CRA provides a new GST/HST Memorandum on zero-rated training services

ETA Sched. VI, Pt. V, s. 18 provides for the zero-rating of supplies of educational or examination services made to a non-registered non-resident who is not an individual. S. 18, which is difficult (nay, impossible) to parse, is paraphrased as follows by CRA in a new GST/HST Memorandum:

The supply must consist of a service of instructing non-resident individuals in, or administering examinations in respect of, certain courses. These courses must lead to certificates, diplomas, licences or similar documents, or classes or ratings in respect of licences, that attest to the competence of the individuals to practise or perform a trade or vocation.

Points made by CRA include:

• “Competence … to practise” means that the mooted vocational or trade “course has a direct link to skills that are recognized by the CRA as relating to an individual’s ability to gain or retain employment.”
• The certificate etc. requirement is satisfied by “any document that demonstrates that the student has successfully completed a course of study and attests to the competence of the individual to practise or perform a trade or vocation.”
• “[T]he course or courses leading to the certificate, diploma, licence or similar document must have a pass/fail element based on the evaluation of an individual’s performance on one or more tests, graded materials and/or projects.”
• An example of training that is not zero-rated is safety training provided to employees of a non-resident forestry company: “While stand-alone industry safety courses may be beneficial … on their own they would not be considered to lead to an occupation … and … do … not lead to a diploma or certificate attesting to the competence of the individual to practice a trade or vocation.”
• There is no requirement that the resident supplier be of a particular type, e.g., a school authority.

Neal Armstrong. Summary of GST/HST Memorandum 20-8 “Educational Services Made to a Non-resident” December 2019 under ETA Sched. VI, Pt. V, s. 18.