File no. HQR0000422
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX July 9, 1997
Dear Mr. XXXXX
This is in response to a facsimile message from XXXXX dated November 18, 1996 in which he requested an opinion on the attached analysis regarding the tax status of sales of training courses by the XXXXX XXXXX
Facts
Our understanding of the facts is as follows:
1) XXXXX is a non-profit organization registered for the GST/HST. It is not a qualifying non-profit organization as defined in subsection 259(2) of the Excise Tax Act ("ETA").
2) XXXXX
• Through training, promote the image of the home building and renovating industry in XXXXX and the value of management development.
• Promote and co-ordinate the administration of training programs which contribute to a higher standard of residential construction in XXXXX .
• Encourage the development of new and revised home builder and renovator courses to meet the needs of the residential construction industry.
• Evaluate the adequacy of existing home builder and renovator training and identify required upgrading, with input from the XXXXX and XXXXX and XXXXX co-ordinate the most suitable delivery system for training, ensuring industry access.
• Encourage educators and training institutions to work with the industry in the development of new and revised training.
• Promote and actively support the endeavours of XXXXX to improve relations with all branches of government in encouraging legislation and regulations, with regard to training, which are in the best interests of the industry in XXXXX
• XXXXX
• Work with the XXXXX in maximizing provincial training and funding opportunities.
• With respect to training, support the provincial XXXXX in the implementation of industry certification in XXXXX
3) XXXXX develops, evaluates, and updates courses to meet the training needs identified by XXXXX warranty, and their membership. It operates in the same fashion as a for-profit business school and derives its revenues from the sale of these courses to other organizations, such as XXXXX principal direct expenses are trainer fees, consulting fees, and resource materials.
5) XXXXX does not have a facility in which to provide the training to course participants.
6) XXXXX is a non-profit organization XXXXX and Human Resources Development Canada ("HRDC"). The mandate of XXXXX is to coordinate the delivery of training to builders and renovators throughout XXXXX receives funding from HRDC to purchase industry-specific training programs from other organizations. XXXXX assembles the courses it purchases into a training program for resupply to individuals in XXXXX The training involves skills upgrading that the construction and renovation industry has identified as being essential to the viability and growth of this industry. XXXXX XXXXX principal supplier is XXXXX although it also purchases courses from universities and business schools.
7) XXXXX prints a course calendar which describes each course and provides a course schedule. XXXXX prints its logo on the course calendar. The course calendar contains a registration form and instructs the applicant to register with XXXXX for the training courses. XXXXX sets a registration fee which is payable to it by the course participants.
8) XXXXX advised on June 10, 1997 that prior to January 1997, the XXXXX sold the course only to organizations, such as XXXXX After 1996, XXXXX sells the courses directly to individuals who do not receive Employment Insurance (EI) benefits and is now charging individual participants tax on the course fees. Due to an HRDC program change, as of January 1997, the XXXXX only resupplies the course to recipients of EI benefits.
9) The XXXXX has developed and/or delivered several courses, four of which it sold to XXXXX which were listed in XXXXX training course calendar:
• XXXXX
• XXXXX
XXXXX
10) Each of the courses listed above in 9 is an independent, stand-alone course, although the XXXXX course is intended to complement the XXXXX course. A separate certificate is issued for each course. Students can select either one or any combination of these courses. The only exception is that the XXXXX course is mandatory for warranty builders. Also note that the XXXXX courses have been designated as future mandatory courses for warranty builders.
11) The XXXXX course is a XXXXX course that provides management training for owners and managers of home building and renovating companies. The purpose of the course is to provide managers and owners who are working in the construction industry with skills and knowledge of how to operate a small business and it consists of XXXXX Training Modules that focus on:
• XXXXX is delivered in XXXXX session and is targeted to builders, renovators, building officials, designers, project managers, and site supervisors involved in the construction of low-rise residential buildings. The goals of the course include:
• providing an understanding of the National Building Code (NBC) and its application to the design and construction of housing;
• providing knowledge and skills to assist in the design, drafting, or examination of house plans for compliance with the NBC; and
• providing knowledge and skills to construct and inspect houses for compliance with the NBC.
