29 April 1998 GST/HST Interpretation HQR0000783 - Supplies Made by a University

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

Dear XXXXX

I am replying to your request, made during the course of our meeting with representatives from the XXXXX , for confirmation of the tax status of supplies made by a university.

Interpretation Requested

 XXXXX in collaboration with XXXXX published a Goods and Services Tax (GST) guide entitled: XXXXX

The information submitted did not contain sufficient background to enable us to provide a GST/HST application ruling. However, in order to assist you, we will provide the following interpretations with respect to the supplies in question.

Interpretation Given

A university is a "public service body" and a "public sector body" as defined in section 123(1) of the Excise Tax Act (ETA). Further a university may be a "public institution" if it satisfies the requirements of the definition in subsection 123(1). We have assumed for purposes of this response that a university is a public institution; therefore supplies made by these organizations may fall within the exempting provisions of Part III or Part VI of Schedule V to the ETA.

Real Property

A supply of real property made by a public service body is exempt pursuant to section 25 of Part VI of Schedule V, unless the supply is described in paragraphs 25(a) thru (i) of Part VI of Schedule V. Pursuant to section 136, a supply by way of lease, licence, or similar arrangement, of the use or right to use real property is deemed to be a supply of real property.

Locker Rental

Carrel Rental

A supply of a right to use a locker is, generally, a supply of real property (there may be occasional circumstances where the lockers are not affixed to real property and are thus viewed as tangible personal property). Pursuant to subparagraph 25(f)(i) of Part VI, if the locker is supplied by way of lease, and the period throughout which the continuous possession or use of that locker is less than a month, the supply of the locker will be excluded from the general exemption of section 25. Further, subparagraph 25(f)(ii) also excludes from the general exemption, the supply of a locker made by way of a licence.

Similarly, a carrel rental is viewed as a supply of real property (i.e., the right to use real property). This supply will be excluded from the general exemption if the supply is made by way of lease and it meets the conditions set out in subparagraph 25(f)(i), or if the supply is made by way of a licence.

Tangible Personal Property

Generally, supplies of tangible personal property made by a public institution are exempt in accordance with section 2 of Part VI to Schedule V, unless such supplies are enumerated in paragraphs 2(a) thru 2(m). Please note that in accordance with section 136 of the ETA, the lease, licence, or similar arrangement of the use, or right to use tangible personal property is considered to be a supply of tangible personal property.

Towel & Gym Apparel Rental

Video & Audio Tapes

Off the Shelf Software

Where a university acquires towel and gym apparel for purposes of making a supply (including rentals) of these properties, the supply would be excluded from the general exemption by virtue of paragraph 2(e) of Part VI of Schedule V. Similarly, paragraph 2(e) would also exclude from the general exemption, a supply of video and audio tapes, and "off the shelf" software, if the university acquired, manufactured or produced these items with the intent of supplying them.

Locker Rental

If the supply of the locker is considered to be a supply of tangible personal property, then it will be subject to the general rules as identified above. Paragraph 2(e) of Part VI of Schedule V could apply to exclude the supply from the general exemption, where the conditions outlined in that paragraph are met.

Steam & Electricity

The Department has generally accepted that tangible personal property also includes electricity and steam. Therefore, paragraph 2(e) of Part VI of Schedule V would apply to exclude the supply of steam and electricity from the general exemption of section 2 of Part VI to Schedule V if the conditions outlined in that paragraph apply to the supply of these properties.

Right to use computer terminals

Generally, a supply of a right to use a computer terminal would be considered a supply of tangible personal property. This supply will be excluded from the general exemption if the university acquired the computer terminals for the purpose of supplying them.

Statement of attendance

Transcripts (including replacements) of academic records

Individual course description

Replacement of diplomas

Certified copies of academic documents

Letters of permission

Duplicate T2202As

Duplicate tuition statements for income tax

ID cards: original and replacement

It is the Department's view that the above are generally supplies of tangible personal property, the supply of which is excluded from the general exemption by paragraph 2(e) of Part VI of Schedule V.

Services

Normally, services provided by a public institution are exempt from GST, unless they are enumerated in the exclusionary paragraphs 2(a) to 2(m) of Part VI of Schedule V.

Fax services

Postage services

Development of Software

Research Services

Laboratory services

Computer services

Evaluation of Transcripts

Where the above are separate supplies (i.e., not an input or incidental to another supply), they are generally viewed as services, and therefore when supplied by a university, fall under the general exemption of section 2 of Part VI to Schedule V.

Production of first video and audio tape

If a university enters into an agreement to produce a video or an audio tape, the supply would generally be viewed as a production service performed by the university. Such a supply would be exempt pursuant to section 2 of Part VI to Schedule V.

Heating (Steam)

As stated earlier, the Department has generally accepted that the supply of steam is a supply of tangible personal property. However, where the steam is used by a university under an agreement to provide heat to another party, the provision of steam should be treated as a supply of a service. As such, the supply of the steam would be exempt pursuant to section 2 of Part VI to Schedule V.

Other Items

Delayed Exam Fees

It is our position that delayed exam fees represent consideration for either a supply of intangible personal property (i.e., a right) or a service so that, in either case, the supply would be exempt pursuant to section 2 of Part VI to Schedule V.

Landscaping

Generally landscaping would be a supply of a service and therefore exempt pursuant to section 2 of Part VI to Schedule V. However, where landscaping includes the acquisition of property such as trees, shrubs and landfill, a decision must be made on a case-by-case basis as to what is the nature of the supply (for example, the landscaping service might be viewed as incidental to the acquisition of such property in many circumstances).

Advertising

Generally advertising is considered a supply of a service and as such would be exempt where provided by a public institution. It is our view that the sale of advertising space in a publication or the sale of billboard advertising is, generally, a supply of an advertising service.

Laundry Services

Laundry services supplied by a public institution would be exempt under the general exemption of paragraph 2 of Part VI. If the supply is one of the right to use a laundry machine (e.g., a coin operated washer or dryer), the supply would be exempt pursuant to section 13.3 of Part I, but only for supplies made after April 23, 1996. Prior to then, the supply would be taxable (it is unlikely that any other exemption would apply).

Photocopying Services

Printing

In the past, the tax status of these supplies varied depending on the circumstances and generally universities have not been challenged by the Department on their treatment of these supplies. We are presently reviewing our policy in this area with the aim of making it easier to ascertain the tax status of these supplies in all circumstances.

Other Exemptions

Supplies made by a public institution that are excluded from the general exemption in section 2 by paragraphs 2(a) thru (m) may still be exempt by another provision in Schedule V. For example, section 10 of Part VI exempts a supply of tangible personal property made by a public institution where such supplies are made for no consideration and section 6 of Part VI exempts a supply of tangible personal property and certain services that do not exceed the direct cost.

It is noted that your publication, XXXXX , XXXXX t in some cases differ from the Department's position concerning these supplies. In addition, the publication has not been updated to reflect recent legislative amendments, such as those concerning the direct cost exemption. You may wish to revise the publication or otherwise inform your clients of the Department's current policy concerning these supplies and recent amendments in time for the commencement of the next academic year. XXXXX

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST Memoranda Series, do not bind the Department with respect to a particular situation.

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
Rulings Officer
Charities, NPOs, and Educational Services Division
GST/HST Rulings and Interpretations Directorate

 XXXXX

Encl.: memoranda 1.4

Legislative References: Section 2 of Part VI of Schedule V, Section 25 of Part VI of Schedule V, section 13.3 of Part I of Schedule V, subsection 123(1), section 136

NCS Subject Code(s): I 11910-1