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: 142072
Business Number: [...]
Dear [Client]:
Subject: GST/HST RULING/INTERPRETATION
Application of the GST/HST to supplies made by [...][the Corporation]
Thank you for your letter of January 12, 2012, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies made by [...]([...][the Corporation]).
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Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.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 are to the Excise Tax Act (ETA) unless otherwise specified.
Statement of Facts
We understand:
1. [The Corporation] was incorporated under [...] on [mm/dd/yyyy].
2. [The Corporation] is registered for GST/HST purposes, with GST/HST account number [...].
3. [The Corporation] has stated that it is a non-profit organization.
4. The purposes for which [the Corporation] was established are set out in its supplementary letters patent, dated [mm/dd/yyyy], as follows: [...]
5. [The Corporation] is described as follows on the [...] section of its website ([...]): [...]
6. As set out in [the Corporation]'s By-laws, [...], [the Corporation] has the following classes of members:
* Voting Members
* [...] Directors of [the Corporation]
* [...] [...][member type A]
* [...] [...][member type B];
* [...][member type C];
* [...][member type D]; and
* [...][member type E]
[...] Directors of [the Corporation]
7. Pursuant to [...] of [the Corporation]'s By-law #[...], a director of [the Corporation] must be a member of [the Corporation], or become a member within [...] days of election or appointment. [...].
[...] [...]([...][member type A])
8. Pursuant to [...] of By-law #[...], [member type A] are [...]. To be a [member type A], a[n] [...][organization] must meet [the Corporation]'s membership requirements relating to corporate structure, fees payable, [organization] name, insurance requirements, etc. [Member type A] may offer recreational, competitive, or combinations of recreational and competitive programs in any [...][sport] discipline governed by [the Corporation]. [Member type A] must register all of their individual members with [the Corporation] as "[member type C]". [Member type A] have weighted voting rights depending on their number of [member type C].
9. According to [the Corporation]'s [...][Information Guide], [member type A] are required to renew their membership annually. [...]
10. [...].
[...] [Member type B]
11. Pursuant to [...] of By-law #[...], individuals who register with [the Corporation] as [member type B] may [...][information about voting options]
[Member type C]
12. Pursuant to [...] of By-law #[...], [member type C] include all individuals who are affiliated or registered with a [member type A] and must be registered with [the Corporation] by the [member type A]. [...][information on type C membership of the Corporation]
13. [...][membership details from the Corporation's website]
[Member type D]
14. Pursuant to [...] of By-law #[...], [member type D] are [...][information on type D membership of the Corporation]
[Member type E]
15. Pursuant to [...] of By-law #[...], [member type E] are [...][information on type E membership of the Corporation]
Fees
16. [The Corporation]'s [Information Guide] and accompanying [...][fee schedule] set out the various membership related fees charged by [the Corporation].
17. The following annual [organization] fees are set out on page [...] of the [Information Guide]: [...]
18. [...][registration information in the Corporation's Information Guide]
19. The [Information Guide] describes the following categories of [...] members: [...]
20. [...][Description of membership fees found in the Information Guide and fee schedule]
21. All amounts listed in the [fee schedule] are plus [...][GST/HST].
22. [...][Description of membership fees]
23. According to [the Corporation]'s website, [member type A] receive the following benefits: [...][Description of membership benefits]
24. Additional [member type A] benefits include [...]
25. [The Corporation] has [...][an insurance policy] that includes [...] coverage. [...][information about the insurance policy requirements]. The insurance coverage applies when all requirements for registration with [the Corporation] are fulfilled.
26. [The Corporation] sets requirements for coaches to participate in member [organization] activities, including [...]. These requirements are explained on [the Corporation]'s website on [...].
27. [The Corporation] is responsible for delivering [...] [a coach training program].
28. [The Corporation] provides a variety of [...][coach training] courses and charges fees in respect of these courses as follows ([...]): [...]
29. [The Corporation] is not constituted or empowered by a federal or provincial act to regulate the practice of [sport] coaching by setting standards of knowledge and proficiency for [the] [sport] coaches.
30. [The Corporation] arranges educational opportunities for the benefit of members, such as [...]. [The Corporation] charges registration fees in respect of these events.
