3 June 1999 GST/HST Interpretation HQR0001818 - Membership

This is in response to your e-mail query of May 26, 1999 in which you requested that we comment on proposed scenario's set out by a representative of the XXXXX[.] Regarding the scenario's, we would first mention that if the XXXXX decided not to charge consideration for its memberships, it might fall under the XXXXX small supplier threshold for public service bodies (e.g. non-profit organizations). It would then not be required to register nor charge GST/HST on its taxable supplies (if any). The memberships themselves would be exempt under section 10/VI/V.

However, the fact that memberships are supplied for no consideration is not a factor in determining whether or not the supplies are made in the course of a business. Rather, the nature and extent of the social activities (and any associated planning or preparatory activities) would be significant factors in determining whether the XXXXX is carrying on a business. For example, if an organization's only activity was the planning of a low-key annual softball tournament, that organization might not be regarded as carrying on a business. However, if an organization planned an event (or events) such as a tournament or convention that required ongoing planning and supplies of registrations/admissions, and the organization made regular supplies of memberships, such activities would most likely be viewed as carrying on a business.

In summary then, the facts to consider in determining whether supplies are made in the course of a business (and thus in a commercial activity) would include:

•   the number of events as well as the nature and extent of each event;

•   the ongoing activities in organizing the event(s);

•   the extent (e.g., frequency, number) of supplying admissions over the course of the reporting period; and

•   the extent to which the memberships, or other supplies are made to members.

However, even though the question of whether consideration is charged is not relative in this determination, supplies made by a PSB for no consideration are exempt under most circumstances, and exempt supplies are specifically excluded from the definition of commercial activity.

Additional information would be required regarding the extent and nature of the XXXXX social activities and memberships in order to provide a more specific response.

I trust this is helpful. Please contact me at (613) 952-0420 if you have any comments or concerns.