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.
GST/HST Rulings Directorate
5th floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 207167r
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Supply of acting programs
[…][Thank you for your correspondence of] August 30, 2020, […][about whether your supply] of acting programs was taxable and subject to the Goods and Services Tax/Harmonized Sales Tax (GST/HST). We apologize for our delay in responding. […].
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 following based on discussions with you, documentation you have provided, information found on the […] website (footnote 1) as well as the websites […][outlining the relevant] provincial curricula for […][subject 1,] (footnote2) [subject 2] (footnote 3) [and subject 3] (footnote 4):
1. You are a sole proprietor, […] operating […][a business that offers acting programs] in [Canada] under the name […].
2. You are registered for the GST/HST under account […], effective November 1, 2020.
3. You are not a charity, a non-profit organization, a school authority, a vocational school, a public college or a university.
4. The following excerpts from your website describe the […] acting programs: […]
5. You confirmed the […] acting programs are not approved for credit by a school authority.
6. Your employees have either post-secondary education and/or experience in the field of drama.
7. The [...] acting programs (see program descriptions below) are available to the following two groups of children:
* […][Grade A]: includes children from junior kindergarten to grade 2; and
* […][Grade B]: includes children from grades 3 to grade 5, 6, or 7 depending on the program
8. Given that the highest grade for […][Grade B] is grade 7, the age range of children in this grade is 12-13 years old. (footnote 5)
9. You provide the following […] acting programs. You explained that they are all basically the same program, i.e., each program is developed from the same interchangeable list of activities, but based on when they are offered in the year, they are called different names:
- After school program
- Saturday program (includes the Virtual Winter Break Camp due to COVID)
- Camp programs ([…][teacher professional development Day, March Break, Summer and Winter Camp)
- Virtual One-to-One program
- Group Program
10. Details regarding the After-school program are as follows:
- You utilize space provided in […] schools to deliver the program, […]
- Each program is comprised of both [Grade A] and [Grade B] up to a maximum of [#] children per group
- Only children enrolled at that school may attend
- The duration is 1.5 hours, one day per week, for eight consecutive weeks at a cost of $[…] per child
- The program will finish at either […] depending on the school
- Since this program takes place on multiple days, there is sufficient time for the students to write a play and perform it for friends and family on the last day of the program
- The child receives a certificate for completing the program
11. Details of the Saturday program are as follows:
- The classes are held […][over multiple] Saturdays
- […][For] the Saturday programs, the Client will split the children into [Grade A] and [Grade B] with a maximum of [#] students per group
- The [Grade A] program is 1.5 hours long with a cost of $[…] per child
- The [Grade B] program is 2 hours long with a cost of $[…] per child
- Since this program takes place on multiple days, there is sufficient time for the students to write a play and perform it for friends and family on the last day of the program
- The child receives a certificate for completing the program
12. Details on the types of camps you offer are as follows:
[…][teacher professional development] Day Camp program
- […]
- It is a single day camp running from 9:00am to 3:00pm
- Available for grades JK – 2 and 3-5
- There’s a theme to the day
- The cost per child is $[…]
- As this is a one-day camp, there is insufficient time to work towards writing and performing a play.
