GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, ON K1A 0L5
August 26, 1998
Dear XXXXX
This is in reply to your facsimile message of October 14, 1997, to XXXXX of Revenue Canada concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the activities of XXXXX. Your inquiry was forwarded to our office for reply. Our comments on the tax treatment of supplies of second-language instruction provided by you 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 documentation submitted and from a telephone conversation with XXXXX on May 25, 1998, is as follows:
1. XXXXX is a business which provides language training services in both official languages, French and English, to federal government employees. The firm hires language instructors who work at the client's location and provide the following courses:
• Improving oral skills (English and French, all levels)
• Improving grammar writing (English and French, all levels)
• Preparation for second language exams (oral, writing, reading comprehension, English and French, all levels)
• Individual courses
• Special courses (e[.]g. presentations)
2. The firm hires language instructors on a part-time basis, depending on demand. XXXXX[.]
3. XXXXX has received Treasury Board accreditation as a private sector language provider. This entitles the firm to be included on a list of private sector suppliers of language training for their employees. Accreditation involves review of the supplier's operations by a Treasury Board Committee. The Committee considers such things as curriculum offered, qualifications and experience of teachers, methodology and materials, evaluation of students, testing of students and administrative practices (such as invoicing, etc.)
4. XXXXX only business activity is the supply of language instruction services. This activity is carried on in the XXXXX[.]
Ruling Requested
That the supply of language instruction services made by XXXXX is not subject to the GST.
Ruling Given
Section 11 of Part III of Schedule V of the Excise Tax Act ("section 11") exempts supplies of a service of instructing individuals in, or administering examinations in respect of, language courses that form part of a program of second language instruction in either English or French, where the supply is made by a school authority, public college or university or an organization that is established and operated primarily to provide instruction in languages.
"School authority", "public college", and "university" are terms which are defined in subsection 123(1) of the Excise Tax Act. XXXXX does not fall within these definitions. Therefore, to qualify for exemption, it must qualify as "an organization that is established and operated primarily to provide instruction in languages".
Based on the description of your activities, as outlined above, supplies of language instruction made by XXXXX qualify for exemption pursuant to section 11. This means that you are not required to charge GST on supplies of language instruction made by [.]
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
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate
| Legislative References: |
section 11/Part III/Section V |
| NCS Subject Code(s): |
R-11915-1 |
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