Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 220810
[Addressee]
Dear [Client]:
Subject: GST/HST RULING
[…][Education Revenue]
Thank you for your [correspondence] of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the […][Corporation’s] […] new sources of education revenue.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand the facts as follows based on your request, the applicable legislation in […][the Province], a review of the [Corporation’s] website, and the additional information provided by you on behalf of the [Corporation].
1. The [Corporation] was established by regulation under […][Provincial Act A], and continued as a corporation in […] of […][Provincial Act B].
2. […][Section cited from the Provincial Act B that grants the Corporation the power to regulate the practice of a profession]
3. On its website, the [Corporation] describes itself as follows:
[Quote from website].
4. Further, the [Corporation] describes its mandate on its website as follows:
[Quote from website describing the activities of the Corporation related to regulating the profession].
5. The [Corporation] is establishing […], an education program for its licensees to meet their […] education requirements. The program will provide […] new sources of revenue to the [Corporation] as follows:
(a) Accreditation Revenue – the [Corporation] will grant accreditation to eligible course providers and individual courses and will assess fees.
(b) […] Education – the [Corporation] will assess a fee for each hour of instruction which will be equivalent to […] education credit.
6. You have stated the following with respect to the Accreditation Revenue:
a. The proposed [Program] will be an online system, available through the [Corporation]’s website. All applications will be submitted electronically. Applicants will submit either […][Application A] or […][Application B] through the online system. The [Program] is optional and there is no requirement for course providers to apply.
b. Eligible course providers will have to meet the […][Guidelines] established by the [Corporation]. Currently, [the Guidelines] state the following eligibility criteria:
[…][direct quote from the Guidelines]
c. Applicants will pay either the [Application A] fee or the [Application B] fee at time of application. Fees will have to be paid at time of renewal. Renewal cycle will be determined in consultation with stakeholders.
d. Course fees are at the discretion of course providers. The [Corporation] will not determine course fees, that is currently, and will continue to be at course providers discretion. The only fees that [the Corporation] will collect are as noted above - for accreditation applicants.
e. Examinations as part of or after the courses is at the course provider’s discretion. The [Corporation] will require some form of attendance tracking to determine course completion - this can be in the form of an exam, or attendance taking. The [Corporation] will provide guidelines for attendance tracking - the course provider will determine the best form at their discretion.
f. If exams are part of the course, this will be created by the course provider and not by the [Corporation]. Course providers have always, and will continue, to administer their own exams as necessary as part of their course/program requirements.
g. As part of the [Corporation]’s [Guidelines], the [Corporation] will require all course providers to issue a completion certificate to all attendees. [The Corporation] will have a certificate template, but the course provider can choose to use it or not. Certificates will be issued by the course provider as they will be required to determine course completion criteria.
h. All individual courses must meet the [Corporation]’s [Guidelines] (available on the [Corporation]’s website currently and will be also part of the [Application A] guidelines). So long as the course meets the [Corporation]’s technical content requirements, the course will count for […]education credit. This is the purpose of the […][Program] - to help licensees determine which courses meet the [Corporation]’s course content requirement.
i. Some courses that are provided by certain organizations (i.e. […][Organization A]) are designation courses.
7. You have stated the following with respect to the […] education revenue:
a. The course content is developed and delivered by the [Corporation].
b. The course modalities will be online - either delivered through […][a learning platform] or as live webinars.
c. Anyone who wants to take the course will pay the fees. The courses are designed for licence applicants and/or licensees.
d. Licensees are required to maintain a number of […] credits specific to their licence […].
e. […] education courses and credits are available to members only.
8. […] The [Corporation] is an ‘other body established by a government’ under Category 1 for the purposes of section 20 of Part VI of Schedule V to the ETA […].
9. The [Corporation] was issued GST/HST account number […] to claim rebates but it is not currently registered for GST/HST purposes.
RULING REQUESTED
You would like to know if the fees assessed by the [Corporation] with respect to the […][education and accreditation revenue] described above are subject to GST/HST.
RULINGS GIVEN
Based on the facts set out above, we rule that:
1. the [Corporation]’s supplies of services of instruction in […] education courses to its members are exempt of GST/HST.
2. the fees assessed by the [Corporation] for accreditation of courses and course providers pursuant to the [Corporation]’s [Program] are consideration for taxable supplies.
EXPLANATION
1. Ruling 1 – […] Education Revenue:
Section 6 of Part III of Schedule V to the ETA exempts “a supply of:
(a) a service of instructing individuals in courses leading to, or for the purpose of maintaining or upgrading, a professional or trade accreditation or designation recognized by a regulatory body, or
(b) a certificate, or a service of administering an examination, in respect of a course, or in respect of an accreditation or designation described in paragraph (a), where the supply is made by a professional or trade association, government, vocational school, university or public college or by the regulatory body, except where the supplier has made an election under this section in prescribed form containing prescribed information.”
A “regulatory body” is defined in Section 1 of Part III of Schedule V to the ETA to mean “a body that is constituted or empowered by an Act of Parliament or of the legislature of a province to regulate the practice of a profession or trade by setting standards of knowledge and proficiency for practitioners of the profession or trade”. The Corporation was established by regulation under the [Provincial Act A] and continued as a corporation in […] of the [Provincial Act B].
Further, […] of the [Provincial Act B] states that […][Section cited from the Provincial Act B that grants the Corporation the power to regulate the practice of a profession]. Therefore, the [Corporation] is considered to be a “regulatory body”, as such term is defined, for the purposes of section 6 of Part III of Schedule V to the ETA.
You have stated that the [Corporation] will assess a fee for each hour of instruction which will be equivalent to […] education credit. The […] education course content will be developed and delivered by the [Corporation] directly to members. The courses are for members only and are designed for licence applicants and current licensees to help meet the required number of […] education credits to maintain their licence […].
Given that the [Corporation] is a “regulatory body” and will be supplying a service of instructing individuals in courses that lead to or maintain a professional accreditation or designation recognized by it, as set out in paragraph 6(a), the supply of […] education by the [Corporation] is an exempt supply and is not subject to GST/HST.
Therefore, the [Corporation] should not charge GST/HST on the fees assessed to administer […] education courses to its members. However, the [Corporation] may elect to make the supplies taxable using CRA Form GST 29 – Educational Services: Election and Revocation of the Election to Make Certain Supplies Taxable.
2. Ruling 2 – Accreditation Revenue:
You have stated that the [Corporation] will also assess fees related to the accreditation of eligible course providers and individual courses. Applicants (i.e. the course providers) will submit either an [Application A] to […] or an [Application B] to […] (together, the [Program]). The applications are submitted through the [Corporation]’s online system along with applicable application fees collected by the [Corporation]. You have also stated that the [Program] is optional for course providers and its main purpose is to help licensees determine which courses are recognized by the [Corporation] and meet the [Corporation]’s […] education requirements. If granted accreditation by the [Corporation], the applicants will determine course fees and will administer their own examinations (if any). The fees being assessed and collected by the [Corporation] in this case are application fees paid by the applicants when submitting their [Application A] or [Application B] and renewal fees at the time of renewal, should they wish to renew their accreditation.
Despite being considered a “regulatory body” for the purposes of Section 6 of Part III of Schedule V to the ETA, the [Corporation] will not be supplying a service of instruction as contemplated in paragraph 6(a), nor will it be administering an examination or supplying a certificate, as contemplated in paragraph 6(b) as part the proposed [Program]. Therefore, the Accreditation Revenue does not meet the requirements of Section 6 of Part III of Schedule V to the ETA to qualify as an exempt supply.
As set out in the Statement of Facts, the CRA considers the [Corporation] an ‘other body established by a government’ under Category 1 for the purposes of section 20 of Part VI of Schedule V to the ETA. Section 20 lists a number of supplies made by a government or municipality or by a board, commission or other body established by a government or municipality that may be exempt of GST/HST. However, the fees assessed by the [Corporation] for accreditation of courses and course providers as part of the [Corporation]’s [Program] do not meet the requirements of any of the supplies listed in section 20 of Part VI of Schedule V to the ETA. Therefore, the fees assessed by the [Corporation] for accreditation of courses and course providers are consideration for a taxable supply. If the [Corporation] is a registrant for GST/HST purposes, the fees will be subject to GST/HST.
Although the [Corporation] has been issued a GST/HST account number to claim rebates, it is not currently registered for GST/HST purposes. In general, every person who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada is required to be registered for GST/HST purposes, except where the person is a small supplier. Generally, a person is a small supplier if its total revenues (before expenses) from its worldwide taxable supplies and those of its associates is $30,000 or less ($50,000 for public service bodies) in any single calendar quarter and in the last four consecutive calendar quarters.
If you are a small supplier and you are engaged in a commercial activity in Canada, you can choose to register voluntarily to begin charging and remitting the GST/HST on your taxable supplies of property and services. If you are a small supplier and you choose not to register, you do not charge the GST/HST (other than on certain taxable supplies of real property), and you cannot claim input tax credits.
For more information, please see CRA Guide RC4022 – General Information for GST/HST Registrants, which may be accessed on our website at https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4022.html.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the CRA is bound by the rulings given in this letter provided that: none of the issues discussed in the rulings are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed. The interpretation given in this letter, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretations or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 343-575-4115. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Paul Lalonde
Public Service Bodies and Rebate Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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