14 July 2003 GST/HST Ruling 38529 - Membership Fees

Dear XXXXX:

Thank you for your letter XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to memberships in the XXXXX (Association). Your request has been forwarded from our XXXXX GST/HST Rulings Centre for response from our office. We apologize for the delay in our response.

You have requested that we review the portion of the ruling issued XXXXX by the XXXXX GST/HST Rulings Centre (see attachment) as it relates to the tax status of the supplies of memberships by the Association. The present ruling replaces the ruling provided XXXXX in respect of the tax status of the memberships in the Association only.

Since the Association makes supplies in XXXXX, a province not participating in the HST, we have not addressed the application of HST to taxable supplies made by the Association in the ruling given.

Statement of Facts

Our understanding of the facts is as follows:

The Association meets the definition of a non-profit organization under subsection 123(1) of the Excise Tax Act (the ETA).

The goals of the Association are:

•   To represent XXXXX.

•   To provide continuing education programs XXXXX.

•   To remain non-profit and to ensure all funds collected by the Association are returned to the membership for the betterment of the members.

•   To provide certification for qualified members.

•   To promote the career of XXXXX to the profession, the community and to government XXXXX.

Members of the Association do not require the membership to maintain a professional status recognized by statute XXXXX. The Association provides a certification process to its members, but the certification is used as a hiring standard with employers.

Members of the Association are organized into XXXXX affiliated associations in XXXXX. These affiliated associations are locals of the Association.

The Association has two membership categories:

Voting Members

•   XXXXX

•   XXXXX Non-voting Members

•   XXXXX

•   XXXXX

•   XXXXX Membership in the Association provides members with many benefits, including the following:

•   XXXXX

•   XXXXX

•   XXXXX

•   XXXXX

•   XXXXX

•   XXXXX

•   XXXXX

•   XXXXX the total fee for membership in the Association is $XXXXX.

The Association is a Corporate Member of XXXXX. A person who is a member in good standing of a Corporate Member in a province or territory of Canada shall become a XXXXX Member of the XXXXX upon the recommendation of the Association.

According to the XXXXX Letter of Agreement between the XXXXX and the Association, as a requisite of membership in the Association, a XXXXX transfer fee of $XXXXX per member will be collected by the Association at the time of the Association's annual renewal period. Fees will be accumulated by the Association and forwarded to the XXXXX of each year.

The XXXXX transfer fee is not broken down and made evident to members of the Association. As previously stated, members are made aware that acquiring an Association membership will provide the member with membership in the XXXXX.

The Association does not currently charge the GST on the total of the membership fee.

The supply of the membership by the Association is not exempt under section 17 of Part VI of Schedule V to the ETA.

Ruling Requested

Is the supply of the membership in the Association exempt from the GST under section 18 of Part VI of Schedule V to the ETA?

Ruling Given

Based on the facts set out above, we rule that the supply of the membership in the Association, for a consideration of $XXXXX, is not exempt from the GST under section 18 of Part VI of Schedule V to the ETA.

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 ETA, or to our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

Section 18 of Part VI of Schedule V to the ETA exempts from the GST the following supply:

"A supply of a membership made by an organization membership in which is required to maintain a professional status recognized by statute, except where the supplier has made an election under this section in prescribed form containing prescribed information."

Although some provinces may regulate by statute XXXXX, membership in the Association is not required to maintain a professional status recognized by statute in XXXXX. As a result, the supply cannot be exempt under section 18 of Part VI of Schedule V.

As you are not an authorized representative of XXXXX, we are unable to comment on the tax status of the membership in XXXXX to which the $XXXXX relates. You may wish to contact them for further information on this topic.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-4206.

Yours truly,

Carol A. Gaudet
Charities, Non-Profit Organizations and Educational Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

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