18 December 1998 GST/HST Interpretation HQR0001310 - Donations from Student Meal Plans

Dear Ms. XXXXX

This is in reply to your letter of June 8, 1998, to XXXXX of Revenue Canada, XXXXX concerning the above-noted subject. Your inquiry was forwarded to our office for reply. Our comments are set out below.

On April 1, 1997, the harmonized sales tax (HST) replaced the goods and services tax (GST) and the provincial sales tax (PST) in the three participating provinces of Nova Scotia, New Brunswick and Newfoundland with a harmonized rate of 15%. XXXXX our comments apply to both GST and HST provinces.

Statement of Facts

Our understanding of the facts, based on documentation submitted and a telephone conversation between you and myself on September 18, 1998, is set out below.

1. Your organization, XXXXX is established to give students the opportunity to donate the cost of one meal (approximately XXXXX from their meal plan to less fortunate individuals and families in the community. The decision to donate is completely voluntary.

2. At present, the XXXXX program operates at XXXXX and will start a XXXXX[.] There are plans to operate the program at XXXXX[.]

3. The program has been operated at XXXXX which has a declining balance meal plan which satisfies the requirements of section 13 of Part III of Schedule V of the Excise Tax Act. Under this type of plan, students pay a lump sum amount (e.g. XXXXX and receive a plastic credit card. When they buy food at university cafeterias, the cards are swiped and their meal accounts are debited.

4. Students are canvassed for donations near the end of the school term when they might have an idea if there will be unused amounts in their meal plans. They provide written authorization to the university food service on the amount of their donation and the designated amount is debited from their food account. The student receives nothing in return for the donation.

5. XXXXX has an agreement with the XXXXX food service. (It is currently verbal and may be confirmed by letter, if required). The terms of the agreement are as follows:

1) The University agrees to support the XXXXX program;

2) The University agrees to provide staff to make deductions from the computer;

3) XXXXX agrees to purchase food from the food wholesalers the university deals with, at cost;

4) The University agrees to provide XXXXX with food storage facilities, as required.

6. Revenue Canada, in an interpretation dated August 19, 1997, advised that donations averaging between XXXXX will not affect the tax status of university meal plans that are exempt pursuant to section 13 of Part III of Schedule V of the Excise Tax Act ("section 13" and "the Act").

Interpretation Requested

What is the maximum amount a student may donate from their meal plan without affecting the tax exempt status of the plan which is exempt pursuant to section 13?

Interpretation Given

Pursuant to section 13, a meal plan that is sold to a student at a university or public college is exempt if the plan is sold for a single consideration and provides at least 10 meals a week for the period of the plan, which must not be less than one month.

A student enrolled in a tax exempt meal plan may make a donation of any size of unused meals to XXXXX[.] As long as no termination of the meal plan occurs (for example, where the student receives a reimbursement for the unused portion of the meal plan or is issued a charitable receipt for the donation) and as long as all requirements in section 13 are met when the meal plan was sold to student, the meal plan will be exempt.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Department with respect to a particular situation.

For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at 954-5125.

Yours truly,

Pauline Greenblatt
Educational Services and Indians Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate