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: 59528
October 26, 2012
Dear [Client]:
Subject: GST/HST INTERPRETATION
[…][Student meal plans]
Thank you for your letter of March 15, 2005, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the interpretation of section 13 of Part III of Schedule V to the Excise Tax Act (ETA). We apologize for the delay in our response.
HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the ETA unless otherwise specified.
INTERPRETATION REQUESTED
You would like to know if
1. Students can purchase snack foods such as chocolate, chips, pop, candy, etc., from the cafeteria. Can these purchases be made under a GST exempt meal plan?
2. A college has a cafeteria and convenience store on campus. Items sold at the cafeteria are also available at the convenience store, i.e., muffins, sandwiches, pizza, 500ml milk, 600 ml pop or chips, etc. The convenience stores have tables and chairs just outside of the store that students can use to consume the products. Can these items be purchases under the GST exempt meal plan?
Some of the convenience stores also have tables and chairs within the store where students can consume items such as sandwiches, muffins, coffee, pop chips, etc. Can these items be purchased under the GST exempt meal plan?
3. Some convenience stores also offer grocery items for sale such as loaves of bread, cans of soup, cartons of milk or juice, etc. Can these zero-rated items be purchased on a declining balance debit card meal plan account? Will this put the meal plan offside?
4. A student purchased a qualifying meal plan with the minimum threshold at the beginning of the school year but does not use it up by the end of the school term when the meal plan is no longer valid. The student is either refunded the balance or it is carried forward for the student for the new school year or is forfeited to the school. Does this mean that the student’s meal plan is no longer GST exempt since he/she did not fully spend the required amount? If it is not GST exempt do we assess GST on the total amount the student spent? How do we handle the balance if the student wants to carry forward the balance for the new school year?
5. A student purchases a qualifying meal plan at the beginning of the year. The student wants to top up this meal plan by transferring an amount from a non meal plan account (i.e., off campus meal account or mini-mart purchase account). Will the meal plan account still qualify for the GST exempt status?
6. A student purchases a meal plan for the whole school year. The student plan meets all the qualifications except that he/she pays for the meal plan in two equal instalments. Will this meal plan still qualify for GST exemption?
INTERPRETATION GIVEN
Under section 13 of Part III of Schedule V to the ETA, the following supply is exempt of the GST/HST:
“A supply of a meal to a student enrolled at a university or public college where the meal is provided under a plan that is for a period of not less than one month and under which the student purchases from the supplier for a single consideration only the right to receive at a restaurant or cafeteria at the university or college not less than 10 meals weekly throughout the period.”
Therefore, meals provided to a student under a meal plan that meets all of the following conditions (herein referred to as a “qualifying meal plan”) are exempt under section 13 of Part III of Schedule V to the ETA:
* The meals are provided to a student enrolled at the university or public college who lives either on-campus or off-campus.
* The student pays a single amount for the plan.
* The single amount is sufficient for the student to receive at least 10 meals each week for the period of the plan.
* The plan is for a period of at least one month.
* The meals are served only at an on-campus restaurant or cafeteria (i.e., on the property of the university or public college). A private operator may own or operate the restaurant or cafeteria where the meals are served, provided it is on campus.
Taking into consideration the requirements of section 13 of Part III of Schedule V, we will respond to each of your questions individually.
1. Students can purchase snack foods such as chocolate, chips, pop, candy, etc., from the cafeteria. Can these purchases be made under a GST exempt meal plan?
It is the supply of meals that is exempt under a qualifying mean plan. The ETA does not define the term “meal”. Generally, we consider the general dictionary meaning of terms that are used but not defined in the ETA. In the case of a meal, we would consider that a meal is any of the regular daily occasions when food is eaten, that is, a meal is generally breakfast, lunch or dinner.
The Canada Revenue Agency (the CRA) considers that food or beverages that meet the exceptions to the zero-rating provision in paragraphs 1(a) to (n), (o.4), (p) and (r) of Part III of Schedule VI are not a meal in and of themselves. Examples of items included in these provisions are candies, confectionary that may be classified as candy, potato chips, single servings of ice cream and carbonated beverages. For a complete list, please refer to GST/HST Memoranda Series 4.3 Basic Groceries.
A meal plan that allows the purchase of any of the items enumerated in paragraphs 1(a) to (n), (o.4), (p) and (r) of Part III of Schedule VI, other than as part of a meal, will not be a qualifying meal plan. Therefore, section 13 of Part III of Schedule V would not exempt any purchase made under this type of plan.
2. A college has a cafeteria and convenience store on campus. Items sold at the cafeteria are also available at the convenience store, i.e., muffins, sandwiches, pizza, 500ml milk, 600 ml pop or chips, etc. The convenience stores have tables and chairs just outside of the store that students can use to consume the products. Can these items be purchases under the GST exempt meal plan?
Some of the convenience stores also have tables and chairs within the store where students can consume items such as sandwiches, muffins, coffee, pop chips, etc. Can these items be purchased under a GST exempt meal plan?
In part, a qualifying meal plan is one that only allows the right to receive a meal at a restaurant or cafeteria at the university or college. It is the CRA’s position that for purposes of section 13 of Part III of Schedule V a convenience store is not a restaurant or cafeteria. As a result, a meal plan that allows purchases at a convenience store will not be a qualifying meal plan and section 13 of Part III of Schedule V would not exempt any purchase made under this type of plan.
3. Some convenience stores also offer grocery items for sale such as loaves of bread, cans of soup, cartons of milk or juice, etc. Can these zero-rated items be purchased on a declining balance debit card meal plan account? Will this put the meal plan offside?
See response to question number 2.
4. A student purchased a qualifying meal plan with the minimum threshold at the beginning of the school year but does not use it up by the end of the school term when the meal plan is no longer valid. The student is either refunded the balance or it is carried forward for the student for the new school year or is forfeited to the school. Does this mean that the student’s meal plan is no longer GST exempt since he/she did not fully spend the required amount? If it is not GST exempt do we assess GST on the total amount the student spent? How do we handle the balance if the student wants to carry forward the balance for the new school year?
The tax status of a supply for purposes of section 13 of Part III of Schedule V is to be determined at the time the student initially enters into the agreement with the supplier and will not be impacted if, at the end of the plan period, unused funds may be refunded or carried forward for use in the future.
Where an unused balance is carried forward for future use, whether GST/HST will apply will depend on whether that amount is consideration for a supply and the tax status of that supply at the time the consideration is paid or becomes due.
5. A student purchases a qualifying meal plan at the beginning of the year. The student wants to top up this meal plan by transferring an amount from a non meal plan account (i.e., off campus meal account or mini-mart purchase account). Will the meal plan account still qualify for the GST exempt status?
The CRA considers “top-ups” or the addition of funds to a qualifying meal plan to be additional consideration for the same supply. As such, the tax status of meals under a qualifying meal plan is not impacted by “top-ups” or the addition of funds to the qualifying meal plan.
6. A student purchases a meal plan for the whole school year. The student plan meets all the qualifications except that he/she pays for the meal plan in two equal instalments. Will this meal plan still qualify for GST exemption?
Section 13 of Part III of Schedule V requires that “the student purchases from the supplier for a single consideration”. Although “single consideration” is not defined in the ETA, under subsection 123(1) “consideration” is defined to include any amount that is payable for a supply by operation of law.
Where a student enters into an agreement for a meal plan and the agreement specifies that there is a single consideration, but that payment for that consideration may be made on an instalment basis, the CRA accepts that this type of arrangement meets the requirement of “single consideration” under section 13.
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 613-954-4206. 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,
Carol A Gaudet
Charities, Non-Profit Organizations and Educational Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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