22 March 2000 GST/HST Interpretation 25843 - Drama Classes Supplied by a Charity

In your e-mail of January 7, 2000, you requested our interpretation of how paragraph 1(f) of Part V.1 of Schedule V would apply to the following situation.

A charity who, apart from other activities, offers youth drama classes. The classes are divided into three categories: Junior (7-10 yrs) Intermediate (11-13 yrs) and Advanced (14-19 yrs). My initial thoughts are that each class is looked at individually to see if it is exempt under subparagraph 1(f)(i) of Part V.1 of Sch V. As a result, both the junior and the intermediate classes would be exempt, however the advanced would not. As a second thought I now question whether the entire drama program should be considered as a whole (as it is done under sec 12 of PSBs). If this were the case, all three classes could be exempt.

Pursuant to your request, we offered you a tentative reply by e-mail that, as a matter of administrative policy, we might interpret the meaning of "activity" in paragraph 1(f) in the manner in which we interpret the meaning of "program" in the similar exemption for public sector bodies under section 12 of Part VI of Schedule V. We advised that our interpretation of "program" is fairly broad in that, since this is not a defined term in the ETA, we would allow a supplier latitude in determining what its "programs" are, so long as the determination is reasonable. However, we also advised you that, since we haven't ruled specifically on this matter where paragraph 1(f) is concerned, we would first consult with the Department of Finance before finalizing our interpretation.

Recently you advised that you are no longer awaiting our resolution of this matter since, as it turns out, the client you are dealing with is a public institution, and not a charity for GST/HST purposes, so that paragraph 1(f) is not at issue. However, you also requested that we advise you of our administrative policy concerning paragraph 1(f) once finalized.

We have just been provided an update by the Department of Finance that the issue of how the term "activity" in paragraph 1(f) should be interpreted remains under review by that Department. We will advise you of our position concerning this matter after Finance has completed its review and we have finalized our policy.

Thank you for your co-operation and assistance. Please contact me at (613) 954-7936 if you have further questions concerning this issue.