22 December 1999 GST/HST Interpretation 8399/HQR2005 - Tax Treatment of Supplies Made by

This is in reply to your recent inquiry concerning the application of the Goods and Services Tax ("GST") to the supplies of tutoring services made by the XXXXX XXXXX[.] Our comments are set out below.

Statement of Facts

Our understanding of the facts of this case is set out below.

1. XXXXX is a private franchise business which operates nationally. Generally, XXXXX provides supplemental education to children from grades one to twelve in reading, writing, math, algebra and study skills.

2. The XXXXX. XXXXX indicates that this course is neither a grammar course nor a primer in vocabulary or spelling. The brochure description of this course indicates that adult enrollment is welcome.

3. The XXXXX. XXXXX indicates that all junior high, senior high and college students can benefit from this program. XXXXX.

4. The GST/HST Rulings and Interpretations Directorate issued a ruling, dated January 30, 1996, to the law firm of XXXXX on the tax treatment of supplies of math tutoring services by a franchise called the XXXXX XXXXX (to be referred to as the XXXXX ruling). The twenty-one levels of the XXXXX system do not correspond with the grade levels in Canadian elementary or secondary schools, and there is no attempt to follow a curriculum that is approved for credit by, or that follows a curriculum designated by, a school authority. The ruling indicated that the supply of math tutoring services is exempt pursuant to section 9 of Part III of Schedule V to the Excise Tax Act ("section 9" and "the Act"). The ruling stated that to qualify for exemption pursuant to section 9 the tutoring need not be limited to tutoring in the material contained in the course, but could also include tutoring in material from lower grades or tutoring in general concepts dealing with the relevant subject matter in order to assist the student to understand the material contained in a credit course or course designated by a school authority.

Information Requested

What is the tax treatment of the XXXXX programs supplied by XXXXX? That is, are these supplies exempt pursuant to section 9 of the Act?

Information Provided

Reference is made to the exemption for tutoring services in section 9 of the Act. Where the supply of tutoring services made by XXXXX meets the required conditions in that section, those supplies will be exempt.

Further, we confirm that the XXXXX ruling is valid and should be applied where appropriate. The excerpts from the ruling, which appear in the Statement of Facts, No. 4, above, indicate the subject matter in which the student is being tutored must relate to a course which the student is taking in school.

For example, if a student seeks tutoring to help him or her in a Grade 11 math course, the XXXXX ruling indicates that tutoring in math material from a lower grade or in general math concepts which help with the Grade 11 course would qualify for exemption pursuant to paragraph 9(a).

If you can determine that the XXXXX skills courses meet the conditions in either of section 9 (in particular, paragraph 9(a)) or the XXXXX ruling then, these courses will be exempt. However, if you determine that the XXXXX school system has no courses comparable to the XXXXX XXXXX then neither section 9 or the XXXXX ruling can be met. (The XXXXX ruling would not be met as the tutoring supplied by XXXXX would not relate, and therefore, not help with any courses the student is taking in school.) These courses would then be subject to tax.

We note that the XXXXX is advertised as being available to college students. We would point out that both the exemption in section 9 and the XXXXX ruling involve courses at the elementary and secondary school level. We would point out that tutoring in college level courses is not exempt pursuant to these authorities.

If you have any questions or require further clarification in this matter, please do not hesitate to call me at (613) 952-9215.