25 May 2007 GST/HST Interpretation 59376 - XXXXX GST/HST Visitor Rebate on Short-term Accommodation

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.

Dear XXXXX:

Thank you for your fax XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the sale of books by an online high school.

All legislative references are to the Excise Tax Act (ETA) and the regulations therein, unless otherwise specified.

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX (the School) is a privately incorporated entity that operates an Internet high school in the province of XXXXX on a for-profit basis. The School is accredited by the XXXXX.

2. The School's mission is to make education available to all those who are aspiring to obtain their high school diploma, yet for various reasons find it difficult to attend conventional classroom courses. To do this the School has created an Internet-based high school curriculum that can be accessed both anywhere and at anytime.

3. The School is designed to provide high school education for many types of students including:

•   Students that require a course that their own local high school is not offering in a particular semester.

•   Students who are pursuing careers in professional athletics or arts and must travel a great deal during the school year.

•   Students with health related issues that prevent them from attending a traditional high school.

•   Mature students who are working full time and do not wish to attend night school.

•   Students who are seeking entry into a college or university program and are missing a necessary prerequisite.

•   International students that are seeking Canadian education.

4. The School is required to follow the curriculum and course standards set forth by the XXXXX. In addition the XXXXX sets diploma requirements and sets policy for student assessments that the school must follow.

5. Credits towards an XXXXX Secondary School Diploma are granted by the principal of the School on behalf of the XXXXX for courses that have been developed or approved by the XXXXX. A half credit may be granted for each XXXXX-hour part of a XXXXX-hour XXXXX course. Half-credit courses must comply with XXXXX requirements as outlined in the curriculum policy documents. Partial credits may be granted for the successful completion of certain locally developed courses.

6. The XXXXX inspects and reviews the curriculum and courses on a periodic basis to insure that they meet XXXXX standards.

7. The School sells the textbooks required for each course and will courier the books to students after they have registered and ordered the textbooks. Included in the listed price of each textbook is taxes and shipping within the province XXXXX. Shipping textbooks outside of the province of XXXXX will require additional shipping charges.

8. The School is registered for purposes of the GST/HST.

9. The School is a school authority for purposes of the ETA.

Ruling Requested

You would like to know:

1. Is the School required to charge the GST/HST on textbooks sold to students? If so, is the GST/HST required to be collected on textbooks that are delivered outside of the Province XXXXX?

2. Is the GST/HST required to be collected on textbooks that are delivered outside of the country?

3. Are the courses offered at the school exempt of the GST/HST?

4. Is the School able to claim an input tax credit for all GST/HST paid in the course of operating the School even though it only charges the GST/HST on sales of textbooks?

Ruling Given

Based on the facts set out above, we rule that

1. As a registrant for purposes of the GST/HST the School is required to charge and collect the GST/HST on the supply of textbooks at the rate of 6% on the value of consideration for that supply, provided the supply is made in Canada. If that supply is made in one of the participating provinces (Nova Scotia, New Brunswick and Newfoundland and Labrador), the School is required to charge and collect an additional tax of 8%. A supply of a textbook is deemed to be made in a province if it is made in Canada and the supplier delivers the property or makes it available in the province to the recipient of the supply (e.g. the School sends the property by mail or courier to an address in the particular province).

2. A supply of a textbook by way of sale is deemed to be a supply made outside Canada when delivered or made available outside Canada. The School is not required to collect the GST/HST on textbooks delivered outside Canada.

3. The courses offered at the School are exempt of the GST/HST pursuant to section 2 of Part III of Schedule V.

4. The School as a registrant for purposes of the GST/HST is allowed to claim an input tax credit on the GST/HST paid or payable on property or services that it acquires or imports for the purpose of making taxable supplies (including supplies of textbooks that are made outside of Canada). The GST/HST paid or payable for the purposes of making exempt supplies of instructing individuals in courses that are provided primarily for secondary school students is not eligible to be claimed as an input tax credit.

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.

ADDITIONAL INFORMATION

The School is a school authority for purposes of the ETA. As such it is entitled to file for Public Service Bodies Rebates. Please visit our website at http://www.cra-arc.gc.ca/E/pub/gp/rc4034/rc4034-e.html for information found in our guide RC4034, GST/HST Public Service Bodies' Rebate. Additional information is available on the website concerning many other GST/HST topics.

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

2007/04/24 — RITS 61048 — Tax Status of Fees in XXXXX