10 February 2003 GST/HST Interpretation 43605 - University Meal Plans

Dear XXXXX:

Thank you for your letter XXXXX (with attachments) concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of meal plans by a university. Your query has been forwarded to our office by the XXXXX Tax Services Office for our response.

As you are not an authorized representative for the university that you identified in your letter, we cannot comment specifically on the application of the GST/HST to the supplies made by that university. We are, however, able to provide you with the following interpretation.

Interpretation Requested

How are university meal plans dealt with under the Excise Tax Act (the ETA)?

Interpretation Given

Section 13 of Part III of Schedule V to the ETA exempts from the GST/HST certain meals supplied to a university student or public college student. It reads as follows:

A supply of a meal to a student enrolled at a university or public college where the meal is provided under a plan that is for a period of not less than one month and under which the student purchases from the supplier for a single consideration only the right to receive at a restaurant or cafeteria at the university or college not less than 10 meals weekly throughout the period.

It should be noted that it is not the supply of the meal plan that is exempt, but the supply of the meal that is provided under a very specific type of plan. The plan must meet the following conditions:

1. The plan must cover a period of not less than one month;

2. The student must purchase the plan from the supplier for a single consideration; and

3. The plan must only provide for the right to receive at a restaurant or cafeteria at the university or public college not less than 10 meals per week for the period of the plan.

Where a plan allows for the right to receive meals at restaurants or cafeterias that are not at the university or public college, the plan will not meet the requirements of section 13. As a result, no meals supplied under that plan will be exempt under section 13.

Generally, the CCRA interprets the phrase "at a restaurant or cafeteria at the university or college", as found in section 13, as meaning a restaurant or cafeteria located on university or public college property.

It should be noted that this exemption does not depend on whether the student purchasing the meal plan lives on- or off-campus. Hence, university students living off-campus and purchasing meal plans are provided with the same treatment as students living in university or public college residences. However, the meal plan must be for use by university or public college students at a campus cafeteria or restaurant. A qualifying meal plan would not cover purchases at an on-campus mini-mart or convenience store or at any location off-campus.

The single consideration for the meal plan need only be sufficient to cover 10 or more meals. The cost per meal must be based on the average cost of a meal at the university or public college. It is a question of fact and law whether the plan is purchased from the supplier for a single consideration. Agreements between the student and the university would have to be reviewed to make this determination and a ruling on this matter could only be provided to a party to the agreement or its authorized representative.

Section 13 was amended by 1997, c. 10, s. 100(1), applicable to supplies for which all of the consideration becomes due after June 1996 or is paid after June 1996 without having become due. Section 13 formerly read:

A supply of a meal at a university or public college to a student where the meal is provided under a plan under which the student purchases from the supplier for a single consideration a supply of not less than 10 meals weekly for a period of not less than one month.

The Department of Finance, in its Explanatory Notes to the amendment, indicated that the new wording ensures that meal plans sold to students in the form of a decreasing balance debit card or meal vouchers are eligible for the exemption under section 13 of Part III of Schedule V to the ETA.

Where a restaurant is making the supply to the university directly, the supply may be exempt under section 14 of Part III of Schedule V to the ETA. This section exempts the following supply:

A supply of food and beverages, including catering services, made to a person that is a school authority, university, or public college under a contract to provide food or beverages

(a) to students under a plan referred to in section 13; or

(b) in an elementary or secondary school cafeteria primarily to students of the school, except to the extent that the food, beverages and services are provided for a reception, conference or other special occasion or event.

Therefore, where the restaurant has been contracted to supply meals to a university or public college, the meals must still be provided under a plan that meets the requirements set out in section 13 of Part III of Schedule V to the ETA in order for the supply to be exempt under section 14.

Agreements between the student, the university or public college, and the restaurant would have to be reviewed to make the determination as to who is making a supply, what is being supplied, and who the recipient of that supply is. As previously stated, a ruling on this matter can only be provided to a party to the agreement or its authorized representative.

You have made reference to paragraphs 22 and 23 of GST Memorandum 300-4-3 Educational Services in your letter. It is important to note that the information found in the GST Memorandums does not replace the legislation found in the ETA and its Regulations.

The CCRA is not responsible for the administration of the Competition Act (R.S., 1985, c. C-34, s. 1; R.S., 1985, c. 19 (2nd Supp.), s. 19.). We therefore cannot comment on how the situation you have described would be treated under this legislation. You may contact Industry Canada for more information on the Competition Act.

We are unable to comment regarding the application of student meal plans under XXXXX, as it's administration is the purview of the Province of XXXXX.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the ETA, 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 Canada Customs and Revenue Agency with respect to a particular situation.

For your convenience, find enclosed a copy of section 1.4 of Chapter 1 of the GST/HST Memoranda Series.

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

XXXXX

NCS Subject Code(s): I - 11915-3