13) The course covers the following topics:
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
14) The XXXXX program for project managers and site supervisors involved in the construction of low-rise residential buildings. It is delivered in XXXXX sessions over the period of XXXXX . While it is a stand-alone course, it is complemented by the XXXXX course and participants are encouraged to register for both courses if they are available in their area. The goals of the course include:
• XXXXX
XXXXX
XXXXX
XXXXX
15) The course covers the following topics:
• XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
16) The XXXXX course for builders, renovators, inspectors, and designers and is offered i XXXXX sessions. It focuses on the latest NBC code requirements and R-2000 technology. It covers the following topics:
• XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
17) XXXXX issues a certificate to the participant after he or she has completed a training course. These certificates are issued by XXXXX to recipients of EI benefits who register for the courses through XXXXX and to individuals who register for the courses directly with XXXXX Course participants are deemed to have successfully completed the course if they attend all sessions and write all tests. The certificates state:
• " XXXXX - This is to certify that XXXXX has successfully completed the requirements for the XXXXX
• XXXXX This certifies that XXXXX has successfully completed this training program."
• " XXXXX This certifies that XXXXX has successfully completed this training program."
• XXXXX XXXXX are pleased to recognize that XXXXX has successfully completed XXXXX
18) The XXXXX does not intend the certificate to mean approval of competency to practice a trade or vocation. Therefore, course participants are not required to pass all tests to receive the certificate.
19) The XXXXX treats the sales of its courses as taxable supplies and charges tax on these supplies. To date, the XXXXX has been claiming full input tax credits in relation to its direct and overhead expenses.
20) XXXXX has been claiming a 50% public service body rebate for the tax charged to it by the XXXXX to organizations such as the XXXXX exempt under section 8 of Part III of Schedule V to the ETA?
2. Are the supplies of training courses by the XXXXX directly to individuals exempt under section 8 of Part III of Schedule V to the ETA?
Response
Supplies to XXXXX by the XXXXX to the XXXXX The service that the XXXXX has contracted to provide to the XXXXX is not an exempt educational service. XXXXX has agreed to supply its training courses, including an instructor and relevant material, to the XXXXX in order that the XXXXX may meet its contractual obligations to the XXXXX The supply from the XXXXX to the XXXXX is not a supply of instructing individuals as the supply of instruction is made by the XXXXX to course participants. All relevant information, including the course calendar, selection of courses, registration of participants and collection of course fees, are the responsibility of the XXXXX and establish that the XXXXX is the supplier of the training courses. Consequently, when the XXXXX sells training courses to the XXXXX such supplies are not exempt under section 8 of Part III of Schedule V to the ETA.
Supplies Directly to Individuals by the XXXXX began supplying industry training courses directly to individuals who are not receiving EI benefits commencing January 1997. These individuals register directly with the XXXXX and pay the course fees to the XXXXX The XXXXX is not involved in resupplying the training courses to these individuals. When the XXXXX supplies the industry training courses that are listed below directly to individuals, such supplies do not meet the conditions for the educational exemption in section 8 of Part III of Schedule V to the ETA:
• XXXXX
XXXXX
Section 8 of Part III of Schedule V to the ETA exempts a supply by a vocational school of instructing individuals in, or administering examinations in respect of, courses leading to certificates, diplomas, licences or similar documents, or classes or ratings in respect of licences, that attest to the competence of the individual to perform a trade or vocation, where: ...
c) the supplier is a non-profit organization or a public institution.
Notwithstanding that the XXXXX is a non-profit organization and may fall within the meaning of "vocational school" in section 1 of Part III of Schedule V to the ETA, the industry training courses do not lead to certificates that attest to the competence of individuals to practice or perform a trade or vocation. To apply section 8 of Part III of Schedule V to the ETA, we examined each course to determine whether or not the resulting certificate attests to the competence of an individual to perform a trade or vocation.
The XXXXX course calendar states that the courses were selected to provide builders with skills in new technologies to meet consumer expectations and to provide skills upgrading that the construction and renovation industry has identified as being essential to the viability and growth of the sector. The XXXXX developed the courses listed in Fact 9 as part of its mandate to contribute to a higher standard of residential construction in the XXXXX . For instance, the " XXXXX course is an organized program of xx Training Modules that provides general knowledge on operating a business and as such, the nature of the course is to enhance the home builder's skills in operating a business. XXXXX courses each focus on a specific topic or area. While the courses relate to trades and vocations, they do not lead to certificates that attest to the competence of an individual to practice or perform a trade or vocation. Furthermore, it is not XXXXX intention that the certificates recognize or give approval of competency to an individual with respect to a particular trade or vocation. Course participants are not required to pass all tests to receive a certificate. The certificates only reflect the fact that the individual has completed the course and do not attest to the competence of the individual to practise or perform a trade or vocation.
I hope these comments are of assistance to you. Please do not hesitate to contact Susan Eastman at (613) 952-6761 if you have any questions.
Joanne Houlahan
A/Manager
Charities, Non-Profit Organizations and Educational Services
GST/HST Rulings and Interpretations Directorate
File no. 119152
| b.c.c.: |
S. Eastman
J. Houlahan
J.A. Venne |
XXXXX
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