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: 204089
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
[…][Supplies of Services of Tutoring or Instructing]
Thank you for your fax of October 29, 2019, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to supplies of services made by […](the Partnership). We apologize for the delay in our 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 that the following statement of facts applies to your situation.
1. […] are partners in a partnership (the Partnership) which operates under the name […]. The partnership has registered for GST/HST purposes under the above noted Business Number.
2. The Partnership is engaged in a business of instructing elementary and secondary school students in writing skills using a program designed by the partners […](the Program). The provision of the Program is the only business activity of the Partnership.
3. The Partnership has not collected any GST/HST on its supplies since it began operating.
4. The Program is not approved for credit by a school authority in […][the Province] and completion of the Program is not a requirement for admittance into a course that is approved for credit by a school authority in [the Province].
5. The Program is a student enhancement program designed to promote language skills that follow and expand upon the standard school curriculum. The Program is intended to aid students in preparation for secondary and post-secondary educational success.
6. The Program helps students develop high proficiency levels in writing. The Program focuses on grammar, vocabulary, essay writing, literary analysis, research, and public speaking skills. The Program is provided at the grade/skill level of each student, but goes further in depth into the writing skills than the regular school curriculum. […].
7. The Program is offered […] to elementary and secondary school students in grades […].
8. Admission to the Program is by application […].
9. The Program is split into three levels. Level one is for students in grades […]; level two is for students in grades […]; and level three is for students in grades […]. The Partnership provided an outline of the weekly course work for each level.
10. Levels 1 and 2 reflect the expectations for writing for grades […] from […][the Provincial] Curriculum […]. Level 3 reflects the expectations for writing for grades […] from [the Provincial Curriculum […]. Each level provides students with key skills and support resources that they can immediately apply to their school work.
11. [The Provincial] Curriculum is the curriculum designated by […][the school authorities], which operate schools in your region.
12. The Program is led by instructors who are educated professionals with degrees in related fields that have been trained to work with children in an iterative process of teaching and learning.
13. The Program runs […] sessions. Each session involves classroom-style instruction in a small group, assignments, and individual interaction with the instructor.
14. The instructor works collaboratively with each student to hone their individually strong skills, and enhance other areas in which they may need more concentrated attention.
15. The instructor evaluates student progress using written assignments, presentations, and examinations. Feedback is provided to the students and their parents consistently throughout the Program and in the form of progress reports.
RULING REQUESTED
You would like to know if the Partnership’s supplies of services of instructing through the Program are exempt from the GST/HST.
RULING GIVEN
Based on the facts set out above, we rule that the Partnership’s supplies of services of instructing individuals through the Program are exempt from the GST/HST.
EXPLANATION
Paragraph 9(a) of Part III of Schedule V exempts a supply of a service of tutoring or instructing an individual in a course that is approved for credit by, or that follows a curriculum designated by, a school authority. “School authority” is a term defined in the ETA to mean “an organization that operates an elementary or secondary school in which it provides instruction that meets the standards of educational instruction established by the government of the province in which the school is operated.”
The Program is not a course that is approved for credit by a school authority. As a result, a supply of tutoring or instructing an individual in a course that follows a curriculum designated by a school authority is the only possible exemption that could apply to the Program.
The Program is an instructional program in writing skills that targets students in grades […]. [The Provincial] Curriculum is the curriculum designated by school authorities in the province where the Partnership operates. Writing skills are an essential part of [the Provincial] Curriculum. As a result, the Program involves the making of supplies of tutoring or instructing an individual in a course that follows a curriculum designated by a school authority. Therefore, these supplies are exempt from the GST/HST.
ADDITIONAL INFORMATION
Deregistration
The Partnership is neither required nor permitted to be registered for GST/HST purposes as its only business activity is the making of exempt supplies. For greater certainty, the Partnership is eligible to cancel its registration for GST/HST purposes. Registrants are to inform the CRA of situations requiring the cancellation of registration, as well as any circumstances requiring an amendment of registration. To cancel your GST/HST registration, please send us completed Form RC145, Request to Close Business Number Program Accounts. Alternatively, you may request cancellation of your registration by calling our Business Enquiries line at 1-800-959-5525 or in writing as long as all necessary information is received. You may wish to refer to GST/HST Memorandum 2-7, Cancellation of Registration, for further information.
Input tax credits
A GST/HST registrant is generally eligible to claim an input tax credit (ITC) for the GST/HST paid or payable on property and services acquired by the registrant for consumption, use or supply in its commercial activities. The definition of “commercial activity” in subsection 123(1) excludes a business involved in the making of exempt supplies. Therefore, where a person, e.g., a Partnership, has incurred an expense in relation to an exempt activity, there would not be an entitlement to claim an ITC to recover any of the GST/HST paid on the expense.
For more information on ITCs, please refer to GST/HST Memorandum 8.1, General Eligibility Rules, and 8.2, General Restrictions and Limitations.
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. Any additional information given in this letter 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 additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 343-573-6095. 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,
Andrew Kaye
Government Sectors and Indigenous Affairs Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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