26 August 1998 GST/HST Ruling HQR0001274 - Residence Meal Plans

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

Dear XXXXX

This is in reply to your letter of February 16, 1998, to XXXXX of the XXXXX Tax Services office concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax to the "topping up" of residence meal plans. Your inquiry was forwarded to our office for reply. Our comments are set out below.

On April 1, 1997, the harmonized sales tax (HST) replaced the goods and services tax (GST) and the provincial sales tax (PST) in the three participating provinces of Nova Scotia, New Brunswick and Newfoundland with a harmonized tax rate of 15%. It is our understanding that you do not make any supplies in the participating provinces and for this reason our response will address only the GST.

Statement of Facts

Our understanding of the facts from the documentation submitted and from a telephone conversation on August 17, 1998, between yourself and Pauline Greenblatt of this office, is as follows:

1. The XXXXX at XXXXX is responsible for the provision of meals at campus facilities to commuter and resident students and staff and faculty.

2. Pursuant to clause XXXXX of a contract titled XXXXX offers students who live in residence a choice of three meal plans. XXXXX provides XXXXX (lunch and dinner) seven days a week in the Residence Dining Hall. XXXXX provides the student with any XXXXX (lunch and dinner) a week in the XXXXX plus a campus cash plan of XXXXX that can be used at any University food service outlet on campus. XXXXX provides any XXXXX (lunch and dinner) meals a week in XXXXX plus a campus cash plan of XXXXX Residence students participating in these plans are provided with a card which is used to electronically track students meal consumption. These meal plans are exempt from GST pursuant to section 13 of Part III of Schedule V of the Excise Tax Act ("section 13" and "the Act").

3. Residence students participating in Plans B and C would like the option of increasing the cash portion of their meal plan, while still maintaining the tax exempt status of the plan. Apparently, residence students would like to eat more often at any University food service outlet on campus, rather than being restricted solely to meals in XXXXX[.] This can only be done if the cash portion of their plan is increased. This increase is referred to as "topping up" the plan.

4. Previously, the Residence Agreement allowed residence students to increase the cash portion of their meal plan and still maintain the tax exempt status of the plan if the specific amount of XXXXX were paid by the student. XXXXX felt that this was the amount required to meet the terms of section 13, given an average cost per meal.

5. XXXXX would like to revise the "topping up" clause of the Residence Agreement, so that residence students may add any amount to the cash portion of their meal plan and still maintain the tax exempt status of the plan, rather than having to deposit the XXXXX specified minimum. XXXXX of the 1998-99 Residence Agreement is so drafted and reads as follows: XXXXX[.]

Ruling Requested

That increasing the cash portion of Plans B and C of the residence meal plans would not affect the tax status of plans, where such plans are already exempt pursuant to section 13.

Ruling Given

Based on the facts set out above, we rule that increasing the cash portion of x Plans B and C of the residence meal plans would not affect the tax exempt status of these plans. That is, these plans will still be tax exempt pursuant to section 13.

Section 13 exempts supplies of meals to students enrolled at universities or public colleges where the meal is provided under a plan that is for a period of not less than one month, is purchased for a single consideration, provides for not less than 10 meals weekly throughout the month, and the meals are served at university or college restaurants or cafeterias. XXXXX satisfy this criterion and are exempt of tax.

The Residence Agreement, being the contract for the meal plan, provides for increasing the cash portion of Plans B and C XXXXX. This "topping up" of the existing portion of the meal plan does not represent a new supply. Rather, it is additional consideration for the same supply of a meal plan and such modification still meets all conditions for exempting the meal plan as set out in section 13. Therefore, "topping up" of the cash portion of the meal plan would not change the tax exempt status of a meal plan that is already exempt pursuant to section 13.

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.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at 954-5125.

Yours truly,

Pauline Greenblatt
Tax Policy Officer
Educational Services and Indians Unit
GST/HST Rulings and Interpretations Directorate