26 March 2003 GST/HST Ruling 39983 - Training

Dear XXXXX:

We are replying to the Notice of Objection XXXXX that you filed after receiving the ruling provided to you by your local Tax Services Office XXXXX. The ruling determined that the training provided by your organization is taxable.

A Notice of Objection is used to file an objection against an audit assessment. There has been no assessment made to which an objection could be filed. Therefore, the local Appeals Division was unable to do a review and has instead forwarded the matter to us at the Excise and GST/HST Rulings Directorate. We have reviewed the file and are providing a ruling that we hope will clarify the situation for you. We apologize for the delay in our response.

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX (the Partnership), provides XXXXX services XXXXX and also XXXXX training to individuals.

2. Currently, XXXXX % of the Partnership's revenues are derived from XXXXX services, XXXXX % from XXXXX training. In previous years, the percentages have been XXXXX % from XXXXX services, XXXXX % from XXXXX training.

3. XXXXX[.]

4. XXXXX[.]

5. XXXXX does not specify the requirements for XXXXX qualification. Each provincial government has its own requirements for XXXXX. In XXXXX are required to have, in addition to XXXXX insurance, a XXXXX and certification that they have successfully completed the requisite XXXXX courses.

6. XXXXX[.]

7. Insurance companies require XXXXX XXXXX training before they will consider insuring applicants.

8. The Partnership is not registered as a vocational school in XXXXX. It is recognized as an educational institution for the purposes of issuing income tax receipts to individuals taking the training.

Ruling Requested

Is the XXXXX training provided by the Partnership exempt from GST?

Ruling Given

Based on the facts set out above, we rule that the training provided by the Partnership is not exempt from GST; the training is taxable.

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 (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 8 of Part III of Schedule V to the ETA exempts supplies of certain courses when made by a school authority, vocational school, public college or university. In other words, the supplier of the courses must be a school authority, vocational school, public college or university. The status of the supplier therefore needs to be determined, before considering whether the courses themselves qualify for exemption.

It is evident that the Partnership is not a school authority (i.e., elementary or secondary school), public college or university. The next step is to determine whether it is a vocational school. A vocational school is defined in section 1 of Part III of Schedule V to the ETA as "an organization that is established and operated primarily to provide students with correspondence courses, or instruction in courses, that develop or enhance students' occupational skills."

An organization is considered to be "operated primarily" to provide correspondence courses or instruction in courses that develop or enhance students' occupational skills, if more than 50% of its total annual revenues are derived from tuition for courses, or may be attributed to the provision of instruction in courses, that develop or enhance students' occupational skills.

As the Partnership's revenues are not derived primarily (i.e. more than 50%) from training, it does not qualify as a vocational school. Since it is not a vocational school, the training it provides is not exempt under section 8 of Part III of Schedule V to the ETA. Nor is there any other provision to exempt the training.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-9592.

Yours truly,

Helena Ingr
Charities, NPOs and Educational Services Unit
PSBs and Governments Division
Excise and GST/HST Rulings Directorate

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