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, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 125678
April 17, 2013
Dear [Client]:
Subject: GST/HST RULING
[...][the Institution]
Thank you for your fax of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to [...]([...][the Institution]) and its status as a school authority. [...]. We apologize for the delay.
The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island (effective April 1, 2013) and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.
Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.
All legislative references made refer to the Excise Tax Act (the "ETA") unless otherwise specified.
Statement of Facts
Based on your submission, on information found on [the Institution]'s website, and on information found on the website of the Ontario Ministry of Education ("OME"), we understand that the following facts describe your client's situation.
1. [The Institution] has a GST/HST registration number: [...] for purposes of claiming the GST/HST public service body rebate.
2. It operates a private elementary school established in [...]
3. [The Institution]`s website states that [...].
4. [The Institution] is registered as a charity under the Income Tax Act. It provides receipts for income tax purposes concerning donations and tuition.
5. [The Institution] is registered with the OME [...].
6. Section 16 of Ontario's Education Act addresses the administration of private schools, as follows:
Intention to operate private school
16. (1) No private school shall be operated in Ontario unless notice of intention to operate the private school has been submitted in accordance with this section. R.S.O. 1990, c. E.2, s. 16 (1).
Idem
(2) Every private school shall submit annually to the Ministry on or before the 1st day of September a notice of intention to operate a private school. R.S.O. 1990, c. E.2, s. 16 (2).
Idem
(3) A notice of intention to operate a private school shall be in such form and shall include such particulars as the Minister may require. R.S.O. 1990, c. E.2, s. 16 (3).
Offence to operate private school without filing notice of intent to operate
(4) Every person concerned in the management of a private school that is operated in contravention of subsection (1) is guilty of an offence and on conviction is liable to a fine of not more than $50 for every day such school is so operated. R.S.O. 1990, c. E.2, s. 16 (4).
Return
(5) The principal, headmaster, headmistress or person in charge of a private school shall make a return to the Ministry furnishing such statistical information regarding enrolment, staff, courses of study and other information as and when required by the Minister, and any such person who fails to make such return within sixty days of the request of the Minister is guilty of an offence and on conviction is liable to a fine of not more than $200. R.S.O. 1990, c. E.2, s. 16 (5).
Inspection of school
(6) The Minister may direct one or more supervisory officers to inspect a private school, in which case each such supervisory officer may enter the school at all reasonable hours and conduct an inspection of the school and any records or documents relating thereto, and every person who prevents or obstructs or attempts to prevent or obstruct any such entry or inspection is guilty of an offence and on conviction is liable to a fine of not more than $500. R.S.O. 1990, c. E.2, s. 16 (6).
Inspection on request
(7) The Minister may, on the request of any person operating a private school, provide for inspection of the school in respect of the standard of instruction in the subjects leading to the Ontario secondary school diploma, the secondary school graduation diploma and to the secondary school honour graduation diploma, and may determine and charge a fee for such inspection. R.S.O. 1990, c. E.2, s. 16 (7).
Inspection of teachers
(8) The Minister may, on the request of a person operating a private school or of a person in charge of a conservation authority school or field centre, provide for the inspection of a teacher in such school or centre who requires the recommendation of a supervisory officer for certification purposes. R.S.O. 1990, c. E.2, s. 16 (8).
Rulings Requested
1. You would like to know if [the Institution] satisfies the definition of a "school authority" in subsection 123(1).
2. We understand that you would like confirmation that [the Institution] is eligible for the public service body rebate using the rebate factor as a school authority, rather than the lower rebate factor for a charity.
Ruling Given
1. Based on the facts set out above, we rule that [the Institution] satisfies the definition of a "school authority" in subsection 123(1). This ruling will not apply if OME at any time and for any reason inspects [the Institution] and it is determined that the school does not continue to meet provincial standards.
2. We cannot issue a ruling on this matter for the following reasons. [The Institution]'s documentation for this analysis has not been provided, and rebate eligibility is normally determined at time of verification of the rebate application to ensure an organization, such as a school authority, is operating otherwise than for profit. Please see the interpretation provided below for guidance on rebate entitlement.
The above ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
Explanation
The definition of a "school authority" in subsection 123(1) is:
"school authority" means an organization that operates an elementary or secondary school in which it provides instruction that meets the standards of educational instruction established by the government of the province in which the school is operated.
In a review of the OME website, and in conversations made with OME officials, it was determined that elementary private schools are regulated in Ontario to the extent that they must receive authorization from OME to operate; OME may request an information return from the school, and OME may inspect the school (for purposes other than to determine if Ontario's standards of educational instruction are being met).
Each province is responsible for educational matters within its own jurisdiction. Therefore, the CRA will accept that, where an organization has been granted permission by the government of a province to operate an elementary or secondary school, the provision of instruction provided in the elementary or secondary school will be considered by the CRA to meet the educational standards of that province. The CRA will rely on provincial authorities to determine situations in which a school does not meet the provincial standards.
In summary, as [the Institution] meets the definition of a "school authority," its supplies of instructing elementary students are exempt from the GST/HST by virtue of section 2 of Part III of Schedule V and no GST/HST is collectable on the tuition fees for these services.
Interpretation Given
Pursuant to section 259, a "school authority that is established and operated otherwise than for profit" is a selected public service body and eligible for a rebate. [The Institution] will be eligible for the public service body rebate using the rebate factor for school authorities provided the evidence available supports that it is a school authority and that it was established and operates otherwise than for profit. However, there are specific apportionment rules under section 259 that may apply (e.g., if [the Institution] acts in distinct capacities: as a charity, and as a school authority.)
For additional information you may wish to refer to CRA Guide (RC4034) entitled: GST/HST Public Service Bodies' Rebate. As well, to determine if [the Institution] meets the requirements to be established and operated otherwise than for profit you may find it helpful to refer to CRA's GST/HST Policy Statement P-215: Determination of Whether an Entity is a "Non-Profit Organization" for Purpose of the Excise Tax Act (ETA). (It is accessible at http://www.cra-arc.gc.ca/E/pub/gl/p-215/README.html .) Although P-215 was issued to provide guidance to determine if a person is a non-profit organization, some of the concepts discussed are also applicable to determine if an organization is established and operated otherwise than for profit.
The foregoing comments represent our general views with respect to the subject matter of your request that deals with rebate eligibility. These comments related to the interpretation provided above are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the Canada Revenue Agency with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-957-1175. 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.
Yours truly,
Dwight Kostjuk
Aboriginal Affairs & Educational Sector Unit
Excise and GST/HST Rulings Directorate
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