30 September 1998 GST/HST Interpretation HQR0001315 - Section 11, Part III, Schedule V

This will serve to respond to your e-mail of September 3, 1998 regarding the application of section 11, Part III of Schedule V to the Excise Tax Act. First, you asked me to confirm that for purposes of applying section 11, "instruction in a second language" does not have to be conducted within a classroom to fall within this exempting provision. This question arose as a result of our telephone conversation. I am confirming that we will accept that both classroom and non-classroom activities, when they are elements of the immersion method of language training, will be exempt pursuant to section 11. In other words, in the context of the immersion method of language training, non-classroom activities may, if the facts justify that they are part of instruction in the second language, fall within the section 11 provision.

Second, you asked me to provide clarification of the criteria of the exempting provision in section 11 that the organization must be "established and operated primarily to provide instruction in languages". To determine whether an organization is established primarily to provide such language courses, the Department will examine the organization's governing documents. These documents, including letters patent, articles of incorporation, memoranda of agreement, and by-laws should contain information as to the purpose for the establishment of the organization. In circumstances where that information is not available, how the organization is operated will be evidence of the purpose for its establishment.

To determine whether an organization is operated primarily to provide such language courses, the Department will review the curriculum and the organization's promotional material. In order to qualify under this criterion, the organization's revenue and human resources should be primarily attributed to the provision of second-language courses in English or French.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact Paule Labbé, Manager at (613) 954-7957 or me at (613) 952-0370.

Legislative References:           section 11, Part III, Schedule V to the ETA.

NCS Subject Code(s):