17 April 2000 GST/HST Interpretation 25843S - The Meaning of "Activity" in Paragraph 1(f) of Part V.1 of Schedule V to the ETA

In the Memorandum dated March 22, 2000, which was sent to your attention, Mike Place, Manager of the Charities, NPOs, and Educational Services unit indicated that we would be advising you of our position regarding the meaning of "activity" in Paragraph 1(f) of Part V.1 of Schedule V to the Excise Tax Act (ETA), once the Department of Finance has completed it review of this section and our policy is finalized. As both the review and our policy have been completed, I am writing to advise you of our position.

Under paragraph 1(f) of Part V.1, a service involving, or a membership, or right entitling a person to supervision or instruction in any recreational or athletic activity is excluded from the general exemption for charities in section 1 of Part V.1, except if it could be reasonably be expected, given the nature of the activity, that the services, membership or rights would be provided primarily to children 14 years of age or under, or such services, memberships, or rights are intended to be provided primarily to individuals who are underprivileged or who have a disability.

In the Memorandum of March 22, it was put forth that "activity" in paragraph 1(f), might be interpreted in a manner similar to the interpretation provided for the meaning of "program" in section 12 of Part VI of Schedule V. As was indicated in that Memorandum, the interpretation of "program" is fairly broad in that, since the term is not defined in the ETA, we have allowed suppliers latitude in determining what constitutes a "program", provided that the determination of such is reasonable.

It is our position that a supplier may have some latitude in determining what constitutes an "activity" for purposes of paragraph 1(f) of Part V.1 of Schedule V, provided that the determination is made on a reasonable basis. For example, if a charity offers instruction in swimming to participants dependant upon the age of the participants; Juniors (7-10 yrs), Intermediate (11-14 yrs) and Seniors (14-19 yrs), it is our position that the charity may consider the provision of the instruction to each age group as a separate activity, or alternatively, it may consider the provision of instruction to all the groups as a single activity. This position mirrors the flexibility in the interpretation of "program" in section 12 of Part VI of Schedule V. Similar to section 12 of Part VI, the flexibility in interpretation is intended to take into account the numerous activities engaged in by charities in the course of their mandated and or fund-raising activities.

If you have any further questions concerning this issue, please contact me at (613) 954-4206[.]