GSTHST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, Ontario
XXXXX K1A 0L5
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XXXXX
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Business Number: XXXXX
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Dear XXXXX
Thank you for your letter of November 28, 1997 to the XXXXX Tax Services Office (with attachment) concerning the application of the Goods and Services Tax (GST)Harmonized Sales Tax (HST) to XXXXX and its provincial housestaff associations. The XXXXX Tax Services Office has asked us to respond directly to you.
It is our understanding that XXXXX and its provincial housestaff associations are each separately incorporated as organizations without share capital: consequently, each would be regarded as a separate person for GST purposes. All provincial housestaff associations are nonprofit organizations for GST purposes. As well, the XXXXX is a trade union.
As discussed, since XXXXX is requesting general information related to memberships with the intention of making its memberships taxable, it was agreed that an interpretation rather than a ruling would be provided.
Interpretation Requested
1. When is a membership in a nonprofit organization exempt under section 17 of Part VI of Schedule V to the ETA?
2. When is a membership in certain professional associations exempt under section 18 of Part VI of Schedule V to the ETA as membership in an organization which is required to maintain a professional status recognized by statute?
3. Are fees paid to a trade union subject to GST?
Interpretation Given
1. Membership in a public sector body (e.g. a nonprofit organization) is exempt under section 17 of Part VI of Schedule V to the ETA, where the organization does not provide any direct benefits other than those "allowable" benefits outlined in the exemption (e.g. the right to vote, certain publications, discounts of insignificant value, etc. as outlined in attachment) Provision of any direct benefits not listed in the exemption would cause the membership to be taxable.
If the public sector body sells a membership which provides no direct benefits or only those listed "allowable" benefits, the membership is exempt unless the body has made an election (GST 23) to have its memberships made taxable. It is no longer necessary to file the election form with the Department; rather, it is only necessary to make the election using the form and retain the election with the public sector body's records. An organization that has otherwise exempt memberships, but that has filed an election form to make them taxable, is entitled to revoke the election form in order to commence selling exempt memberships.
2. Membership in certain organizations (e.g. professional associations) are also exempt provided membership is required in order to maintain a professional status recognized by statute. There are no restrictions on the benefits members can receive and the organization need not be a public sector body to have its professional memberships exempt. It is sufficient that a professional status be recognized in at least one province for supplies of memberships in the professional association to be exempt in all provinces. An election (GST 24) may be made by the organization to have its otherwise exempt professional memberships made taxable. It is, as well, not necessary to file this election form with the Department. However, it should be retained in the organization's records. If such a professional association were to revoke the election form, it would commence making exempt supplies of memberships.
3. Generally, where an amount is paid to an organization as a membership due paid to a trade union (as defined in section 3 of the Canada Labour Code, or in any Act of the legislature of a province), or to an association of public servants, or to a parity or advisory committee or similar body, the payment of which was required under law, that organization is deemed to have made an exempt supply to the person and such a due is not subject to GST. The organization is not able to elect to make such dues taxable.
I have enclosed a copy of the exemption provisions described above.
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) 952-0420.
Yours truly,
Lorrie Grannary
Charities and Non[-]profit Organizations Unit
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate
| c.c.: |
J.A. Venne
J.M. Place
Ottawa, TSO |
| Legislative References: |
17 and 18VIV |
NCS Subject Code(s) I7
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