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: 123441
November 29, 2012
Dear [Client]:
Subject: GST/HST RULING
[…] [Music Programs]
Thank you for your letter of [mm/dd/yyyy], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to […] [music programs] provided by […] ([XYZ]). We apologize for the delay in responding to your enquiry.
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 Excise Tax Act (ETA) and the regulations thereto, unless otherwise specified.
STATEMENT OF FACTS
We understand:
1. [XYZ] provides [#] [music programs]. […]. You provided the following descriptions of the [music programs]:
* […] [Descriptions of Programs A & Program B] […]
2. According to the information provided by […], the following musical concepts are taught in […] [Program B]: […]
3. […] [Students] may start […][the] programs at any age. […]. A certain set of skills must be evident before a [student] moves on to the next class.
4. […]
5. […].
6. […]
7. The […] curriculum is based, in part, on several established instructional methodologies used in music education. […]
RULING REQUESTED
You would like to know whether [XYZ]’s supplies of [music] programs are exempt from GST/HST.
RULINGS GIVEN
Based on the facts set out above, we rule that
[…] […] [Programs A] [do] not qualify as “music lessons” for GST/HST purposes. As no exempting provision applies, [XYZ] must charge GST/HST on its supplies of [Programs A].
[…] […] [Program B] [qualifies] as “music lessons” for GST/HST purposes; therefore, [XYZ]’s supplies of the [Program B] [is] exempt from GST/HST under paragraph 9(b) of Part III 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
Pursuant to paragraph 9(b) of Part III of Schedule V and the Equivalent Courses (GST/HST) Regulations, the supply of a service of tutoring or instructing an individual in music lessons is exempt from GST/HST. The Canada Revenue Agency (CRA) views a lesson as an activity designed to result in a progression or development of skills toward a pre-set lesson goal or objective. Music lessons involve formal instruction that develops skills in musical performance involving the use of the human voice or musical instruments, conducting an orchestra or musical composition.
Music lessons would not include instruction devoted to music-recording skills, music history or the teaching of techniques of music education. The fact that an activity involves music does not mean it is a supply of instruction in music or a music lesson. Activities involving music entertainment or appreciation and recreational courses that include an element of music (e.g. ballroom dancing, aerobics) would not be considered music lessons.
Whether a particular activity or program is a music lesson is a question of fact. The CRA considers the following questions to determine whether an activity or program is a music lesson. These questions are not necessarily all-inclusive or of equal significance in each particular case.
* Does the supplier provide instruction in identifiable musical skills or concepts?
* Is the program delivered in a structured and sequential manner with defined goals or objectives?
* Are students required to complete an examination or assessment to determine the appropriate class placement or starting level of instruction?
* Does the instructor provide students with feedback regarding their progress? Or are there examinations to identify the students’ progress during or upon completion of the program?
* Does the instructor possess any qualifications in music (e.g. a degree in music or other musical training)?
* Does the instructor use a recognized method of teaching music?
* Are the lessons designed to meet criteria specified by a governing body that lead to standardized assessment or certification by either the governing body or their authorized representatives?
* Does the program involve non-musical elements? If so, what proportion of the program schedule is devoted to instruction in music? Can the other elements be connected to musical concepts or methods of teaching music?
* What is the main purpose of the program? That is, is the program provided to teach musical skills, or for some other purpose such as recreation?
* How is the program advertised and promoted?
The tax status of each of [XYZ]’s programs must be considered separately. It is our view that the [Programs A] are not music lessons, […]. Therefore, [XYZ] must charge GST/HST on its supplies of these programs […] [that] are more focused on play and other activities involving music […]. […]. Although the [Programs A] […] involve music; the primary purpose of these programs is not to develop skills in musical performance, conducting an orchestra or musical composition.
We are of the opinion that the [Program B] […] qualifies as music lessons. Therefore, the program is exempt from GST/HST. [Students] in the [Program B] receive instruction in many of the fundamental elements of music and are introduced to singing, reading and writing music. In addition, the [students] learn a basic instrument, […]. The [Program B] is very structured. The program is […] designed to be taken in order as the child progresses through the program.
For your convenience, find enclosed a copy of GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-3158. 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, Non-Profit Organizations and Educational Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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