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
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.