GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, ON K1A 0L5
September 25, 1998
Dear XXXXX
This is in response to your letter of November 7, 1997 sent to XXXXX (with attachments), of our XXXXX TIS Center, 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.
Statement of Facts
Our understanding of the facts, the transaction(s), and the purpose of the transaction(s) is as follows:
1. On July 30, 1997 you received a ruling from XXXXX of the XXXXX TIS Centre. This ruling provided you with a general interpretation of subsections 6(a), 6(b), 6.2 of Part I of Schedule V indicating that they did not apply to your organization. The letter also explained the changes to the definition of vocational school in Part III of Schedule V.
2. Although it was not a directed interpretation, you interpreted it to mean that the XXXXX (the Centre) qualifies as a vocational school and you have written to request a ruling on this issue. The November, 17 1997 letter was sent to us for a direct reply.
3. It is our understanding that (the Centre) is operating a business of retreats in XXXXX as well as providing a XXXXX.
4. The Centre received certification as an educational institution by HRDC and is registered under XXXXX[.]
5. The objective of both the long term and short term courses is to enhance personal growth by providing training in the holistic arts.
6. Professionals get training in XXXXX through the program and certification is given in specific areas after various lengths of stay, according to proficiency in that field.
7. You believe that because the Centre operates primarily as a learning centre, and since the revenue from course fees is over XXXXX that the Centre qualifies as a vocational school.
Ruling Requested
Does the XXXXX qualify as a vocational school?
Ruling Given
Based on the facts set out above, we rule that XXXXX does not qualify as a vocational school.
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
A "vocational school" as defined in section 1 of Part III 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." The definition of "vocational school" was amended by Bill C-70 effective for supplies made after 1996. Prior to the amendment, the definition also included organizations that were certified by the Minister of Employment and Immigration for purposes of subsection 118.5(1) of the Income Tax Act (ITA). However, as a result of the change, an organization is only considered a vocational school if it is established and operated primarily to provide 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 skill enhancing courses if the courses it provides 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. Further, 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.
While the XXXXX is established and operated primarily to provide instruction in courses, it is the opinion of the Department that the courses do not constitute occupational training. Courses such as XXXXX can, XXXXX be beneficial to individuals and help them better perform at their job. However, they do not qualify as occupational training. Consequently, the Centre does not satisfy the requirements to be a vocational school for purposes of the Excise Tax Act.
Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 957-1175.
Yours truly,
Don Gagnon
Educational Services and Indians Unit
Public Sectors Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate
| c.c.: |
Paule Labbé
Pierre Bertrand
XXXXX
Don Gagnon |
Encl.:
| Legislative References: |
Section 8 of Part III of Schedule V |
| NCS Subject Code(s): |
R[-]11915-7 |
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