File 11915-7-3
Ref. 8/III/V
Document 455
Dear sir:
This is in response to your letter of January 6, 1993, to Mr. Don Dawson, concerning the application of GST to supplies of dance instruction made by dance schools.
Facts
1. XXXXX was incorporated in 1978 as a for-profit private dance school that offers dance instruction to people of all ages.
2. XXXXX is a registered teacher of the Royal Academy of Dancing and provides instruction in the Academy's Children's Syllabus and its Major Exam Syllabus. XXXXX also provides instruction in dancing for students wishing to obtain their Student Teaching Certificate, and provides dance instruction for the Canadian Dance Teacher Syllabus, which has the same structure as the Royal Academy of Dance exams. Certificates are issued to the students when they successfully complete of an examination in respect of such syllabi.
3. XXXXX does not meet the definition of "private vocational school" in section 2 of the Private Vocational Schools Regulation Act, because it is not considered to offer instruction in any vocation. It is therefore not required to register pursuant to section 6 of that Act, or otherwise be governed by that Act.
4. XXXXX is certified by the Minister of Employment and Immigration for purposes of subsection 118.5(1) of the Income Tax Act (ITA).
5. The total taxable supplies made by XXXXX was greater than $30,000.
6. XXXXX was not registered for GST purposes at the time of your letter, and had not charged or collected GST on any dance fees.
7. In a letter dated November 22, 1990, the Department notified XXXXX that supplies of dance instruction by private dance studios would be subject to GST.
8. The first written information that XXXXX received from the Department was your letter of September 9, 1992.
9. The Honourable Otto Jelinek, then the Minister of National Revenue, sent a letter to XXXXX in response to its letter of September 16, 1992. The Minister outlined GST policy concerning supplies of dance instruction by a private dance school. You indicated that XXXXX has since begun collecting and remitting GST as a result of your letter and the Minister's letter to them on the issue.
Request
1. Will the supplies of dance instruction or administering examinations in respect of such instruction, such as those provided by XXXXX , be exempt under section 8 of Part III of Schedule V if the dance instruction is solely for recreational purposes?
2. What is the meaning of the phrase "the supplier is governed by federal or provincial legislation respecting vocational schools"?
Response
1. The supplies of a service of dance instruction by a private dance studio, such as those provided by XXXXX are taxable.
XXXXX qualifies as a vocational school as defined in section 1 of Part III of Schedule V to the Excise Tax Act (ETA). Section 1 defines "vocational school" as an organization that is established and operated primarily to provide students with
(a) correspondence courses, or
(b) instruction in courses
that develop or enhance students' occupational skills and includes an educational institution that is certified by the Minister of Employment and Immigration for the purposes of subsection 118.5(1) of the ITA.
Section 8 of Part III of Schedule V to the ETA exempts a supply, other than a zero-rated supply made by a vocational school of a service of instructing individuals in, or administering examinations in respect of, courses leading to certificates, diplomas, licences or similar documents that attest to the competence of individuals to practise or perform a trade or vocation where
(a) the document is prescribed by federal or provincial regulation;
(b) the supplier is governed by federal or provincial legislation respecting vocational schools; or
(c) the supplier is a non-profit organization or a charity.
The document is considered to be prescribed by federal or provincial regulation if the regulation contains a description of the document and the circumstances in which it can be issued.
The supplier is considered to be governed by federal or provincial legislation respecting vocational schools if it operates pursuant to federal legislation (other than the ETA) or provincial legislation that defines what a vocational school is and sets out rules for the operation of such a vocational school.
The supplier is considered to be a non-profit organization or a charity if it fits the definition of "non-profit organization" or "charity" in subsection 123(1) of the ETA.
In your letter, you questioned whether dance courses would be exempt if they followed the syllabus of the Royal Academy of Dance or the Canadian Dance Teachers' Association. However, section 8 does not mention the Royal Academy of Dance or the Canadian Dance Teachers' Association. Whether or not a course follows the syllabus of the Royal Academy of Dance or the Canadian Dance Teachers' Association is irrelevant for purposes of exemptions pursuant to section 8.
In your letter, you questioned whether the exempting provision could apply to a course taken solely for recreational purposes. Rather than looking at why someone takes a course, we should consider the nature of the course. If a course is designed to be taken for recreational purposes, the supply of such a course would not be exempted by section 8, because one of the things that section 8 requires is that the course lead to documents attesting to the competence of individuals to practise a trade or vocation.
As the courses supplied by XXXXX do not meet the criteria given in section 8, the supply of such courses is taxable.
2. The phrase "the supplier is governed by federal or provincial legislation respecting vocational schools" means that the supplier is subject to legislation that defines vocational schools or that regulates the activities of vocational schools. We are unable to cite any federal legislation that governs vocational schools, but each province has legislation that outlines the rights and responsibilities of vocational schools. XXXXX the applicable legislation is the Private Vocational Schools Regulation Act.
In your letter, you referred to the statement in the Public Service Bodies section of the Technical Manual that an organization will be considered to be a vocational school that is governed by federal legislation respecting vocational schools if it meets the definition of "vocational school" in section 1 of Part III of Schedule V to the ETA. However, this statement was incorrect. In order for the supplier to be considered to be governed by federal legislation respecting vocational schools, the supplier must be governed by legislation, other than the ETA, that defines what a vocational school is and sets out requirements for the operation of a vocational school. As previously stated, we are not aware of any federal legislation that fulfils this function but each province has such legislation.
We hope that the information provided has been of assistance. If you have any questions concerning this letter, please do not hesitate to contact Ms. Joanne Houlahan at (613) 954-07945 or Mr. Don Dawson at(613) 954-4393.
Yours truly,
J. A. Venne
Director
Special Sectors
GST Rulings and Interpretations
c.c.: J. Houlahan
D. Dawson
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