3 January 2002 GST/HST Interpretation 32387 - Administering Tests

Thank you for your letter of August 11, 2000, with attachments, concerning the application of the Goods and Services Tax (GST) to a service of administering tests by the XXXXX (XXXXX) on behalf of XXXXX XXXXX (XXXXX). We regret the delay in responding.

Statement of Facts

XXXXX is a resident, non-profit organization, not registered for GST/HST purposes, that provides various courses and support to members of the community seeking employment.

XXXXX is a non-resident who is not registered for GST/HST purposes. XXXXX provides internet based certification testing services, where candidates can register for and take the exams.

XXXXX is a certified test administrator and testing center under an agreement with XXXXX.

Under the agreement with XXXXX, XXXXX provides facilities for candidates to sign on and take certification testing in various computer-based skills, such as XXXXX. XXXXX provides registration, the physical facilities, on-line time and an in-room proctor for candidates taking examinations on-line.

XXXXX provides certification to students as a result of the testing conducted.

XXXXX accepts payment from candidates and forwards same to XXXXX at month end.

XXXXX receives a fee from XXXXX for each test delivered as well as a fee for a test registered by the center.

Question Asked

You requested our advice as to whether the supply made by XXXXX to XXXXX, as described, is a supply of a service made to a non-resident and whether the supply is zero-rated.

Answer Provided

a) Administering Examinations

Policy Statement P-077R, Single and Multiple Supplies, contains the factors for determining whether goods and services provided together constitute a single supply or multiple supplies. In identifying and analyzing the various elements and facts of this case, a distinction was made between the administering of examinations, and other elements such as: providing testing facilities, registration, accepting payments, etc., which are simply considered inputs consumed in making the supply or part of the supply, and all of these inputs appear to be included in the agreement between XXXXX and XXXXX. The provision of all of the elements is contingent on the provision of the others, consequently, the supply of the service in this case is considered to be a single supply.

Section 18 of Part V of Schedule VI to the Excise Tax Act (Act) would apply if non-resident students, that register to take examinations with XXXXX, were directed to XXXXX to take the certification exams, providing that the supply is made to a non-resident person, other than an individual, who is not registered under Subdivision d of Division V of Part IX of the Act of a service of administering examinations in respect of, courses leading to certificates, diplomas, licences or similar documents.

Since Section 18 of Part V of Schedule VI to the Act zero-rates this specific service, we would not refer to Section 7 of that Part. Section 7 zero-rates a supply of a service when made to a non-resident person provided that none of the exclusions in the provision apply. Since the service of administering examinations in this case is a service that is rendered to an individual while that individual is in Canada, it is specifically excluded under paragraph (a.1) of Section 7 of Part V of Schedule VI to the Act.

(b) Registration Only

In the case where XXXXX supplies a service of registration only, it would not be zero-rated under Section 18 of Part V of Schedule VI to the Act as it is not a service of administering an examination.

A supply of a service of registration may be zero-rated under the general provision for services under Section 7 of Part V of Schedule VI to the Act. Section 7 zero-rates a supply of a service when made to a non-resident person provided that none of the exclusions in the provision apply. In the case of XXXXX service of registration, the following paragraphs may apply to exclude the service from the zero-rating provision:

(a) A service made to an individual who is in Canada at any time when the individual has contact with the supplier in relation to the supply.

(a.1) A service that is rendered to an individual while that individual is in Canada (whether or not the individual is the recipient of the supply).

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-4294.