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 0L5XXXXX
XXXXX
XXXXX
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Case Number: 46094XXXXX
XXXXXAugust 10, 2006
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Subject:
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GST/HST RULING
Application of the GST/HST to the affairs of XXXXX.
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Dear XXXXX:
Thank you for your letter XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the affairs of the XXXXX (the Academy). We apologize for the delay in our response.
Effective July 1, 2006, the rate of the GST has been reduced from 7% to 6% and the rate of the HST from 15% to 14%. The new rates apply to supplies for which the GST/HST is paid on or after July 1, 2006, without having become payable before that date. Specific transitional rules apply to certain supplies, for example, real property. For more information on the transitional rules for the reduction of the GST/HST rate, please refer to Reduction in the Rate of the GST/HST - Questions and Answers (http://www.cra-arc.gc.ca/agency/budget/2006/gstrateqa-e.html) on the CRA Web site.
Statement of Facts
Our understanding of the situation is as follows:
1. XXXXX (the Academy) is a career college registered under the XXXXX. The Academy is a sole proprietorship operated by XXXXX on a for-profit basis. The Academy was established solely to provide instruction in welding courses that develop or enhance student's occupational skills. Currently 100% of the revenues of the Academy come from providing instruction in courses in the field of welding. The Academy receives no money from public sources of funding.
2. The Academy makes supplies of instruction in various welding courses. They include:
• XXXXX.
• XXXXX.
• XXXXX.
• XXXXX.
• XXXXX.
3. Courses include a theory portion that involves classroom/book instruction and three written tests that are marked on a pass/fail basis. With all courses, students also receive individual hands-on instruction in the use of hand torches, semi-automatic torches, gouging and plasma cutting. All courses (other than gouging) include the applicable XXXXX test. The Academy requests an inspector from the XXXXX to come to the school to perform the test. Students are not allowed to take the test until they are ready to pass.
4. XXXXX.
5. XXXXX:
XXXXX.
6. XXXXX,
XXXXX,
XXXXX.
7. XXXXX:
XXXXX.
8. XXXXX:
XXXXX.
9. XXXXX:
XXXXX.
XXXXX.
XXXXX.
XXXXX.
XXXXX.
XXXXX.
XXXXX.
XXXXX.
XXXXX,
(a) XXXXX; and
(b) XXXXX.
XXXXX,
(c) XXXXX;
(d) XXXXX;
(e) XXXXX; and
(f) XXXXX.
XXXXX,
XXXXX.
10. The Academy has not filed an election under either section 6 or 8 of Part III of Schedule V to the Excise Tax Act (ETA).
Ruling Requested
You would like to know if the instruction in courses that you provide is exempt from the GST.
Ruling Given
Based on the facts set out above, we rule that the instruction in courses listed below that lead to certificates or diplomas that attest to the competence of individuals to practise or perform a trade or vocation are exempt from the GST pursuant to section 8 of Part III of Schedule V to the Excise Tax Act (ETA).
• XXXXX
• XXXXX
• XXXXX
• XXXXX
• XXXXX
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Goods and Services Tax Rulings. We are bound by this ruling provided that none of the above issues is 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
A vocational school is defined in section 1 of Part III of Schedule V to the ETA to mean, "an organization that is established and operated primarily to provide students with correspondence courses, or instruction in courses, that develop or enhance students' occupational skills." The CRA recognizes that the term organization can include sole proprietorships. As the Academy is an organization that was established solely to provide instruction in welding courses that develop or enhance student's occupational skills, and currently, 100% of the revenues of the Academy come from providing instruction in courses in the field of welding, the Academy is considered a vocational school for purposes of the ETA.
As a vocational school, instruction provided by the Academy in a course that leads to both a certificate and a diploma that attests to the competence of an individual to practise or perform the trade of welding would be an exempt supply pursuant to section 8 of Part III of Schedule V to the ETA.
The ruling provided herein applies only to instruction in courses supplied by the Academy and more specifically only to instruction in courses supplied by the Academy that lead to certificates and diplomas that attest to the competence of individuals to practise or perform a trade or vocation.
The Canada Revenue Agency considers that, in order for a certificate or diploma to attest to an individual's competence, the individual's performance in the course must have been evaluated based on a single, or series of, tests, graded materials or projects. If a course is part of a series of courses making up a program, the individual's performance may be evaluated on the program as a whole. Certificates, diplomas or other documentation that has been awarded based on attendance alone, class participation alone, or a combination of the two, is not considered to attest to the individual's competence.
For this reason, caution should be taken in using the rationale of this ruling to judge the tax status of instruction in other courses or other services offered by the Academy or other welding schools not contemplated in this ruling.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-0329.
Yours truly,
Trent MacDonald
Charities, Non-Profit Organizations and Educational Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
2006/08/15 — RITS 56497 — Fund-raising Campaign
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