31. [The Corporation] oversees and organizes various competitive [sport] events. Members are charged a registration fee to compete in these events.
32. Some [sport] events are independently hosted by [member type A]. To host an event, a [member type A] must apply to [the Corporation] and pay a sanctioning fee. The fee charged depends on the type of event. The following sanctioning fees are set out on the [...]: [...]
33. [The Corporation] purchases an electronic [...] software program on behalf of [...][certain members] and divides the cost proportionally. [...] The fee for the [...] program is $[...] this year.
34. The [...][electronic] portion of the program is online. [The Corporation] determines which [organizations] require this program and then they are provided a user name and password to login. There is a one-time annual charge. The fee is determined on [...]. This program expires at the end of [...].
35. [The Corporation] does not make any profit from the [electronic] program. In fact, [the Corporation] could lose money depending on how many [organizations] require the program.
36. [The Corporation] sells various items to members at cost or with a small mark-up, such as [...]. [The Corporation] charges GST/HST on its supplies of these items.
RULINGS REQUESTED
You would like to know:
1. Are the following fees charged by [the Corporation] consideration for a taxable supply?
• [organization] membership fees;
• [...] fees;
• [...][coach training] program fees;
• Educational program registration fees ([...]);
• Registration fees for [sport] events;
• Hosting sanctions fees;
• [Electronic] program fees; and
• Fees for tangible personal property (e.g. [...]).
Ruling Given
Based on the facts set out above, we rule that
1. The following fees are consideration for taxable supplies made by [the Corporation] and are subject to the GST/HST:
• Membership fees payable by [member type A] (including [...] fees);
• Membership fees payable by [member type B] (including insurance fees, special assessment fees, and any applicable program fees [...]);
• [coach training] program fees;
• Registration fees for [sport] events;
• Hosting sanctions fees;
• [Electronic] program fees; and
• Fees for tangible personal property (e.g. [...]).
2. [The Corporation]'s supplies of memberships to [member type C] and [member type E] are supplies for no consideration that are exempt from the payment of GST/HST under section 10 of Part VI of Schedule V.
This 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
General Information
A "non-profit organization" is defined under subsection 123(1) to mean a person (other than an individual, an estate, a trust, a charity, a public institution, a municipality or a government) that was organized and is operated solely for a purpose other than profit, no part of the income of which is payable to, or otherwise available for the personal benefit of, any proprietor, member or shareholder thereof unless the proprietor, member or shareholder is a club, a society or an association the primary purpose and function of which is the promotion of amateur athletics in Canada.
It is a question of fact whether, at any particular time, [the Corporation] meets the definition of a non-profit organization for ETA purposes. In particular, whether [the Corporation] meets the criterion of operating solely for a purpose other than profit must be determined on an ongoing basis.
In general, supplies of property and services made by a non-profit organization are taxable for GST/HST purposes unless the supply is an exempt supply under a provision in Schedule V. In providing our response, we have considered provisions in Schedule V that exempt certain supplies made by non-profit organizations.
Membership fees
[Member type A]
[The Corporation] charges various fees to [member type A]. These fees vary depending on the programs provided by the [member type A] and the number of [member type C] affiliated with the [member type A]. In our view, the various fees payable by [member type A] are consideration for a single supply of a membership. The total consideration that each [member type A] must pay is calculated based on the programs provided by the [organization] and the number of [member type C].
All [member type A] are required to pay a base [organization] membership fee of $[...], plus the annual [...] fee of $[...], if applicable. A [member type A] must pay the following additional fees depending on the programs and activities provided by the [member type A]: [...][additional fees]
These fees are not payable by all [member type A]; however, the fees are mandatory if [...].
In addition, pursuant to By-law #[...] and the [Information Guide], [member type A] must register each individual member with [the Corporation] within [...] days of the individual becoming [...][involved] with the [member type A]. The [member type A] will then be invoiced for $[...] per [member type C].
Some of the fees are related to insurance coverage. The [insurance policy] is an input into [the Corporation]'s supplies of memberships. Where a supplier charges a fee to a recipient to recoup the cost of an input into a supply, this fee forms part of the consideration for the supply. As such, the membership fees related to insurance form part of the consideration for [the Corporation]'s supplies of [member type A] Memberships. [...].
