of the single supply of a service (for example, the right to use a laboratory or a darkroom facility).
• The subject of the activity is broad (for example, writing).
• The supplier advertises or promotes the activity as being intended to instruct participants.
• The activity is promoted together with other activities in a prospectus or calendar prepared by an educational institution.
• The promotional material indicates that the activity is part of a broader program that may lead to a formal recognition of skills, such as a diploma, degree or licence.
• The promotional material is aimed at persons who have the prerequisites required to participate in the activity.

Supply of an admission to a seminar, activity or event

69. The following are some of the factors that generally indicate that a given supply is a supply of an admission to a seminar, activity or event:

• The supplier and the participant engage in minimal individualized interaction.
• The participant need only attend the activity to receive evidence of successful or satisfactory completion of the activity.
• The supplier’s purpose with respect to the activity is principally to provide information to, or to facilitate the exchange of information among, participants.
• The subject of the activity is narrowly‑focused (for example, study skills for first-year students or money management techniques).
• The activity is discrete from other activities offered by the supplier, with no formal prerequisites for attendance.
• The participant is not required to take part in the activity as a prerequisite for participating in another activity.
• The activity is promoted as a stand‑alone activity.
• The activity is promoted to the general public.
• The activity is promoted as a seminar, workshop or similar event.
• The activity occurs during a brief, concentrated period of time (for example, a number of hours, a day or several consecutive days).

Supplies of transportation services to other school authorities may be exempt under Sched. V, Pt. VI, s. 2

20. Supplies of transportation services made by a school authority to another school authority are not exempt under section 5 of Part III of Schedule V. Such supplies are therefore subject to the GST/HST when made by a registrant unless exempt under another provision of the Act. For example, where the school authority making the supply is a public institution as defined in the Act, supplies of transportation services made by the public institution to a school authority are exempt under section 2 of Part VI of Schedule V.

Students may not necessarily be taking the courses as part of a diploma program

23. The supply of a service of instructing in credit courses made by a school authority is exempt even if the supply is made to students who are not enrolled in a diploma program. Consequently, the exemption applies to supplies of instruction in courses for which credit toward a diploma may be obtained where those courses are offered by a school authority, either at night as part of a continuing education program or during the day, even if some students are not taking the courses as part of a diploma program.

Can apply to student club memberships or 3^rd-party suppliers

25. Examples of the supplies referred to in section 7.1 of Part III of Schedule V include supplies of various student club memberships where the consideration for these supplies must be paid by students because they receive a supply that is exempt under section 7 of Part III of Schedule V.

26. There is no requirement that the supplies under section 7.1 and section 7 of Part III of Schedule V be made by the same supplier. As is the case with the exemption under section 7, the exemption under section 7.1 applies even if the supply is made to students who are not enrolled in a diploma program.

27. The exemption under section 7.1 of Part III of Schedule V does not apply to mandatory fees in respect of a supply of tangible personal property, such as a musical instrument or lab equipment, that is required for use in a course. Such supplies may, however, be exempt under another section of the Act.

No requirement that supplier be a school authority

34. Although section 18 of Part V of Schedule VI is similar to section 8 of Part III of Schedule V, there is no requirement under section 18 that the supplier be a school authority or any other specified type of entity. Where all of the conditions in section 18 of Part V of Schedule VI are satisfied, the supply will be zero‑rated regardless of who is providing the service.

Separate supply of course materials not exempted under s. 11

44. If the supply of course materials is a separate supply from the exempt supply of a service of instruction, the supply of the course materials would not be exempt under Part III of Schedule V, and would be taxable unless another exempting provision of the Act applies to the supply.

Meaning of program

54. A program is more than a miscellaneous collection of courses that relate to a given topic or area or that have been grouped under a particular heading. Rather, a program must consist of 2 or more courses that usually have a common subject matter or purpose and that fit together in a coherent way or in a logical sequence.

55. It is not necessary that all of the courses in a program be offered every year or semester, as long as the program includes 2 or more courses that are available on a periodic basis. It is also not necessary that a program be a recurring program. Provided it is made up of 2 or more courses, a program could, for example, be created to meet a need for a single year.

56. In addition, it is not necessary that an individual take all the courses in a program for the exemption to apply as the exempting provision is for the supply of instruction in a particular set of courses within a program offered by a school authority, not the planned course or program of studies of an individual.

57. The exemption under section 16 of Part III of Schedule V does not necessarily extend to all courses under a program, and each course must be separately evaluated to determine whether the supply of the course meets the conditions set out in this section. In some cases, courses in a program may have different tax statuses as the program may include a combination of qualifying courses and courses designed to be taken primarily for recreational purposes, the supply of which is specifically excluded under section 16.

Exclusion for recreation

58. For the purposes of the exemption under section 16 of Part III of Schedule V, an activity designed to be taken primarily for recreational purposes is understood to be an activity designed to be an enjoyable diversion or pastime. A recreational course may be informative but is mainly directed at satisfying the participant’s interest or desire for enjoyment or at enhancing the participant’s social activities. …

60. Examples of recreational courses include non-credit courses in subjects such as dancing, skating, cooking or sailing.