28 April 1998 GST/HST Ruling HQR0001047 - Supervised Child Access Program

Dear XXXXX

Thank you for your letter of October 28, 1997, with attachments, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the services provided by the XXXXX[.]

Our understanding of the facts is as follows.

Statement of Facts

1. XXXXX is incorporated as a non-profit organization that began operating on XXXXX, 19 xx.

2. XXXXX is in the process of applying to Revenue Canada, Taxation for status as a registered charity.

3. The types of services offered by XXXXX involve facilitating and or supervising visits between children and their non-custodial parents, personal consultation and counselling, and seminars for children, youth, and adults.

4. Through its XXXXX provides a drop-off and pick-up service for children during exchanges between custodial and non-custodial parents. It also offers an on-site supervised access service where the non-custodial parent and child remain in the facility and the visit takes place under the supervision of a third party. Other family members such as grandparents who are entitled to access to a child may also use the supervised access services.

5. XXXXX also provides counselling for children, support groups, and informal educational workshops. Through its youth and adult programs, XXXXX provides counselling, parenting seminars, and support groups.

6. XXXXX is not funded by any government program and charges user fees for its programs. These fees are evaluated based on the recipient's ability to pay.

Ruling Requested

Is XXXXX required to collect the GST on the amounts it charges for its services?

Ruling Given

Based on the facts set out above, we rule that the services provided by XXXXX are taxable supplies. Unless XXXXX a small supplier, it is required to register with Revenue Canada and collect and remit the GST on its taxable supplies.

The definition of "small supplier" is contained in the enclosed GST Memoranda Series 2.2, Small Suppliers. Effective April 23, 1996, the $30,000 threshold amount mentioned in the Memoranda was increased to $50,000 for public service bodies (which include charities and non-profit organizations). To summarize, XXXXX is a small supplier if its revenues from taxable supplies for the previous four consecutive calendar quarters, and for the current calendar quarter, do not exceed $50,000. Should its taxable supplies exceed $50,000 at any time in the course of one calendar quarter, XXXXX would no longer be a small supplier from the time immediately before the taxable sale that placed XXXXX above the $50,000 small supplier threshold, and it would be required to register at that time. Where its taxable supplies do not exceed $50,000 in any particular quarter, but exceed $50,000 cumulatively in the previous four calendar quarters, XXXXX remains a small supplier until the end of the month following the fourth quarter.

As a GST registrant, XXXXX would be entitled to claim input tax credits to recover the GST it paid on its purchases used to make taxable supplies. Please note that if the XXXXX is a small supplier, it may voluntarily register for the GST in order to charge the tax on its taxable supplies and to claim input tax credits.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST 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 transactions for which you requested a ruling.

It is our understanding that XXXXX is in the process of applying for status as a registered charity. Please note that the ETA provides a general exempting provision for charities under which their services, such as those offered by XXXXX are exempt from the GST. A charity that makes only exempt supplies is not entitled to be registered for the GST. Such a charity would not collect the GST on its supplies nor would it be entitled to claim input tax credits. However, it would be entitled to a 50% rebate for the GST it pays on its purchases.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-6761.

Yours truly,

Susan Eastman
Charities, Non-Profit Organizations and Educational Services Unit
Public Service Bodies and Governments Division

c.c.:      E. Vermes, A/Director
M. Place
S. Eastman
XXXXX