GST/HST Memorandum 20-5 “School Cafeterias, University and Public College Meal Plans, and Food Service Providers” December 2019

“Primarily to students”

3. The phrase “primarily to students” means that where a school cafeteria supplies food and beverages (other than supplies of prescribed food or beverages or food or beverages supplied through a vending machine) to both students and non‑students, more than 50% of the supplies must be to students of the particular school in order for the exemption to apply. If the supply of food and beverages in the cafeteria is made primarily to students of the school, all supplies of food and beverages made in the cafeteria are exempt except for food or beverages that are prescribed, supplied through a vending machine or supplied for a private party, reception, meeting or similar private event.

“Cafeteria”

4. In elementary or secondary schools that do not have cafeterias, food and beverages may be provided to the students in classrooms, gymnasiums or other designated areas. For the purposes of section 12 of Part III of Schedule V, such spaces are considered to be cafeterias.

Example of “private” meeting - home and school meeting

Example 2

A secondary school’s parent association holds monthly meetings at the school to discuss various school-related topics. The company that supplies lunches to the students of the school also makes lunches available to those attending the parent association’s meetings, which are private meetings. Private meetings are excluded … .

Fast food chain could supply the school cafeteria lunches

5. At some elementary and secondary schools, a supplier, such as a fast‑food chain or a private company, supplies lunches directly to students within the school. The exemption under section 12 … applies to the supplies of such lunches, provided that the supplies are made primarily to students in a location determined to be a school cafeteria.

Determination of 10-meals weekly test using average retail meal price

19. The calculation of whether the amount payable for a meal plan is enough for 10 meals a week is a question of fact and is based on the average retail price of a meal at the university’s or public college’s on‑campus cafeterias or restaurants.

20. The CRA considers the average retail price of a meal to mean the average retail price of a meal available to students at the on‑campus restaurants and cafeterias at which the meal plan may be used.

Topping-up option permitted

26. A topping-up option is often offered to students who purchase a qualifying meal plan. The CRA considers top‑ups or the addition of funds to a qualifying meal plan to be additional consideration for the same supply. As such, the tax status of meals under a qualifying meal plan is not impacted by top‑ups or the addition of funds to the qualifying meal plan.

Declining balance cards permitted

27. Some universities or public colleges administer their meal plans through the use of declining balance cards or similar means. A student may access one or more accounts through the card, such as an on‑campus meal plan account, an off‑campus meal plan account, or a mini‑mart or non‑food account used for laundry or bookstore purchases.

28. A meal provided under a meal plan, for which an amount is deducted from a declining balance card account is exempt under section 13 of Part III of Schedule V provided both of the following conditions are met:

• the plan is a qualifying meal plan
• the university or public college maintains a separate account for the qualifying meal plan on the declining balance card and advertises its terms and conditions separately

29. Cards issued by a university or public college to students for a qualifying meal plan are not considered to be gift cards ... .

Example of declining-balance card used for three accounts, one of them, exempt

Example 3

Students enrolled at a university pay an amount of $2,800 to the university. The students are issued a declining balance card through which 3 separate accounts can be accessed: an on‑campus qualifying meal plan account of $2,500, an off‑campus meal account of $150 and a mini‑mart account of $150. Each of these accounts is a separate plan.

The on‑campus meal plan account meets all of the requirements to be a qualifying meal plan. The meals are provided to students of the university at on‑campus eating establishments under a meal plan throughout the period of the plan, which is the 34‑week academic year. The university determined that the average retail price of a meal at the university is $7.25. Based on the average retail price per meal at the university, the single amount paid by a student is sufficient to provide the student with at least 10 meals each week for the period of the plan ($7.25 × 10 meals × 34 weeks = $2,465).

The university maintains separate accounts for the 3 separate plans and also advertises the terms and conditions of the 3 plans separately. The university is therefore not required to collect tax in respect of the meals provided under the qualifying meal plan. In addition, the university determines that the off‑campus meal plan and mini‑mart accounts are gift cards. As such, no tax is payable to the university at the time of issuance of the gift card.

Tax status determined at initial time

30. The tax status of meals under a qualifying meal plan is determined at the time the student initially enters into the agreement with the supplier. If unused funds are returned to the student at the end of the term or carried over for use in the future, the tax status of the meals previously provided under the qualifying meal plan will not be impacted.

Example of exempt supply to university

Example 4

University ABC offers a qualifying meal plan that provides students with lunch and dinner every day for a 3‑month semester in the university’s cafeteria. Under a contract with a third party, the university pays the third party to provide the food and beverages under the qualifying meal plan to the students of the university. The supply made to the university by the third party is exempt under section 14 of Part III of Schedule V.

Catering exemption

33. Section 14 of Part III of Schedule V includes supplies of catering services made to a school authority, university or public college under a contract to provide food or beverages. The Act does not define catering. However, the CRA considers a caterer to be a person who, at the direction of the customer, supplies prepared meals (including buffet style) or other food or beverages and delivers the order to the premises designated by the customer where the food may be arranged, heated or served by the supplier.