Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 188320
Subject: GST/HST RULING
Tax status of memberships
Thank you for your fax of October 6, 2017, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to memberships supplied by […] (the […][Organization]). We apologize for the delay in providing our response.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand the facts as follows based on your fax, additional information and documents provided, and […]:
1. The [Organization] was incorporated under […] in [yyyy] and […].
2. The [Organization] has stated it is a non-profit organization for purposes of the ETA.
3. The [Organization] is not a charity as that term is defined in subsection 123(1).
4. The [Organization] describes itself as:[…]
5. The […] “Scope of Practice” […] defines the role of […][Professional X]:
[…][Description of Professional X’s tasks and skills]
6. Section […] of the [Organization]’s […][By-laws] states the [Organization]’s member categories as follows:
[…][Type A and Type B]
7. The [Organization] makes supplies of memberships. The consideration for the supply of a membership depends on the type, and the membership is valid […][for one year].
8. […][Description of memberships and costs]
9. A person who has […] [a Type A] Membership with the [Organization] is permitted to use the designation [Professional X] or […].
10. The law of three Canadian provinces ([…][Province A, Province B, and Province C]) requires that a […][Professional Y] or a […][member of the Organization] be employed to provide certain […] services in relation to […]. Specifically, a provision […] [in the following Regulations under a Provincial Act Province A, Province B, and Province C] mentions […] [Profession X]:
* […][Legislative reference to Regulation D made under Act D from Province A].
* […][Legislative reference to Regulation E made under Act E from Province B].
* […][Legislative reference to Regulation F made under Act F from Province C].
11. Subsection […] of […][Regulation D] states:
[…][Legislative provision of Regulation D]
12. Subsection […] of […][Regulation E] states:
[…][Legislative provision of Regulation E]
13. Subsection […] of […][Regulation F] states:
[…][Legislative provision of Regulation F]
14. The [Organization] is not registered for GST/HST purposes.
15. The [Organization] has not completed and signed a Form GST24, Election and Revocation of the Election to Tax Professional Memberships.
You would like to know the tax status of the supply of the [Organization]’s [Type A] and [Type B] Memberships.
Based on the facts set out above, we rule that the [Organization]’s supplies of memberships are exempt under section 18 of Part VI of Schedule V.
Section 18 exempts “a supply of a membership made by an organization membership in which is required to maintain a professional status recognized by statute, except where the supplier has made an election under this section in prescribed form containing prescribed information.”
The [Organization] supplies [Type A] Memberships which are required to use the title […] and maintain the professional status of [Professional X]. Persons who have a [Type A] Membership in the [Organization] are required to have advanced education in […] and are expected to maintain their knowledge through continuing education. Regulations in [Province A, Province B, and Province C] limit certain jobs within the […] industry to a person who is a [Professional Y] or a [Professional X] registered with the [Organization]. Therefore, the [Type A] Membership is required to maintain a professional status that is recognized by statute.
Based on the above, the supply of the [Type A] Membership by the [Organization] is an exempt supply and is not subject to the GST/HST. Therefore, the [Organization] should not charge GST/HST on its [Type A] Memberships. As the [Type B] Memberships are also memberships in the [Organization] and one of the classes of memberships in the [Organization] is required to maintain a professional status recognized by statute, the [Type B] Memberships are also exempt under section 18 of Part VI of Schedule V.
The benefits conferred by the [Type A] Membership exceed the allowable benefits under section 17 of Part VI of Schedule V. Therefore, the [Type A] Membership would not be exempt under section 17.
As the supply of memberships is exempt under section 18 of Part VI of Schedule V, the [Organization] may elect to exclude the supply of one or more classes of memberships from exemption under this provision and, where no other exempting provision in Schedule V applies, the membership will be a taxable supply. To make the election, the [Organization] must complete Form GST24, Election and Revocation of the Election to Tax Professional Memberships, and keep it with its books and records while the election is in effect and for six years from the end of the year to which the election relates.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling given in this letter provided that: none of the issues discussed in the ruling are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-7943. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Charities and Non-profit Organizations Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate