Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
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Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 125197
Business Number: XXXXX
Attention: XXXXX XXXXX
July 7, 2010
Dear XXXXX:
Subject:
GST/HST INTERPRETATION
Application of the GST/HST to the supply of student meal plans at a university
Thank you for your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of student meal plans by the XXXXX.
HST applies at the rate of 15% in Nova Scotia, 13% in New Brunswick, Newfoundland and Labrador, and Ontario, 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) unless otherwise specified.
We understand that there is some debate in the university community over the proposed availability of a university/college meal plan that allows for a point-of-sale rebate of the provincial portion of the HST in the province of Ontario.
In the past, Ontario universities offered meal plans that were not subject to the retail sales tax (RST) in Ontario. According to your letter, meal plans supplied to students by universities in Ontario were exempt of the RST when the plan provided for at least 40 meals consisting of prepaid food products over a period of not less than four weeks at a total non-refundable cost to the student of not less than $120. The key distinction with those arrangements is that the provincial rules did not require an end date for the plan, as long as it covered a minimum of 4 weeks. In other words, unlike the criteria under the ETA, the minimum number of 40 meals can be consumed over a period of time that exceeds four weeks, potentially resulting in an average number of meals that is less than 10 per week.
Currently, you are aware of a few Ontario universities that plan to offer a meal plan that is patterned after the current RST exempt arrangements and these universities presume that the meal plans in question will be eligible for a point-of-sale rebate of the provincial portion of the HST. XXXXX,
"XXXXX".
XXXXX.
Interpretation Requested
You would like to conclusively determine the tax status of a meal plan that is patterned after the current RST exempt arrangements. That is, will a meal plan that is patterned after the current RST exempt arrangements be eligible for a point-of-sale rebate of the provincial portion of the HST?
Interpretation Given
We are unable to conclusively determine the tax status of a meal plan without a full discussion of the facts surrounding the supply. However, based on the information provided, we can clarify some of the assumptions that have led to the debate in the university community in Ontario over the availability of a point-of-sale rebate of the provincial portion of the HST in the province of Ontario with respect to the supply of a university/college meal plan.
As you are aware, a supply of a meal plan is exempt of the HST where the single consideration paid by a student for the meal plan is sufficient to provide the student with at least 10 meals each week for the period of the plan, which must not be less than one month. The calculation of whether the amount for the plan is enough for 10 meals a week should be based on the average price of a meal at the university's restaurants or cafeterias. The meals must be provided only at on campus restaurants or cafeterias at the university. The student may live on or off campus. A private operator may own or operate a restaurant or cafeteria on campus where the meals are provided.
An underlying assumption in the debate in the university community in Ontario discussed in your letter is that the meals in question are not exempt pursuant to section 13 of Part III of Schedule V to the ETA and would therefore be subject to the HST.
In general, the CRA considers a meal plan to be a prepayment of the anticipated total price of the meals involved under the plan. As such, the supply of the meals is considered to be made at the time the meal plan is sold and the single consideration for the supply of the meals is considered to be due at the time the amount is payable for the plan.
The rules for the point-of-sale rebate of the provincial portion of the HST in the province of Ontario were introduced in The Deduction for Provincial Rebate (GST/HST) Regulations under the ETA. The Deduction for Provincial Rebate (GST/HST) Regulations uses the following wording to describe the point-of-sale rebate for qualifying food and beverages:
Qualifying food and beverages sold to a person at a particular time, if the total of all consideration for all qualifying food and beverages sold to the person at the particular time is four dollars or less.
In order for meals under a meal plan to qualify for a point-of-sale rebate of the provincial portion of the HST in the province of Ontario, the total of all consideration for meals sold to the student when they purchase the meal plan would have to be four dollars or less. A meal plan that is not exempt of the GST pursuant to section 13 of Part III of Schedule V to the ETA, the total cost of which is $120, would not qualify for a point-of-sale rebate of the provincial portion of the HST in the province of Ontario.
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) 952-0420. 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,
Trent MacDonald
Charities, Non-Profit Organizations and Educational Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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