11 August 1998 GST/HST Interpretation HQR0001142 - Application of the GST/HST to "For Profit" Conductive Education Services

Dear XXXXX

This letter is in response to XXXXX memorandum of April 1, 1998, addressed to Eniko Vermes of this division, with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the services provided by XXXXX[.]

XXXXX requested that we review her proposed draft response to XXXXX[.] We are in agreement with XXXXX comments and conclusions discussed in her draft ruling of March 31, 1998 to XXXXX of the camp.

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX has been registered for GST purposes since April 28, 1995 under account number XXXXX is a sole proprietorship and a "for profit" organization.

3. XXXXX provides conductive education services to children aged 3 to 12 years with conditions such as cerebral palsy, spina bifida and impaired motor deficiencies. The camp operates XXXXX[.]

4. XXXXX is a treatment for teaching children with lower degrees of motor ability to utilize dormant or atrophied muscles. A group setting is provided where children perform therapeutic exercises, strengthening and neurodevelopmental and muscular education exercises.

5. Children attend the camp for a period of XXXXX and in most cases stay at the facility for 24 hours a day. They attend class XXXXX[.] The children receive approximately 1 XXXXX[.]

6. XXXXX conductors are graduates of the XXXXX which at present is the only facility for this type of training available.

7. XXXXX does not provide transportation to and from the facility nor does it provide food or supervision to the children outside of class time.

8. On-site accommodation is provided at no charge for the duration of the children's stay. This accommodation is also available to the child's accompanying parent or guardian. There is no reduction of fees if the child and parent or guardian do not use the camp's accommodations.

9. A parent or guardian must accompany the child to the facility. The parent or guardian is responsible for the well-being and supervision of the child while the child is at the facility.

10. Parents are counseled and are shown how to continue their children's training when they return home with their child.

11. All of the conductors at XXXXX hold XXXXX[.]

12. The program payment information does not make reference to provincial health care plans.

Interpretation Requested

Are the XXXXX services provide by XXXXX exempt from the GST?

Interpretation Given

The services described above provided by XXXXX are taxable at a rate of 7% pursuant to subsection 165(1) of the Act.

In addition, please note that on April 1, 1997, the provincial sales tax (PST) in three participating provinces, Nova Scotia, New Brunswick, and Newfoundland was unified with the GST to create the HST. The HST, at a rate of 15%, replaces both the PST and the GST on supplies that are made (or considered to be made) in participating provinces and applies to the same as of goods and services as the GST.

Analysis

We are in agreement with the comments and explanation provided in XXXXX proposed draft ruling. The relevant exempting provisions within Parts II, III and IV of Schedule V to the Act do not apply to the above circumstances. We will not further reiterate the discussion from the draft letter in our response since the explanation of these sections in the proposed draft is clear and concise.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9214.

Yours truly,

Doris Rist
Charities and Non-Profit Organizations Unit
Public Sector Bodies Division
GST/HST Rulings and Interpretations Directorate