There is no distinct and independent property or service provided in exchange for the $[...] [...][certain membership fees]. [The Corporation] does not provide a recreational or competitive [sport] program in exchange for these program fees, rather these amounts are intended to offset expenses incurred by [the Corporation]. As such, the program fees are part of the consideration for a single supply of a membership in [the Corporation]. The program fees are one of the components used to calculate the total amount payable by the Member [...].
In your request for a ruling, you stated that your supplies of memberships should be exempt from GST/HST because [...]% or more of your members are 14 years of age or younger. Certain supplies of memberships by public sector bodies (including non-profit organizations) are exempt under section 12 of Part VI of Schedule V, which states:
A supply made by a public sector body of a membership in, or services supplied as part of, a program established and operated by the body that consists of a series of supervised instructional classes or activities involving athletics, outdoor recreation, music, dance, arts, crafts or other hobbies or recreational pursuits where
(a) it may reasonably be expected, given the nature of the classes or activities or the degree of relevant skill or ability required for participation in them, that the program will be provided primarily to children 14 years of age or under, except where the program involves overnight supervision throughout a substantial portion of the program; or
(b) the program is provided primarily for underprivileged individuals or individuals with a disability.
A supply will be exempt under section 12 of Part VI of Schedule V where:
• The supplier is a public sector body;
• The supply is of a membership in a program or services supplied as part of a program;
• The program is established and operated by the public sector body;
• The program consists of a series of supervised instructional classes or activities involving athletics, outdoor recreation, music, dance, arts, crafts or other hobbies or recreational pursuits;
• One of the following circumstances applies:
* The program is provided primarily to children 14 years of age or under and it does not involve overnight supervision throughout a substantial part of the program; or
* The program is provided primarily to underprivileged individuals or individuals with a disability.
Section 12 of Part VI of Schedule V does not apply to [the Corporation]'s supplies of memberships to [member type A]. [The Corporation] does not supply "a membership in ...a program established and operated by the body that consists of a series of supervised instructional classes or activities involving athletics, outdoor recreation, music, dance, arts, crafts or other hobbies or recreational pursuits" in exchange for the [member type A] Membership fees.
[...]
[The Corporation] engages in many activities involving [sport] in connection with its supplies of memberships to the [member type A] ([...]). However, these activities are not a series of supervised instructional activities. Under [the Corporation]'s membership structure, it is generally the [member type A] that provide supervised instructional classes or activities to the individuals enrolled in [sport] programs in [...][province X]. To be exempt under section 12 of Part VI of Schedule V, the program must be established and operated by the supplier. In other words, the exemption applies only where the public sector body itself directly supplies to the individuals a program that consists of supervised instructional classes or activities involving athletics or other recreational activities.
The more relevant provision to consider in [the Corporation]'s case is section 17 of Part VI of Schedule V, which exempts a supply of a membership in a non-profit organization (other than a membership in a club the main purpose of which is to provide dining, recreational or sporting facilities or in a registered party) where each member does not receive a benefit by reason of the membership, other than the allowable benefits listed in paragraphs (a) to (f) of that section. These benefits are described in Guide RC4081, GST/HST Information for Non-profit Organizations.
A "benefit" is the right to any property or service of value regardless of the extent to which the right is actually exercised by individual members. All possible benefits accruing to members must be taken into consideration in determining the tax status of a membership.
[Member type A] receive significant direct benefits by reason of their membership in [the Corporation], including [...]. These benefits exceed the allowable benefits listed in paragraphs (a) to (f) of section 17. Therefore, [the Corporation]'s supplies of [organization] Memberships are not exempt under section 17 of Part VI of Schedule V.
As no provision in Schedule V applies, [the Corporation]'s supplies of memberships to [member type A] are taxable. Therefore, [the Corporation] must charge GST/HST on the membership fees payable by [member type A] regardless of how the fees are determined. As previously stated, the consideration for a[n] [organization] Membership would include [...] fees, insurance fees, [...] fees.
[Member type B]
[Member type B] are those members not affiliated with a [member type A] ([...]). Under [the Corporation]'s By-laws, [member type B] belong to the Voting Member membership class. [Member type B] must submit the [...] form and pay their membership fee directly to [the Corporation]. [Member type B] are covered under [the Corporation]'s [insurance policy]. Insurance coverage is considered a direct benefit of membership that does not fall under paragraphs (a) to (f) of section 17 of Part VI of Schedule V. Therefore, [the Corporation]'s supplies of [member type B] Memberships are not exempt under that section. As no other exempting provision applies, [the Corporation]'s supplies of [member type B] Memberships are taxable.
[Member type C]
[Member type C] automatically become members of [the Corporation] when they join a [member type A]. [The Corporation] does not charge any membership fees directly to the [member type C]. [The Corporation]'s [fee schedule] sets out [...]. However, these fees are payable by the [member type A]. The fees charged by [the Corporation] in respect of each individual member form part of the consideration payable by the [member type A] for the supply of a [member type A] Membership.
Section 10 of Part VI of Schedule V exempts a supply made by a non-profit organization of any property or service where all or substantially all of the supplies of the property or service by the organization are made for no consideration, but not including a supply of blood or blood derivatives. The [member type C] do not pay any consideration (that is, fees) to [the Corporation] in exchange for membership in [the Corporation]. Therefore, [the Corporation]'s supplies of memberships to [member type C] are supplies for no consideration that are exempt under section 10 of Part VI of Schedule V.
[Member type E]
[Member type E] do not pay any fees to [the Corporation] in exchange for membership in [the Corporation]. As such, [the Corporation]'s supplies of [member type E] are exempt under section 10 of Part VI of Schedule V.
[Coach training] program fees
[The Corporation] provides several different [...] coaching courses. In your request for a ruling, you stated that your supplies of [...] courses are exempt under "Schedule V, section 6 of the ETA".
Section 6 of Part III of Schedule V exempts the following:
A supply of
(a) a service of instructing individuals in courses leading to, or for the purpose of maintaining or upgrading, a professional or trade accreditation or designation recognized by a regulatory body, or
(b) a certificate, or a service of administering an examination, in respect of a course, or in respect of an accreditation or designation described in paragraph (a),
where the supply is made by a professional or trade association, government, vocational school, university or public college or by the regulatory body, except where the supplier has made an election under this section in prescribed form containing prescribed information.
A supply is only exempt under section 6 of Part III of Schedule V if made by a professional or trade association, government, vocational school, university, public college or a regulatory body. [The Corporation] is not a professional or trade association, a government, a university or a public college as defined in the ETA. Therefore, section 6 of Part III of Schedule V will only apply if [the Corporation] is a vocational school or regulatory body.
"Vocational school" is defined in section 1 of Part III of Schedule V as "an organization that is established and operated primarily to provide students with correspondence courses, or instruction in courses, that develop or enhance students' occupational skills."
Based on the purposes set out in [the Corporation]'s supplementary letters patent, [the Corporation] was not established primarily to provide students with correspondence courses, or instruction in courses, that develop or enhance students' occupational skills. Therefore, [the Corporation] is not a vocational school.
"Regulatory body" is defined in section 1 of Part III of Schedule V as "a body that is constituted or empowered by an Act of Parliament or of the legislature of a province to regulate the practice of a profession or trade by setting standards of knowledge and proficiency for practitioners of the profession or trade." We have found no federal or provincial act that constitutes or empowers [the Corporation] to regulate the practice of [sport] coaching. Therefore, [the Corporation] is not a "regulatory body" as defined in section 1 of Part III of Schedule V.
Section 6 of Part III of Schedule V does not apply to [the Corporation]'s supplies of [coach training] programs as [the Corporation] is not one of the enumerated entities. There is no other exempting provision that would apply to supplies of coaching courses made by a non-profit organization; therefore, [the Corporation]'s supplies of [...] courses are taxable.
Registration fees for [sport] events
There are many different [sport] competitions and events held in [province X] each year. Participants pay a registration fee to take part in these events. This registration fee is in addition to any membership fees charged by [the Corporation] or by the [member type A]. The registration fee is consideration for a supply of the right to participate in the event. The right to participate in an event is a supply of intangible personal property. There is no exempting provision that would exempt such a supply of intangible personal property made by a non-profit organization. Therefore, [the Corporation]'s supplies of the right to participate in [sport] events are taxable.
For each of these [sport] events, it is necessary to determine who is the supplier of the right to participate in the event. Some of the events are presented by [the Corporation] itself, while others are presented by a [member type A] and sanctioned by [the Corporation]. Some events are shared between [the Corporation] and a [member type A]. Pursuant to subsection 123(1), the "supplier" in respect of a supply, means the person making the supply. Where [the Corporation] is the person making the supply of the right to participate in the [sport] event, [the Corporation] must charge GST/HST on the registration fees.
Hosting Sanctions Fees
[The Corporation] charges sanction fees to [member type A] who independently host [sport] events. In exchange for the sanction fees, [the Corporation] supplies the [member type A] with the right to hold a sanctioned event. There is no exempting provision that would apply to such a supply made by a non-profit organization. Therefore, [the Corporation] must charge GST/HST on the hosting sanctions fees.
[Electronic] program fees
[The Corporation] acquires the electronic [...] program and then splits the cost between [...][certain] [member type A]. This constitutes a re-supply of the electronic program by [the Corporation] to the [member type A]. A supply of this nature is considered to be a supply of intangible personal property. There are no exempting provisions that apply to a supply of an electronic program made by a non-profit organization. Therefore, [the Corporation] must charge GST/HST on the [electronic] program fees. The "direct cost" exemption, discussed below, does not apply to supplies of intangible personal property.
Fees for tangible personal property ([...])
[The Corporation] makes various supplies of tangible personal property ([...]). Most supplies of tangible personal property made by a non-profit organization are taxable unless a specific exempting provision applies.
A non-profit organization that sells tangible personal property on a cost-recovery basis can choose to make its sales taxable or exempt depending on whether it charges GST/HST. Under section 6 of Part VI of Schedule V, the "direct cost" exemption, if no GST/HST is charged for the property, the supply will be exempt if the charge for the property is equal to or less than the direct cost of the property. If GST/HST is charged, the supply of the property will be taxable if the consideration for the property is equal to or more than the direct cost of the property (not including the GST/HST and the Quebec Sales Tax (QST), when the non-profit organization is a QST registrant).
"Direct cost" is defined in subsection 123(1). The direct cost of the property includes:
* The amount [the Corporation] paid when purchasing the property it intends to re-sell;
* The amount paid for an article or material (other than capital property) incorporated into, consumed or expended directly in the manufacturing, producing , processing, or packaging of the property;
* Any GST/HST, QST and non-recoverable provincial taxes, duties and fess payable by [the Corporation].
"Direct cost" does not include administrative or overhead expenses, employees' salaries, or the cost of services incurred to produce the property.
[The Corporation] charges GST/HST on its supplies of tangible personal property. [The Corporation] sells these items at cost or with a small markup. Therefore, [the Corporation]'s supplies of tangible personal property are taxable.
Interpretation Given
[Member type D] Memberships
We were not provided with sufficient information on all the benefits available to [member type D] of [the Corporation]; therefore, we are unable to rule on the tax status of a supply of an [member type D] Membership as a separate class of membership. For example, neither the [Information Guide] nor the [...] chart sets out the benefits available to [member type D]. However, we are pleased to provide you with the following general comments about the application of the GST/HST to [member type D] Memberships.
Pursuant to [...] of [the Corporation]'s By-Law #[...], [member type D] "shall pay such registration fees or dues as determined by the Board of Directors." Any such registration fee would constitute consideration for a supply of a membership. If [...][a] [member type D] receives direct benefits in excess of the allowable benefits set out in paragraphs (a) to (f) of section 17 of Part VI of Schedule V, [the Corporation]'s supplies of [member type D] Memberships would be taxable. If [...][a] [member type D] does not receive any benefits by reason of the membership, other than those allowable benefits set out in paragraphs (a) to (f) of section 17 of Part VI of Schedule V, [the Corporation]'s supplies of [member type D] Memberships would be exempt.
Educational program fees
We were not provided with information about any specific [...]; therefore, we are unable to provide a ruling on the tax status of [the Corporation]'s supplies of educational [sport] programs. However, we are pleased to provide you with the following general comments.
