9 February 2000 GST/HST Interpretation 8373/HQR0001979 - Membership of a Non-profit Organization

This is concerning your memorandum of August 5, 1999 (copy attached) addressed to the Technical Interpretation Service Unit of XXXXX concerning XXXXX XXXXX. The memorandum was transferred to us for response.

Background Information

1. XXXXX acts as a subscription agent for non-profit-organizations (NPOs). XXXXX sends their customers an order form to list any memberships and publications they wish to renew or commence receiving. The customers return their orders with the money to XXXXX.

2. XXXXX XXXXX compiles the various orders and sends them to the NPOs for processing. XXXXX does not receive any of the publications or correspondence associated with the subscription or membership. The NPO supplies the publications/memberships directly to the customers.

3. Once the order is placed with the NPO, XXXXX is then invoiced by the NPO. As an example, the NPO invoices XXXXX for a membership.

4. XXXXX sends out an invoice to their customers for XXXXX; the $XXXXX difference is XXXXX commission/charge for processing the order. The XXXXX is forwarded to the NPO.

Questions

Is the supply between XXXXX and its customers exempt under section 17 of [P]art VI of Schedule V to the ETA assuming that all criteria therein have been met?

If section 17 of Part VI of Schedule V does not apply, does the GST/HST apply to the full amount of the invoice XXXXX or does the GST/HST apply only on the commission XXXXX[.]

Response

A membership in a non-profit-organization is generally taxable if the members receive any benefits other than those set out under section 17 of Part VI of Schedule V. As we do not have any information on the supply of memberships by the NPOs, we cannot confirm if the exemption under section 17 applies. Furthermore, the publications will be exempt only if they are part of an exempt membership and meet the requirements of subsection 17(f) of Part VI to the ETA.

However, assuming that all requirements of section 17 have been met on the supply of memberships by the NPOs and that the memberships are exempt, it is our view that XXXXX is not required to collect GST/HST from its customers. The above treatment is based on the premise that the NPO is not transferring ownership of the memberships to XXXXX for resupply by XXXXX. Furthermore, XXXXX is supplying an "administrative service" to the NPO for XXXXX As there is nothing in the Excise Tax Act to exempt that service, it would be taxable. Therefore, XXXXX should be collecting GST/HST from the NPO on the value of the consideration XXXXX for the supply of that service.

If the membership is not exempt then the XXXXX will be taxable. Please note that assuming the NPOs are registrants, they will be liable for remitting the tax charged on the XXXXX unless parties have filed an election under subsection 177(1.1) which would allow XXXXX to account for tax charged on the supply of the membership by the NPO.

Finally, XXXXX is required to remit tax on the XXXXX as the XXXXX consideration for the services supplied by XXXXX.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-0329.

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