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
[Addressee]
Case Number: 203882
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Meals provided to students
Thank you for your letter of October 23, 2019, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to meals provided to students attending […][the School]. We apologize for the delay in this 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:
1. […] (the Corporation) was incorporated under […].
2. The Corporation, operating under the trade name […], provides the school lunch program at [the School]. The lunches provided are healthy and culturally diverse hot lunches and snacks. The lunches include an appetizer, a main course, and a dessert.
3. [The School] operates a private school located in […] [city, province] and teaches school children […][in elementary and secondary school], […].
4. The students and school staff members of [the School] who wish to participate in the school lunch program (the Participants) must register on the Corporation’s website. Once Participants are logged on to the website, they indicate which days of the month they will participate in the lunch program and pay the required fee.
5. You noted that the “meals are prepared by the organization and only served at the school to mainly students.”
6. An unsigned copy of […] (the Agreement) between the Corporation and [the School] was provided.
7. Under the Agreement, the Corporation provided lunch plus a morning and afternoon snack (referred to under the Agreement as the “meal plan” and “meals”) for the [yyyy-yyyy] school year.
8. […] the Corporation is also offering the meals for the [yyyy-yyyy] school year.
9. The Agreement provides for the following:
- The Corporation will provide the menu to all subscribers of the meal plan on the […] of the previous month and will not make more than […] changes to the menu in any particular month.
- [The School] will provide the facility necessary for serving the meals. The Corporation will provide disposable plates and cutlery to all students […].
- There is no meal preparation done on [the School] premises.
- The lunches are served in the following locations:
i. for [grade #], the lunch is served inside the classroom;
ii. for Participants in grades [#] to [#], the lunch is served in the […][the multipurpose room];
iii. for Participants in grades [#] to [#], the lunch is served in the […][dining area].
The location where the morning and afternoon snacks are served is not provided.
- [The School] will provide the Corporation a calendar showing schedule modifications and days where food service will not be required.
- [The School] may request complementary food services for special events located on campus for a separate fee.
- Parents and staff register on the website to receive food service and pay the Corporation directly. They may opt to order by term or by year.
10. The price for the school lunch program for the [yyyy to yyyy] school year was $[…] per meal.
11. In a conversation with one of our field officers you noted that:
- The Corporation does not sell through vending machines on [the School] premises.
- No prescribed foods or beverages are sold individually.
12. The Corporation has been charging tax on the food and beverages provided through the school lunch program to the Participants.
13. The Corporation is registered for GST/HST purposes under business number […].
RULING REQUESTED
You would like to know if the food and beverages provided to the students and staff at [the School] under the Agreement are subject to the HST.
RULING GIVEN
Based on the facts set out above, we rule that the food and beverages provided to students and staff at [the School] under the Agreement are exempt from the HST.
EXPLANATION
Most food or beverages sold in an elementary or secondary school cafeteria primarily (more than 50%) to students of the school are exempt from the HST.
This exemption does not extend to sales of food or beverages supplied through vending machines.
Supplies of certain food and beverages, known as prescribed food and beverages, are also excluded from the exemption.
In addition, the exemption does not include private catering services provided through a school cafeteria for a private party, reception, meetings or similar private event.
The food and beverages provided to the students and staff of [the School] are supplied in rooms which are used as cafeterias during the lunch period. Also, the food and beverages are provided primarily to students of [the School]. As such, the food and beverages provided to the students and staff at [the School] are exempt from the HST.
Additional information may be found in GST/HST Memorandum 20.5, School Cafeterias, University and Public College Meal Plans, and Food Service Providers, available on our website.
Generally, a GST/HST registrant is eligible to claim input tax credits to recover the GST/HST it pays to the extent that its purchases and expenses are inputs into making taxable supplies for consideration. No input tax credit is available where a purchase or an expense was incurred for the purpose of making exempt supplies (such as the food and beverages provided under the Agreement), or for a purpose other than the making of supplies. For more information, see Guide RC4022, General Information for GST/HST Registrants.
GST/HST collected in error
Where a supplier has collected GST/HST in respect of an exempt supply, the GST/HST has been collected in error.
Where a person has charged or collected an amount as or on account of GST/HST in error on an exempt supply, the person has the option to adjust, refund or credit the excess tax within two years after the day the amount was so charged or collected. If the person chooses to adjust, refund, or credit the excess amount of GST/HST, a credit note containing prescribed information must be issued by the person to the recipient within a reasonable time. The person may also make an adjustment to its net tax calculation to account for any adjustment, refund or credit of an amount of tax charged or collected in error to the extent that the amount was included in determining the net tax for the reporting period or a prior reporting period.
Alternatively, persons (that is, students and staff members purchasing meals under the Agreement) that paid an amount as or on account of GST/HST in error on supplies that are exempt may file an application for a rebate of amounts paid in error. However, if they have claimed an input tax credit with respect to an amount of GST/HST paid in error, they cannot also claim the same amount as a rebate. Form GST 189, General Application for Rebate of Goods and Services (GST)/Harmonized Sales Tax (HST), is used to apply for the rebate. The time limit to apply for this rebate is within two years after the day the amount was paid.
Additional information concerning tax collected in error may be found in GST/HST Memorandum 12.2, Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act. Further information regarding rebate claims is set out in Guide RC4033, General Application for GST/HST Rebates.
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. The interpretation given in this letter, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, […]. 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,
Desneiges Arbour
Charities, Non-profit Organizations and Educational Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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