4 September 2003 GST/HST Interpretation 38786 - Zero-rating Exported Services

Dear XXXXX:

Thank you for your letter XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of services made to non-resident individuals.

Based on the information in your letter, CourseCo is a GST/HST registered Canadian supplier of vocational correspondence courses. You contend that in most cases the supply by CourseCo of these vocational courses are exempt by virtue of section 8 of Part III of Schedule V to the Excise Tax Act (the "Act"). In all circumstances the courses are supplied to individuals.

Interpretation Requested

You request confirmation that where the requisite conditions of section 7 of Part V of Schedule VI to the Act are met (where the requisite conditions of section 18 of Part V of Schedule VI to the Act are not met because the recipient is an individual), that CourseCo's supplies to non-residents may be zero-rated pursuant to section 7 of Part V of Schedule VI to the Act.

Interpretation Given

Section 18 of Part V of Schedule VI to the Act zero-rates a supply of a service of instructing non-resident individuals in courses leading to certificates, diplomas, licences or similar documents, or classes or ratings in respect of licences that attest to the competence of the individuals to whom the service is rendered. Where the non-resident recipient of the supply is an individual and section 18 of Part V of Schedule VI to the Act does not provide zero-rating, the supply may still be zero-rated by section 7 of Part V of Schedule VI to the Act. Section 7 of Part V of Schedule VI to the Act is the general zero-rating provision for supplies of services made to non-residents. Section 7 of Part V of Schedule VI to the Act zero-rates the supply of services made in Canada to non-residents unless the services are specifically excluded by paragraphs 7(a) through 7(h) of that section (the exclusions to this section are discussed in paragraphs 18 - 23 of the enclosed section 4.5.3 of the GST/HST Memoranda Series). In particular, the exclusions include 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 and a service that is rendered to an individual while that individual is in Canada.

Where none of the exclusions in section 7 of Part V of Schedule VI to the Act are applicable (as is given in your request), section 7 could apply to zero-rate the supply of the vocational correspondence courses made by CourseCo to non-resident recipients who are individuals.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the CCRA with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-8812.

Yours truly,

Jeffrey Frobel
Border Issues Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate