Dear Sir:
This is in response to your memo of November 18, 1993, to Don Dawson, concerning the application of GST to supplies made by the XXXXX[.]
In your memo, you stated that under the present policy, aircraft rental for the purpose of completing solo flying time requirements for a commercial pilot's licence is not considered to be a supply of a tax exempt educational service. However, we are not in agreement with your interpretation of the present policy on the matter.
The present policy, as outlined in our policy paper on the subject, is that a supply of an aircraft to a person so that they can complete solo flying time requirements leading to a commercial pilot's licence is exempt of tax pursuant to section 8 of Part III of Schedule V to the Excise Tax Act. The policy paper on solo flying time refers to two different types of supplies made in respect of the obtaining of a commercial pilot's licence. The student is required to complete thirty-five hours of dual flying time, during which the instructor is in the aircraft providing instruction, and thirty hours of solo flying time without the instructor present. Both types of supplies are considered to be exempt of tax pursuant to section 8 of Part III of Schedule V to the Act. This is because the cost of dual and solo flying time up to the minimum flight training requirements to obtain a commercial pilot's licence is considered to be part of the student's tuition.
You indicated that the invoice from the XXXXX which you forwarded to us pertained to the rental of aircraft for completing solo flying time requirements. However, it appears instead to be an invoice for instruction and aircraft rental pertaining to the dual flying time portion of the training. Where the rental of the aircraft is considered to be part of the tuition, it is exempt. The rental of an aircraft for this purpose is considered to be exempt pursuant to section 8, regardless of whether a single charge is made for the instruction and rental or whether separate charges are made on the invoice.
The rental of an aircraft to a student in order to allow the student to fulfil the solo flying time requirement is also exempt of tax pursuant to section 8, regardless of how it is billed. Our policy, as outlined in the attached policy paper on solo flying time, is that charges made for the rental of an aircraft for purposes of completing solo flying time requirements for a commercial pilot's licence should be regarded as consideration for an supply of an educational service that is exempt pursuant to section 8. The wording of the invoice does not affect the tax status of the supply.
In your memo, you asked whether the policy on single and multiple supplies will affect the solo flying time policy paper. The policy on single and multiple supplies does not alter the tax status of the supplies at issue, since our decision to treat the rental of aircraft as a tax exempt supply of educational services is an administrative decision, taken in order to keep our policy in line with Income Tax policy. Therefore, the provision of an aircraft for either dual flying time or solo flying time as part of the training toward a commercial pilot's licence is considered to be exempt of tax as an educational service pursuant to section 8, regardless of whether it is billed separately or as part of one amount, and regardless of the wording of the invoice. However, a supply of an aircraft by way of rental for a purpose other than completion of training required to obtain a commercial pilot's licence, or a class or rating in respect of such a licence, is taxable.
We hope that the information provided is of assistance to you. If you have any questions regarding this letter, please do not hesitate to contact Mr. Don Dawson at (613) 954-4393 here in Ottawa.
Sincerely,
J.A. Venne
Director
Tax Policy - Special Sectors
Policy and Legislation
Excise/GST
| c.c.: |
J.A. Venne
J. Houlahan
D. Dawson |
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