8 September 1998 GST/HST Interpretation HQR0001005 - Definition of Vocational School

Dear XXXXX

This letter is in response to the electronic mail of December 22, 1997 from XXXXX to Lorrie Grannary of our office concerning the definition of vocational school in Part III of Schedule V to the Excise Tax Act (ETA). We apologize for the delay in responding to the query.

XXXXX query concerns a for-profit truck firm that provides freight transportation services, but also provides tractor trailer and tandem trucks driving training courses. The company is a registrant for purposes of the Harmonized Sales Tax (HST) and is governed by XXXXX[.] The company is also certified for purposes of subsection 118.5(1) of the Income Tax Act (ITA). Students who complete the course receive a certificate issued by the company, but must complete the provincial exam in order to obtain a license.

Interpretation Requested

Ms. XXXXX questions whether the company qualifies as a vocational school given the amendment to the definition, which removed the reference to organizations that are certified by the Minister of Employment and Immigration for purposes of [s]ubsection 118.5(1) of the ITA.

Interpretation Given

An organization will qualify as a vocational school if it meets all the requirements in the definition. Pursuant to section 1 of Part III, a "vocational school" means "an organization that is established and operated primarily to provide students with correspondence courses, or instruction in courses, that develop or enhance students' occupational skills."

To determine whether an organization is established primarily to provide courses that enhance students' occupational skills, we will examine its governing documents. These documents including letters patent, articles of incorporation, memoranda of agreement, and by-laws should contain information as to the reason or purpose for the establishment of the organization. In circumstances where that information is not readily available, how the organization is operated will be evidence of the purpose for its establishment.

The Department will consider an organization to be providing instruction in courses that develop or enhance students' occupational skills if the courses are not in respect of sports, games, hobbies, or other courses that are designed to be taken for recreational purposes or for personal interest. The purpose or the intent of the courses may be obtained from a review of the curriculum and the organization's promotional material.

Furthermore, with respect to the operated primarily requirement, most of the organization's revenue and human resources should be attributed to the provision of the courses that enhance students' occupational skills. However, if in the case at hand, the organization receives most of its revenues from, or most of its human resources may be attributed to, the provision of freight transportation services, the organization would not be considered to be operated primarily to provide skill enhancing courses. Therefore, the organization would not be a vocational school as defined in section of Part III.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-4206.

Yours truly,

Dwayne Moore
Charities and Non-profit Organizations Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate