18 February 2004 GST/HST Interpretation 46264 - Whether Supplies Acquired by the Constitute Intangible Personal Property or Educational Services

Please note that the following documents, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ces documents, bien qu'exacts au moment émis, peuvent ne pas représenter la position actuelle de l'Agence.

This is in reply to your e-mail XXXXX, wherein you asked for our opinion on whether the supplies acquired by the XXXXX constitute intangible personal property or educational services. You advised that the XXXXX is a band-empowered entity (BEE) for purposes of Technical Information Bulletin B-039R GST Administrative Policy - Application of GST to Indians (B-039R).

In your e-mail, you indicated that the Summerside Rebates Processing Centre denied all portions of Code 1 rebate claims for amounts paid in error in respect of courses, seminars and conferences. Other claims were also denied. The XXXXX objected to the Notice of Assessment.

The basis on which the rebates claimed by XXXXXwere denied is B-039R. B-039R provides, in part, that tax relief is available on property acquired by a BEE where the property is situated on a reserve or delivered to a reserve. As intangible personal property is not property that can be delivered to a reserve, it must be situated on a reserve for tax relief to apply. Therefore, for example, where a BEE acquires a supply of intangible personal property on or off reserve, such as an admission to a seminar, tax relief will apply where the right of entry, or access to that seminar is on a reserve.

I understand that all of the issues specific to the XXXXX have since been resolved. However, for purposes of making future determinations, you have asked for guidelines to assist in distinguishing between a supply of an admission and a supply of a service of instruction.

A paper entitled "Characterization of Supplies of an Admission to a Seminar, an Activity or an Event versus Supplies of a Service of Instruction", a copy of which is enclosed, was developed in response to your request. Please note the factors set out in the attached are not all-inclusive. They are merely provided as a guide to aid in differentiating between these two types of supplies. The respective weight of each factor should be determined according to the facts of each case.

We trust that the factors set out in this paper will be of assistance to you. We realize that the use of these factors in making a determination may not always be easy particularly where information respecting the supply is limited.

If you have any questions or would like to discuss further, please call me at (613) 954-7957.

Enclosure

CHARACTERIZATION OF SUPPLIES OF AN ADMISSION TO A SEMINAR, AN ACTIVITY OR AN EVENT VERSUS SUPPLIES OF A SERVICE OF INSTRUCTION

A supply of an admission to a seminar, an activity or an event, is a right of entry or access to, or attendance at, the seminar, activity or event. An admission may comprise a service component that forms part of a single supply of an admission. Conversely, where a service is a separate supply in its own right, the supply may be provided to a single recipient, to multiple recipients or to a specific recipient for re-supply. The characterization of a supply is dependent upon the nature of the agreement between the supplier and the recipient.

The following factors are intended to assist in distinguishing between a supply of an admission to a seminar, an activity or an event and a supply of a service of instruction. These factors should be considered in the course of conducting an analysis in determining whether a supply constitutes an admission or a service. These factors are not all inclusive. Consideration should be given to the ordinary meaning of such words as "seminar" and "course". Furthermore, the order in which the factors appear is not intended to convey a priority or weighting to any one factor.

For reading ease, the word "activity" refers to the activity carried out for purposes of making a supply of admission or a supply of a service of instruction (e.g., in-class instruction, seminar-based learning programs, conference, information sessions, etc.).

1) Factors that generally indicate that a supply is that of a service of instruction are:

•   the activity involves the provision of systematic instruction;

•   the supplier monitors or supervises the progress or learning of the participant;

•   the supplier assesses the participant's progress during the course of the activity and provides ongoing support, feedback and guidance to the participant (e.g., the supplier may be available to assist the participant with the subject matter at a time and location different from the time and place in which the activity occurs);

•   the supplier assesses the competency of the participant upon completion of the activity by requiring the participant to formally demonstrate the knowledge the participant has acquired. If the competency is not achieved, the activity may have to be repeated;

•   the participant is required to invest time and effort outside of the activity (e.g., completing assignments, reading course material);

•   successful completion of verified prerequisites may be required before the participant may take part in the activity; (e.g. before taking intermediate computer skills, the participant must demonstrate that he/she has completed introductory computer skills);

•   the participant may be required to successfully complete the activity before being permitted to participate in another activity;

•   the activity is part of a series of activities leading to a formal recognition of skills;

•   the activity may be part of a program that consists of a series of two or more related activities;

•   the activity occurs at set intervals over an extended period of time (such as weeks or months);

•   the activity does not include the provision of rights or if there is a provision of rights they are incidental to or part of a single supply of a service (e.g., right to use library facilities);

•   the subject of the activity is broad (e.g., Canadian History);

•   the supplier advertises or promotes the activity as instructing participants;

•   the activity is promoted together with other activities in a prospectus or calendar prepared by an educational institution; the promotional material indicates that the activity is part of a broader program which may lead to a formal recognition of skills;

•   the promotional material is aimed at persons who possess any prerequisites required to participate in the activity.

2) Factors that generally indicate that a supply is that of an admission to a seminar, an activity or an event (i.e., right of entry or access to, or attendance at) are:

•   there is little individualized interaction between the supplier and the participant;

•   attendance at the activity is sufficient for the participant to receive evidence of successful or satisfactory completion of the activity;

•   the supplier's purpose with respect to the activity is principally to provide information to, or to facilitate the exchange of information amongst participants;

•   the subject of the activity is narrowly focused (e.g., improving sales techniques; emergency response techniques; financial planning techniques);

•   each activity is discrete with no formal prerequisites for attendance;

•   participation in the activity does not serve as a prerequisite for participation in another activity;

•   the activity is promoted as a stand alone activity;

•   the activity is promoted to the general public;

•   the activity occurs during a brief, concentrated period of time, such as a day or a several consecutive days.