13 December 1995 GST/HST Interpretation 11915-2[1] - of Educational Services

Subject:          GST Interpretation of Educational Services

I refer to your facsimile of July 13, 1995 concerning the application of the Goods and Services Tax (GST) to educational services provided by a XXXXX Canadian Joint Venture.

Facts:

1. An XXXXX enterprise (University club) is planning to form a joint venture with a Canadian University to provide XXXXX XXXXX[.]

2. Instruction will be provided by both Canadian and XXXXX professors at the Canadian University.

3. Participants of the program will be required to take an exam upon completion of the course.

4. Successful candidates will receive XXXXX degree from the Canadian University.

Question

1. Are XXXXX exempt from GST?

2. Does the price of the tuition for an educational program, such as XXXXX change the tax status of the program?

3. Is it true, that if the program is exempt, expenses incurred by the XXXXX Canadian Company cannot be claimed as input tax credits (ITCs).

Response

1. Pursuant to section 7 of Part III of Schedule V to the Excise Tax Act (ETA), "a supply made by a university of a service of instructing individuals in, or administering examinations in respect of, courses for which credit may be obtained toward a diploma or degree" is exempt of the GST. Therefore where a Canadian university supplies courses to individuals to obtain a Canadian XXXXX the supply is GST exempt.

Generally, persons who are engaged in the making of exempt supplies (e.g. educational services offered by a university) do not charge GST and cannot recover GST paid on expenses related to the exempt supply. However, if the person is a Canadian University which is established and operates on a not-for-profit basis, it is eligible for a partial rebate of 67% of the GST paid on its expenses related to its exempt supplies.

2. The tax status of a credit course offered by a university does not depend on the amount of tuition charged.

3. You mention expenses incurred by the XXXXX /Canadian Company". It is our understanding that the courses will be supplied by the Canadian university and therefore the expenses will also be incurred by the Canadian university. Therefore, the Canadian university will be ineligible for input tax credits.

However if the courses are offered by an organization which is not a university, they may be taxable. Private educational programs offered to participants at a place in Canada by a corporation which is not a Canadian university or does not form part of a Canadian University (i.e., is a separate legal entity) may be subject to the GST. Even where corporations employs university professors as instructors, the supply of the courses by the corporations may be subject to the GST.

For your information, I have enclosed a copy of the booklet entitled "Doing Business in Canada, A Guide for Non-Residents".

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed or future amendments to the legislation may result in changes to our interpretation. These comments are not rulings and, in accordance with the guidelines set out in GST Memoranda Series (1.4), do not bind the Department with respect to a particular situation.

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 954-4206.

J.A. Venne
Director
Special Sectors
GST Rulings & Interpretations

c.c.:      D. Moore