8 September 1998 GST/HST Ruling HQR0001144 - Application of the GST/HST to Supplies of Admissions to Staff Parties

GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, ON K1A 0L5

                                                                        September 8, 1998

Dear XXXXX

This letter is in response to your letter of October 31, 1997, to the XXXXX Tax Services Office, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies made by XXXXX[.] The XXXXX Tax Services Office requested that we respond to you concerning the supply of admissions to staff parties.

Our understanding of the facts is based on the information submitted in your letter to the XXXXX Tax Services Office, and our telephone conversation of June 15, 1998, and is as follows:

Statement of Facts

1.  XXXXX is a registered charity XXXXX for purposes of the Income Tax Act.

2. Staff parties for employees of XXXXX are organized and held approximately 3 times a year.

3. The parties may be organized by department heads for their particular area (e.g., nurses), or they may be organized by management and opened to all staff members.

4. A nominal amount (approximately XXXXX is charged to the staff members for admission to the parties. This amount does not cover all the costs associated with the parties.

5.  XXXXX provides mainly exempt supplies but also makes taxable supplies.

6.  XXXXX was previously registered for purposes of the GST/HST, but is currently deregistered.

Ruling Requested

The supply of admission to staff parties provided to staff members of XXXXX is not subject to tax.

Ruling Given

Based on the facts set out above, we rule that the supply of admission by the charity to the staff party is not a taxable supply made in the course of a commercial activity. Please note, it is a question of fact whether an admission to a staff party is made in the course of a commercial activity, and any queries concerning such activities must be considered on a case-by-case basis.

This ruling is 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

Staff parties held by commercial enterprises may be considered as an expense of doing business and thus, part of their commercial activities. However, a staff party held by a charity may be sufficiently unrelated to its mandate and ongoing activity, that it would not be considered part of its ongoing activity. When considered independently, the staff party would not be considered a business and therefore would not fall within the definition of a commercial activity.

Please note, consideration of whether a staff party is part of an organization's commercial activity is based on the facts and should be done on a case by case basis. For example, a staff party held by a charity, or non-profit organization may, in some circumstances, be considered to be part of the organization's commercial activity.

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