12 August 1998 GST/HST Ruling HQR0001264 - Tax Status of Certificate Courses

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

Dear XXXXX

Thank you for your letter of March 13, 1998 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction(s) described below.

Statement of Facts

Our understanding of the facts, the transaction(s), and the purpose of the transaction(s) in question, is as follows:

1. The XXXXX XXXXX was established with the object of providing instruction in courses that develop or enhance skills needed to perform occupations in the beauty industry. The provision of these courses is the XXXXX primary activity.

2. The XXXXX offers the courses listed below. Two of the courses, namely the XXXXX, and the XXXXX courses, are diploma courses. The remaining courses are certificate courses, some of which are designed to provide your clients with an opportunity to practice the skills acquired in the courses for which they are registered.

3. The XXXXX is registered as a Vocational School under XXXXX[.] The cost of professional kits (where indicated) and books is included in the tuition fees, which range from $ XXXXX to $ XXXXX[.] The courses vary from XXXXX in length.

Transaction(s)

It is our understanding that the Academy offers the following courses:

XXXXX

Ruling Requested

1. Are the courses listed above exempt supplies pursuant to Section 8 of Part III of Schedule V to the Excise Tax Act (hereinafter "the ETA")?

2. Are the books and professional kits provided by the Academy to its students subject to the Goods and Services Tax/Harmonized Sales Tax (hereinafter "GST/HST")?

Ruling Given

It is the position of the Department that the Academy was established and is operated primarily to provide students with instruction in courses that develop or enhance students' occupational skills. As such, it is a "vocational school" for the purposes of the ETA. Therefore, it may offer courses exempted from the application of GST/HST under section 8 of Part III of Schedule V to the ETA if the courses lead to certificates or diplomas that attest to the competence of individuals to practice or perform a trade or vocation, and the Academy is governed by provincial legislation respecting vocational schools.

It is the position of the Department that all of the above-mentioned courses lead to documents attesting to the competence of individuals to practice or perform a trade or vocation. Since the Academy is registered as a vocational school with the Ontario Ministry of Education and Training, the supply of the courses is considered to be exempt and GST/HST is not applicable to that portion of the tuition that represents consideration for the supply of the courses.

With respect to that portion of the tuition that represents consideration for the books and professional kits, it is the Department's view that in most cases such items provided with an educational program are integral elements of a single supply of a service of instructing individuals and as such, hold the same tax status as the course itself. Generally, this view applies where the supply of instruction is contingent upon the acquisition of these items (i.e., a student could not purchase the service of instruction without having the lesson materials, professional kits, etc.).

Based on the information provided, and a "single vs. multiple supplies" analysis as set out in Policy P-077R, it is the Department's position that the books and professional kits provided by the Academy to its clients are an element of a single supply of instruction, and are therefore exempt.

Please note however, that where an individual purchases the kits or books separately, without registering for a course, the nature of that supply may be tangible personal property and therefore subject to GST/HST as a taxable supply.

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%. To the extent that they are taxable supplies (which are not zero-rated), tax must be collected at the harmonized rate.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, a copy of which is enclosed for your reference. 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 (613) 952-4157.

Yours truly,

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

Legislative References:           Section 8 of Part III of Schedule V to the ETA