[The Corporation] provides a variety of [sport] [...] [programs]. [The Corporation] charges a different fee for each [...]. This fee is in addition to any membership fees charged by [the Corporation] or by the [member type A]. The registration fee is consideration for a separate supply from [the Corporation]'s supplies of memberships. [The Corporation]'s supplies of [...], may be exempt under section 12 of Part VI of Schedule V where requirements of that provision are satisfied. See our discussion of section 12 of Part VI of Schedule V beginning on page 13 above.
Since [the Corporation] supplies multiple [sport] programs, some of these programs may be exempt from GST/HST while others may not. For example, a [sport] day camp established and operated by [the Corporation] and provided primarily to children 14 and under would be exempt under section 12 of Part VI of Schedule V. However, a coaching [...] provided primarily to adult coaches would be taxable.
If section 12 of Part VI of Schedule V does not apply, the supply would be taxable as there is no other exempting provision that would apply to a supply of a [...] made by [the Corporation].
Input tax credits
In general, subsection 169(1) provides that a registrant is eligible to claim an input tax credit (ITC) for the GST/HST paid or payable by the registrant on property or a service acquired, imported or brought into a participating province to the extent (expressed as a percentage), that the property or service was acquired, imported or brought into a participating province for consumption, use or supply in the course of the registrant's commercial activities. "Commercial activity" includes any business or adventure or concern in the nature of trade carried on by a person (including the making of taxable supplies), but does not include the making of exempt supplies.
Therefore, [the Corporation] is entitled to claim ITCs to recover the GST/HST paid or payable on the purchases related to its commercial activities. [The Corporation] cannot claim ITCs for the GST/HST paid or payable on property and services consumed, used or supplied in the course of its exempt activities.
[The Corporation] makes both taxable and exempt supplies. Thus, [the Corporation] must apportion its ITCs based on the extent of use of the property or services in its commercial activity. For instance, [the Corporation] may claim ITCs to recover the GST/HST paid or payable on purchases related to its taxable supplies of memberships to [member type A]. However, [the Corporation] cannot claim ITCs for the GST/HST paid or payable on property and services to the extent the property or service is consumed, used or supplied in making exempt supplies of memberships to [member type C].
In general, a registrant (other than a financial institution) is eligible to claim a full ITC for the GST/HST paid or payable on property or a service acquired, imported or brought into a participating province, for consumption or use substantially all (90% or more) in the course of the registrant's commercial activities and where all other conditions for claiming an ITC are met. On the other hand, if the property or service is for consumption or use substantially all in the course of the registrant's activities that are not commercial activities (e.g., exempt activities), then all of the property or service is considered to be for consumption or use in non-commercial activities and no ITC is available.
Where a registrant (other than a financial institution) acquires, imports or brings into a participating province property or a service for consumption or use in commercial activities more than 10% and less than 90%, the registrant is generally eligible to claim an apportioned ITC based on the percentage of consumption or use of the property or service in commercial activities.
Although the ETA does not specify any method that must be used to apportion property or services that have been acquired, imported or brought into a participating province for consumption or use partly in making taxable supplies for consideration in the course of a registrant's commercial activities and partly in other activities, subsection 141.01(5) provides that the method chosen must be fair and reasonable and be used consistently throughout the year.
It is a question of fact whether a particular method used by a registrant for the purposes of claiming ITCs is fair and reasonable in the circumstances. The method used should, as much as possible, link the property or service to its use in commercial activities and in other activities.
For more information on the general rules for claiming ITCs and methods for calculating ITCs, see GST/HST Memoranda Series 8.1, General Eligibility Rules and 8.3, Calculating Input Tax Credits.
Special rules exist for calculating ITCs for capital property. In general, a non-profit organization that is a registrant (other than a financial institution), will be entitled to claim a full ITC for the GST/HST paid or payable on the acquisition of capital personal property or capital real property where the property is for use primarily (more than 50%) in its commercial activities. Alternatively, if the capital property is for use more than 50% in its exempt activities, then no ITC is available.
For more information, see Guide RC4081, GST/HST Information for Non-Profit Organizations.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments 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 613-952-9592. 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,
Heather Reardon
Charities and Non-Profit Organizations Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
Email this Content