File: 11930-3(DRM)
Doc: 1225
ss. 12/Pt VI/Sch. V
I refer to your memorandum of April 6, 1995, concerning the application of section 12 of Part VI of Schedule V to the Excise Tax Act (ETA) to a soccer tournament held by the XXXXX (the Association).
Facts
1. The Association offers two basic programs for youths in XXXXX who wish to participate in organized soccer activities: an indoor program which is conducted in the XXXXX from XXXXX, and an outdoor program from XXXXX[.]
2. The programs are offered to youths in various age categories, however the vast majority of the participants are 14 years of age or younger.
3. The Association arranges a tournament in the spring for children ages XXXXX, as the basic summer program does not extend to children under XXXXX[.]
4. The tournament is promoted as XXXXX[.]
5. The tournament is held over two weekends. On the first weekend, teams comprising players ages XXXXX[.] A similar format is used on the second weekend for teams comprised of players from XXXXX[.]
6. No prizes are awarded to any winning team. All players receive a participation pin as an acknowledgment of their participation in the tournament.
7. The intent of the tournament is encourage participation by the younger age group in the sport of soccer.
8. Each team is required to provide a linesman for each game it plays. Teams may also be asked to provide a referee, if the volunteer referees do not show for the scheduled games. The home team as indicated on the schedule is asked to provide the balls for the game.
Issue
1. Does the XXXXX held by the Association qualify as a program for the purposes of section 12 of Part VI of Schedule V to the ETA?
2. Is the fee payable for participation in the XXXXX XXXXX exempt of GST pursuant to section 12 of Part VI of Schedule V to the ETA?
Response
1. It is our opinion that the XXXXX qualifies as a program for purposes of section 12 of Part VI of Schedule V to the ETA.
2. The fee payable for entry in the tournament (program) is not exempt of the GST as the supply is not in respect of a membership or services provided by Association, but is instead as supply of a right to participate in an event organized by the Association. As a result the Association is required to collect and remit GST on the entry fee, unless it is a small supplier.
Analysis
1. With respect to the meaning of "program" in section 12 of Part VI of Schedule V to the ETA, the Department has given latitude to organizations to determine what constitutes a "program", subject only to whether that determination is reasonable. This flexibility is intended to take into account the numerous activities engaged in by public sector bodies. The guidelines listed in the Question and Answer database are intended to provide some measure of whether an activity is reasonable.
2. Assuming the tournament qualifies as a program the only issue to resolve is whether the entry fee payable for admissions to the tournament is a supply of a membership or, is in respect of services supplied as part of the program. It is our belief that the supply made by the Association is neither that of membership in the program nor services supplied as part of the program.
Participants obtain by paying an entry fee, a right to participate in the event organized by the body. That right to participate in that event is not the same as acquiring a membership in a program of the organization. The determination as to whether a person is a member of a particular organization is a matter of fact (as outlined in the bylaw, constitution, etc., of the organization). Nothing in the information, submitted for our review, suggest that the entry fee is in respect of membership in that particular program.
The common use of the word "membership" has been expanded by subsection 123(1) to include an entitlement to services and the use of the facility of the organization where it appears the person is not in fact a member. The Association supplies a right to participate in the soccer tournament. This supply includes access to playing fields, as well as services (e.g. referee), however the true supply appears to be that of participation in the event rather than the use of the facilities or services offered by the association. In other words, the association is making a single supply of a right to participate in the tournament. The use of the facilities and other services are all inputs in the making of the primary supply, i.e., participation in the event.
This argument also holds for the exemption under section 12 for services supplied as part of a program offered by the body. Again, any services that are obtained by the participants are of a secondary nature and are as a result of the right to participate in the tournament. These services are simply inputs to the actual supply of the right to participate.
Finally, in the memorandum, you distinguished between the tournament held by XXXXX XXXXX and that of the Association. Specifically, the tournament sponsored by the Association is held in lieu of an outdoor program for that particular age group, whereas the tournament sponsored by the XXXXX is not in lieu of any program. However, it is our opinion that such a distinction has no effect on the supply being made by either organization. As discussed above, the term "program" is sufficiently broad to encompass the tournament sponsored by XXXXX as well as that of the Association. The fact remains that in both cases the supply being made is not of membership in, or services supplied as part of a program, but that of a right to participate in that program (i.e., the tournament).
If you have any questions, please do not hesitate to contact Joanne Houlahan, Manager, Public Service Bodies, at (613) 954-7945 and Dwayne Moore, Tax Policy Officer, at (613) 953-4206.
J.A. Venne
Director
Special Sectors
GST Rulings & Interpretations
c.c.: D. Moore
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