CRA indicates that the “primarily operated” test for GST/HST-exempt supplies of ESL or FSL instruction will be tested on an annual-revenues basis

ETA Sched. V, Pt. III, s. 11 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 by a school authority, a vocational school, a public college or a university or in the course of a business established and operated primarily to provide instruction in languages.

In the case of the four listed types of schools, this exemption overlaps with s. 7, which may exempt for-credit courses that they offer.

In its new GST/HST Memorandum on s. 11, CRA states that the “program” exception generally requires that there be “a series of courses” and provides an example of this requirement being satisfied where a continuing education program of a public college provides course in four languages including French, and provides for three levels of French language instruction.

Respecting the requirement, for the final type of listed organization, that it make the supplies “in the course of a business established and operated primarily to provide instruction in languages,” CRA states that it:

will consider a business to be operated primarily to provide instruction in languages if more than 50% of its total annual revenues are derived from fees/tuition for, or can be attributed to instruction in, language courses

and conversely that:

if the portion of the business’s total annual revenues that is derived from language course fees/tuition or that can be attributed to instruction in these courses falls to 50% or less during the following fiscal year, the business would no longer be considered to be operated primarily to provide instruction in languages in the next fiscal year.

Neal Armstrong. Summaries of GST/HST Memorandum 20-7 “Second-language Instruction” December 2019 under ETA Sched. V, Pt. III, s. 11 and Equivalent Courses (GST/HST) Regulations, s. 2.