9 November 1998 GST/HST Ruling HQR0001247 - Tax Status of Children's Overnight Camp and Rental of Camp Facilities

Dear XXXXX

Your letter of April 23, 1998, addressed to XXXXX Tax Services Office concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to summer camps for children and the rental of canoes by XXXXX was forwarded to us for reply.

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX is a charity for the purposes of the Excise Tax Act (the "ETA"). It is a children's summer camp (during XXXXX that provides camp programs varying in duration from XXXXX to children under the age of 14 years. Although the camps were initially designed for children 14 years and under, they have also been provided to older groups.

2. The camp programs are offered for an all-inclusive price and include accommodation, meals, overnight supervision by volunteer staff, and all recreational activities, such as canoeing, swimming, field sports, games, and crafts.

3. The camps are not intended to be provided primarily to underprivileged individuals or individuals with a disability.

4. XXXXX also supplies various camp facilities to different groups (e.g., school outings and church retreats) during the periods it is not used as a summer camp. It makes supplies of real property, such as campsite rentals for weekly, weekend and overnight use, and for day use, at specified rates for each supply. The groups who stay overnight do not use the camp's volunteers or paid staff for supervision purposes. In addition, XXXXX also rents a hall and the use of its kitchen. It also supplies catering services.

5. XXXXX also rents equipment, such as canoes and barbeques, independently of campsite rentals.

6. XXXXX sells T-shirts at a price above their direct cost to campers during the six- to seven-week period that the property is being used as a summer camp. The T-shirts are sold to raise funds for the charity's activities, as well as for advertising purposes.

Rulings Requested

You are requesting a ruling on the tax status of the supplies listed above.

Rulings Given

Based on the facts set out above, the following rulings are provided.

1. Overnight camp program

The supply of the overnight children's camp program, including the accommodation, meals, and recreational services provided as part of the program, is taxable, as it is excluded from the general charity exemption by paragraph 1(f) of Part V.1 of Schedule V. As such, the value of the consideration for the supply of the camp program is subject to the GST at a rate of 7% pursuant to subsection 165(1) of the ETA.

2. Catering services and supplies of real property: day and overnight use of camp facility hall and kitchen rentals

The supplies listed in Fact #4; i.e., catering services and supplies of real property for day, weekly, weekend, and overnight use, as well as hall rentals and kitchen use, are exempt in accordance with section 1 of Part V.1 of Schedule V.

3. Rentals of barbecues, canoes, and other equipment

The rental of the canoes and barbecues noted in Fact #5 are taxable as they are excluded from the general exemption by paragraph 1(d) of Part V.1 of Schedule V. As such, the value of the consideration for these supplies is subject to the GST at a rate of 7% pursuant to subsection 165(1).

4. Sales of T-shirts

The sales of T-shirts noted in Fact #6 are exempt pursuant to section 3 of Part V.1 of Schedule V.

These rulings are subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to departmental interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

Section 1 of Part V.1 of Schedule V (the "general charity exemption") exempts all supplies made by a charity of personal property and services, except those specifically listed in paragraphs 1(a) to (m).

1. Overnight camp program

Paragraph 1(f) excludes from the general charity exemption, services involving supervision or instruction in recreational or athletic activities where such services are provided as part of a program involving overnight supervision throughout a substantial portion of the program. Since the summer camp involves substantial overnight supervision, the supply is not exempt under section 1. Since no other exemption applies, the supply is taxable.

2. Catering services and supplies of real property: day and overnight use of camp facility hall and kitchen rentals

Catering services and supplies of real property by lease or licence by a charity, such as the daily, weekly, weekend, and overnight rentals of camp facilities, use of the kitchen and hall rentals, fall under the general exemption of section 1 of Part V.1 of Schedule V (none of the paragraphs under this section apply to exclude these supplies from the general charity exemption).

3. Rentals of barbecues, canoes, and other equipment

Paragraph 1(d) of Part V.1 of Schedule excludes from the general exemption for charities supplies of tangible personal property that were acquired, manufactured, or produced by the charity for the purposes of making a supply of the property, except where the property was donated to the charity, or used by another person before the charity acquired the property. Consequently, where a charity acquires new canoes, barbecues, and other equipment for the purpose of renting these to campers and other customers, such rentals are taxable.

4. Sale of T-shirts

Section 3 of Part V.1 of Schedule V exempts supplies of most types of personal property or services made by a charity in the course of a fund-raising activity provided the charity does not make such sales on a regular or continuous basis throughout the year or a significant portion of the year. As the sales of the T-shirts do not take place on a regular or continuous basis throughout a significant portion of the year, these sales qualify as being made in the course of an exempt fund-raising activity as referred to under section 3.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-6761.

Yours truly,

Susan Eastman
Charities and Non-Profit Organizations Unit
Public Service Bodies and Governments Division