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: 215808
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
[…][Supplies of services of tutoring or instructing]
Thank you for your letter of September 18, 2019, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to a service of tutoring to individuals. 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 following based on discussions with you and […], materials found [on relevant websites], and supplemental documentation received from the corporation:
1. […] was incorporated under the Canada Business Corporations Act on [mm/dd/yyyy] […] [and] is operating as […](the Corporation) in […][the Province].
2. The Corporation is a GST/HST registrant with GST/HST account number […] effective [mm/dd/yyyy]. GST/HST has not been charged on any supplies made to-date and input tax credits have not been claimed.
3. The Corporation is not a charity, a school authority, a vocational school, a public college or a university.
4. The Corporation offers tutoring services for grades K-12. The Corporation stated in its incoming letter that its “major goal is to help children succeed in mainstream school programs and obtain required credits for future education.”
5. Tutoring is provided to special needs students as well as homeschooled and mainstream school students. All these students are learning the curriculum designated by a school authority in […][the Province].
6. The following facts relate to the Corporation’s tutoring of special needs students:
a) Tutoring is available for school grades K-8. At this time, students receiving tutoring are in school grades K-6;
b) Special needs tutoring is always 1-on-1 with the student.
c) Special needs tutoring is provided using the […][Method]. This is a […][Method] that was created in […]. It is available in the subjects of reading, writing, math and science. […].
d) The [Method] is currently being used […][by school authorities] in [the Province] […]. All tutors using the [Method] are specially trained in how to deliver […][it] successfully.
e) In some cases, arrangements are made with the student’s school to leave certain classes so they may attend [Method] tutoring on that subject […]. The parent is required to transport the student to and from their tutoring session.
f) [Method] programs are oriented toward the student’s abilities rather than their age or school grade. The [Method] grade levels closely match the curriculum of the school grade levels. Placement in the [Method] program starts with the student’s school grade as the base. After performing various tests, the Corporation will determine in what grade the student is actually performing and is comfortable and tutoring will begin at that grade level. It is not unusual for placement to be 2 or 3 grades lower than their current school grade.
g) The Corporation provided a comparison of the overall expectations to be achieved per the […][provincial] curriculum and the corresponding [Method]textbook content that meets these competencies.
h) The Corporation purchases all the materials required to deliver the tutoring. This includes all textbooks, storybooks and workbooks used by both the teachers and the students. The parent is not able to purchase the materials directly from the publisher.
i) The workbooks contain pre-printed lessons that correspond with the teacher’s textbook and other materials. Substitutions for the workbook are not possible. Students are unable to participate in the tutoring without the workbooks. The Corporation charges for the workbook on the same invoice as the tutoring service.
7. The following facts relate to the Corporation’s service of tutoring homeschooled and mainstream school students in their curriculum courses:
a) Tutoring is available for grades K-12 in all curriculum courses.
b) These students require supplemental tutoring in their curriculum based school lessons including help with homework and assignments.
c) […], the tutoring sessions are available either 1-on-1 or in group sessions […]. Under COVID restraints the tutors do not make home visits. […].
d) Materials used when tutoring mainstream students are those provided by the child’s school.
e) Parents deciding to homeschool their child must inform their school board of intent in writing at the beginning of each school year. The board accepts this written notification as evidence that the parents are providing satisfactory instruction at home. The Corporation only tutors homeschooled children that follow the school authority’s designated curriculum. As such, the Corporation assists the homeschooling parent on what materials they need to purchase, which are generally the same materials as those used by the school.
f) The Corporation provides 1-to-1 tutoring online/virtually. The student is provided with a link on a publicly available platform, such as Zoom or Google, which when accessed facilitates a face-to-face connection between the student and the tutor. This is the same tutoring service the student would receive had it been done in person.
8. […]
RULINGS REQUESTED
You would like to know:
1. Are the supplies made by the Corporation exempt?
2. Is the supply of tutoring using an online platform exempt?
RULINGS GIVEN
Based on the facts set out above, we rule that:
1. The Corporation’s supplies of a service of tutoring individuals are exempt from the GST/HST.
2. The Corporation’s supplies of a service of tutoring using an online platform are exempt from the GST/HST.
EXPLANATION
The supplies made to special needs children are a single supply of tutoring services. Although the supplies include tutoring and a workbook, the dominant element is the supply of tutoring.
The Corporation’s tutoring of students with special needs is provided using the [Method]. You provided a comparison between content in the [Method] programs and the [provincial] curriculum. The comparison consisted of listing the [provincial] curriculum’s overall expectations and listing the [Method] text book, level, and specific lessons that correspond to each expectation. The similarities between the [Method] and the [provincial] curriculum and its use by […] school authorities in [the Province] demonstrate that the program is following the curriculum designated by a school authority. Therefore, the Corporation’s supplies of tutoring special needs students in [the Province] using the [Method], together with the student workbooks, are exempt.
A supply of a service of tutoring an individual in a course that follows a curriculum designated by a school authority is exempt from the GST/HST. The Corporation’s tutoring of mainstream school students and homeschooled students is in courses that follow a curriculum designated by a school authority and is therefore exempt.
The Corporation provides the same service it supplies in-person but in an online/virtual format. The tutoring using an online platform involves human interaction, specific work that is performed for a specific student, and does not involve a supply of rights to an existing product. This format provides a mechanism to continue tutoring individuals who would normally receive tutoring in-person. The Corporation is not providing software or any other property which would facilitate the virtual tutoring. You and the student are both using publicly available platforms that make it possible for both parties to see each other. The supply of tutoring begins once each party has successfully connected via the platform and face-to-face contact has been made. The Corporation’s supplies of both the in-person and online/virtual tutoring have the same tax status as it is the exact same service being provided. Therefore, the provision of tutoring using an online/virtual format is an exempt supply.
ADDITIONAL INFORMATION
Cancelling Registration
The Canada Revenue Agency (CRA) will generally cancel the registration of a person on the request of that person where the person is registered in error (e.g., the person advises the CRA that it is engaged in a commercial activity and applies to be registered, and it is subsequently discovered that there was no commercial activity, only exempt activity). Since the Corporation is only engaged in an exempt activity, it is not required to be registered. Please refer to GST/HST Memorandum 2.7, Cancellation of Registration, for information on how to cancel the Corporation’s GST/HST registration.
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 rulings given in this letter provided that: none of the issues discussed in the rulings 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. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the rulings or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 873-455-1962. 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.
Sincerely,
Connie Carnegie
Public Service Bodies and Rebates Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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