Doc 555
Ref: S 3, Pt VI, Sch V
11830-5-4(MB)
XXXXX January 31, 1995
Dear XXXXX
This is in reply to your letter of February 8, 1993, in which you request a written approval as to whether the charity volunteer exemption under section 3 of Part VI of Schedule V of the Excise Tax Act (ETA) applies to supplies made by the XXXXX . The information that you have provided is not sufficient for us to issue a definitive ruling; however, we will provide the following general interpretation concerning the volunteer exemption, with reference to the information that you have provided. This interpretation is based upon our current understanding of the ETA and regulations thereunder in their present form and do not take into account the effects of any proposed or future amendments thereto or future changes in interpretation.
We apologize for the delay in responding but trust that this general interpretation may still be helpful.
Statement of facts:
1) XXXXX is a charity for GST purposes.
2) XXXXX organizes a number of fundraising events for the benefit of special Olympians.
3) The operation and administration of these events involves both employees of XXXXX and volunteers.
Issue:
On the basis of the above, XXXXX requests written confirmation that they qualify for the charity volunteer exemption pursuant to Section 3 of Part VI of Schedule V of the ETA as it applies to supplies of admissions to the fundraising events in question.
Reply:
Paragraphs 3(a) and 3(b) of Part VI of Schedule V of the ETA provide that where a charity supplies property or services in the course of a business, or an activity that is not part of an on-going business, those supplies are exempt if the day-to-day administrative and other functions involved in carrying on the business or activity are performed exclusively by volunteers.
For the purpose of this provision, the Department interprets "volunteer" as a person who provides services and is not remunerated or entitled to remuneration by the charity, in return for providing those services.
"Administrative functions" is interpreted as any activity which relates to the management, conduct, planning, supervision and direction of a business or other activity such as, the performance of executive duties, the direction or oversight of any office, services or employment. "Other functions" means any activity, other than administrative activities, related to the operation of a business or other activity.
In paragraph 3(a), the reference to administrative functions and other functions is modified by the phrase "day to day". Activities of XXXXX such as a board of director's meeting which takes place once or twice a year would not be included when determining the volunteer contribution.
The determination of whether the "exclusively" test can be satisfied should be based on whether generally 90% or more of the work is performed by volunteers, rather than whether 90% or more of the people performing the work are volunteers. Accordingly, the hours worked by volunteers versus non-volunteers would be an appropriate measurement of the volunteer participation, rather than the ratio of paid to unpaid staff. Although there is flexibility in choosing the method for measuring the volunteer contribution, the result of this calculation must reflect the actual amount of time work was performed by a volunteer in comparison to an employee or contractor, to satisfy the requirements of the volunteer exemption.
The document submitted by XXXXX states the number of paid employees versus volunteers. This information does not allow a measurement of actual work performed by volunteers versus that performed by paid employees of XXXXX We trust this information will be of assistance. If you have further questions regarding these matters, please contact Michèle Brûlé at (613) 952-9208. If you have other questions regarding the GST, please contact the XXXXX District Office at XXXXX
Yours truly
J.A. Venne
Director
Tax Policy - Special Sectors
GST Policy and Legislation
| c.c.: |
J. Houlahan
M. Brûlé
J. Phillips XXXXX |
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