21 August 1998 GST/HST Ruling HQR0000206 - Application of GST to Career Consulting and Employment Services

Dear XXXXX

This letter is in response to the Memorandum of April 22, 1996 from XXXXX, concerning the application of the Goods and Services Tax (GST) to supplies made by XXXXX[.] We apologize for the delay in responding to this request.

Our understanding of the facts are based on the information contained in the memorandum of April 22, 1996, including the attached Schedules of contracts with the province, the electronic mail of October 28, 1996 from XXXXX Tax office, a follow-up note from XXXXX to XXXXX dated January 29, 1997, and my telephone conversation of August 17, 1998 with XXXXX. The relevant facts are summarized below:

Facts

1. At the time of the memorandum, XXXXX was a sole proprietor operating a business under the name XXXXX which provided career consulting and employment services.

2. XXXXX entered into contracts with XXXXX XXXXX to provide consulting and employment services to specified individuals under the contracts.

3. In the memorandum, XXXXX indicated that the contracts between the province and XXXXX were standard contracts similar to ones he had reviewed between the XXXXX and for which it had been determined that the payments made under the contracts were not consideration for a supply.

4. As a part of the requirement to obtain government contracts, XXXXX had to register with the XXXXX (the body that oversees the registration of course providers and other administration requirements under the XXXXX[.]

5. Under the terms of the contracts, specified individuals would receive lifeskills courses, job search workshops, career assessments, resume writing and interview workshops, and specialized training (i.e., vocational training).

6. XXXXX provided all workshops, assessments and courses except for the vocational training. XXXXX paid the tuition of the specified individuals to attend local colleges and vocational schools where they received the vocational training. The students receive diplomas or certificates in respect of the course(s) from the colleges or the vocational schools.

7. As a part of the contracts, XXXXX also provided XXXXX courses for those individuals who had not completed elementary or secondary school. However, the individuals were required to take the examination leading to the equivalency diploma at the public college.

8. XXXXX developed curriculums with respect to the workshops and lifeskills courses it offered.

9. Individuals received a certificate from XXXXX for the completion of the workshops and lifeskills courses.

10. XXXXX received a GST registration number XXXXX January 25, 1995. Although, her revenues exceeded the small supplier threshold, prior to that date she was not registered for purposes of the GST. (XXXXX claims that she had applied for registration but was told that her supply was exempt and therefore she was not required to register).

11. XXXXX is currently operating under the name XXXXX. In addition to the consulting and employment services she was formerly engaged in providing, she is presently engaged in the retail sale of computers and accessories.

Issue

1. Is XXXXX a vocational school as defined in section 1 of Part III of Schedule V to the ETA?

2. Do any of the courses offered by XXXXX lead to certificates that attest to the competence of individuals to practise or perform a trade or vocation?

3. Does registration under the XXXXX mean that XXXXX is "governed by federal or provincial legislation respecting vocational schools".

Response

1. It is our opinion that XXXXX is not a vocational school as defined in section 1 of Part III of Schedule V to the ETA.

2. The workshop and lifeskills courses offered by XXXXX would not qualify for the exemption under section 8 or any other section of Part III of Schedule V. Therefore, with taxable sales exceeding the small supplier threshold, XXXXX was required to have been registered for purposes of the GST.

3. The fact that XXXXX is registered under the XXXXX is not relevant as she is not a vocational school for purposes of the ETA.

Explanation

In order to qualify as a vocational school an organization must be established and organized primarily to provide students with correspondence courses or instruction in courses that develop or enhance students' occupational skills. Generally, courses in sports, games, hobbies or other courses that are designed to be taken for recreational purposes or for personal interest will not be considered as developing or enhancing students' occupational skills. Furthermore, the courses offered by the organization should normally lead to, or form part of a program that lead to a diploma or certificate that enables the individual to obtain, or upgrade the skills necessary for employment in a trade or vocation.

The services offered by XXXXX are intended to assist individuals in their search for employment. Through such services as job search workshops, career assessments, resume writing and interview workshops, and lifeskills courses, XXXXX provides individuals with advice and counsel. However, these services are not equivalent to vocational training. They do not provide an individual with the knowledge and practical experience necessary to perform or practise a trade or vocation. The courses that do enhance students' occupational skills, i.e., the specialized training, were not provided by XXXXX (tuition is paid by XXXXX for the individual to take the courses at a public college or vocational school). Since XXXXX does not offer courses that enhance students' occupations skills, it does not meet the definition of vocational school in Part III of Schedule V. Consequently, the services provided by XXXXX are taxable.

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
Educational Services and Indians Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate

XXXXX

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