File: 11910-5(DRM)
Doc: 2655
Subsection 123(1)
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Subject:
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GST Rebates - Public College
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Dear XXXXX
I refer to your facsimile transmission of December 1, 1995 wherein you requested a review of policy statement [P]-186 "Funding for Public Colleges". It is your opinion that the phrase "funded by a government or a municipality" in the definition of "public college" should be interpreted in accordance with the definition of "government funding" as defined in the Public Service Body Rebate (GST) Regulations. You are concerned that the requirement for funding by a government or a municipality as articulated in the policy statement is too restrictive. Furthermore, you indicate that the Department had issued binding rulings to various educational institutions stating that "monies received from the government department in respect of training persons who qualified under a particular agreement constituted government funding".
It is the Department's position that the phrases "government funding" and "funded by a government or a municipality" are separate and distinct and should be interpreted as such. Government funding as defined in the Public Service Body Rebate (GST) Regulations applies specifically to section 259 of the Excise Tax Act (the ETA) to determine whether a non-profit organization qualifies for a rebate under that section. The aforementioned regulation is not intended to give guidance as to what constitutes "funded by a government or a municipality" for the purpose of determining whether an organization qualifies as a public college. Specifically, the regulation does not refer to subsection 123(1) of the ETA and the definition of public college therein.
As such, the Department has developed the following policy position in order to address the requirements for an organization to qualify as a public college:
In order for an organization to qualify as a public college it must meet the requirements set out in the definition of "public college" in subsection 123(1) of the ETA, and clarified by the policy paper. As such the organization (i.e., not an individual operating as a sole proprietor) must be operating a post-secondary college or post-secondary technical institute. In order for a facility in Canada to be considered a college, it must be established and operated pursuant to the relevant provincial legislation governing the establishment of "colleges". Similarly, in order for a facility to be considered a technical institute, it must be registered or licensed as an educational institution pursuant to relevant provincial legislation. Also, the organization must have as part of its normal admission standards the requirement that the prospective student have either a secondary school diploma or mature student status.
The definition of "public college" requires that the primary purpose of the college or technical institute must be to provide programs of instruction in one or more fields of vocational, technical or general education. In other words it must satisfy a primary purpose test.
Furthermore, pursuant to the definition of "public college" the organization must be funded by a government or a municipality. The policy statement establishes that money received by the college under an agreement with a government or a municipality to compensate the organization for training provided to specified individuals who qualify as a result of the particular agreement does not constitute government funding. "Funded by a government" means that the money received from the municipality or government is for the ongoing delivery of educational programs by the college to the general public.
Organizations that were issued rulings by the Department wherein they were misinformed as to whether they qualified as public colleges in accordance with subsection 123(1) of the ETA, must be examined in order to determine if all the requirements are met. Note, the Department will not reassess on any amount claimed as a rebate, by these organizations, prior to the issuance of the policy statement (September 11, 1995). However, organizations that claimed rebates as public colleges but were not eligible, and did not receive rulings from the Department on this issue, have erroneously filed rebate claims, and may be reassessed on those amounts.
If you have any questions or comments, please do not hesitate to contact Joanne Houlahan, Manager, Public Service Bodies, at (613) 954-7945 or Dwayne Moore, Tax Policy Officer, at (613) 954-4206.
Yours truly,
J.A. Venne
Director
Special Sectors
GST Rulings & Interpretations
c.c.: D. Moore
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