27 March 2001 GST/HST Ruling 35059 - Tax Treatment of Language Instruction Services

Dear XXXXX:

Thank you for your letter of February 1, 2001 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the situation described below.

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX Consultants carries on the business of providing French and English language instruction services to federal government employees.

2. XXXXX Consultants hires language instructors who work at the client's location and provide the following courses:

•   Improving oral skills (English and French, all levels);

•   Improving grammar/writing (English and French, all levels);

•   Preparation for second language exams (oral, writing, reading comprehension, English and French, all levels);

•   Individual courses; and

•   Special courses (e.g. presentations).

3. XXXXX Consultants hires instructors on a part-time basis, depending on demand. There may be two to three English, and five to six French instructors. The instructors are paid on an hourly basis.

4. XXXXX Consultants has received Treasury Board accreditation as a private sector language provider. This entitles the firm to be included on a list of private sector suppliers of language training for government employees. Accreditation involves review of the supplier's operations by a Treasury Board Committee. The Committee considers such things as curriculum offered, qualifications and experience of teachers, methodology and materials, evaluation of students, testing of students and administrative practices (such as invoicing, etc.)

5. The only business activity of XXXXX Consultants is the supply of language instruction services. This activity is carried on in XXXXX, where several federal government departments are located.

6. You advise that as of September 2000, the federal department of Public Works and Government Services ("Public Works") cancelled all standing offers related to language instruction.

Ruling Requested

That the supply of French and English language training by XXXXX Consultants to federal government departments located in XXXXX, is not subject to GST, notwithstanding that Public Works cancelled all standing offers relating to language training.

Ruling Given

Based on the facts set out above, we rule that the supply of French and English language training by XXXXX Consultants to federal government departments located in XXXXX, qualifies for the exemption in section 11 of Part III of Schedule V to the Excise Tax Act. You are not required to charge GST on these supplies.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact Danielle Lafleche at 954-7936.

Yours truly,

Aurelia I. Mauro
Charities, Non-Profit Organizations and Educational Services Unit
Public Service Bodies & Governments Division
Excise and GST/HST Rulings Directorate