March Break Camp program
- […]
- The camp is held […][over multiple] days from 9:00am to 3:00pm
- The cost is $[…] per child
- Maximum number of children per group is [#]
- Depending on the number and grade of the children registered, you may divide the children into a separate group of [Grade A] and a separate group of [Grade B] to a maximum of [#] children per group. When this is the case [Grade B] will do more activities than [Grade A]
- Since this program takes place on multiple days, there is sufficient time for the students to write a play and perform it for friends and family on the last day of the program
- The child receives a certificate for completing the program
Summer Camp program
- The camp runs for […] [multiple] days from 9:00am to 3:00 pm
- The cost is $[…] per child
- Depending on the number and grade of the children registered, you may divide the children into a separate group of [Grade A] and a separate group of [Grade B] to a maximum of [#] children per group. When this is the case [Grade B] will do more activities than [Grade A]
- Parents have the option of sending their JK children for […]
- Since this program takes place on multiple days, there is sufficient time for the students to write a play and perform it for friends and family on the last day of the program
- The child receives a certificate for completing the program
Winter camps – in-person
- Available to children in grades JK – 5
- A full day camp running from 9:00am to 3:00pm for […] [multiple] days
- […]
- Since this program takes place on multiple days, there is sufficient time for the students to write a play and perform it for friends and family on the last day of the program
- The child receives a certificate for completing the program
Virtual Winter camp program
- […], there is a separate time slot for [Grade A] and [Grade B] using the ZOOM platform
- The program is available on [multiple] Saturdays for […] at a cost of $[…] per child
- The [Group A] program is from […] and the [Group B] program is from […]
- It has the same content as an in-person Saturday program
- There is a maximum of [#] per group
- Since this program takes place on multiple days, there is sufficient time for the students to write a play and perform it for friends and family on the last day of the program
- The child receives a certificate for completing the program
13. Details of the Virtual One-to-One program are as follows:
- The classes are delivered using the ZOOM platform to a single child on a one-to-one basis
- This is available to students from grades Junior Kindergarten to Grade 12. This is the only program which is offered to children in higher grades than [Grade B]
- In this program the child can choose from [#] specific topics, each being [#] minutes in length. […]
- Program involves […] through acting along with discussions and visuals
- The child can choose a […] session for $[…], or a […][longer] session for $[…]
14. Details of the Group program are as follows:
- This program may be held at [various locations].
- Virtual sessions are currently offered due to COVID
- Registrants can be either children from a specific school, or children belonging to a group such as […][an organized children’s group,] or a group of friends
- It is available for both [Grade A] and [Grade B]
- The number of children per group depends on the program length, who the group is, and whether it’s virtual or in-person
- Options include: In-Person when possible due to COVID (a group rate depending on how many people); or Virtual (a group rate depending on how many people but less expensive than in-person). The program could be [of various durations] […]
15. All the programs are held at one of the following locations when they’re not held virtually:
- The Client utilizes space in […] schools. The Client confirmed that the school is only providing the space and not the actual program
- The Client rents space in various churches in the […] area
16. You have developed [#] activities and lessons (Activities). Each Activity has been given its own name and has a specific goal that you would like the children to learn. You have created written as well as video descriptions and instructions for each Activity which the instructors are to follow when delivering the program.
17. You choose from the list of the [#] interchangeable Activities when creating all the […] acting programs listed above. The number of Activities chosen for a program depends on the program length, i.e., the program may be a few hours, a whole day or multiple days. There is generally no duplication of Activities within a program. For example, the Activities chosen for a one-week summer camp are different for each day of the camp.
18. For each program you will choose one or two Activities related to […]. You stated that the schools like your programs because they teach […] that aren’t usually taught a lot in the everyday school’s curriculum because it is more focused on academics.
19. Generally, a group consists of both [Grade A] and [Grade B]. The Activities are not segregated by [Grade A] and [Grade B], i.e., the same Activities are taught to all participants in the program regardless of age or grade level. In other words, a program may be comprised of children from junior kindergarten to grade 7 doing the same Activities. When required, the instructors may teach to the age of a child by differentiating their learning for a given activity.
20. At times, if there are a large number of participants, you will divide them into two or more groups. The same Activities are provided in each group.
21. You stated that during an Activity the instructors may challenge the [Grade B] more by having them come up with the ideas of what the participants will act out, or sometimes they may assist the instructor.
22. You stated that all the instruction within a program complements and adds to the […] provincial curricula for […][subject 1, subject 2 and subject 3].
23. You confirmed the programs do not focus on the individual student and what their specific needs are in terms of their school curriculum. You stated you are “not teaching the children specific things like they do in school”.
24. You indicated you cannot teach the curriculum expectations for each grade level because you don’t have enough participants to have individual grade levels.
25. There are no prerequisites for admittance into a program, there is no pass or fail grading, and there is no limit to the number of times a child can enrol in a program.
26. You provided two comparisons with the […] provincial curriculum documents:
- One comparison was a brief description of the [Grade A] activities compared to some of the expectations from the [provincial] Curricula for grade 2 in [subject 1, subject 2, and subject 3].
- The second comparison was a brief description of the [Grade B] activities compared to some of the expectations from the [provincial ] Curricula for grade 7 in [subject 1, subject 2, and subject 3].
- You compared your activities to […][a few] expectations from the […] provincial curricula for grades 2 and 7 […][in subject 1].
- You compared your activities to a few of the […] expectations provided for grades 2 and 7 found in the […] provincial curricula for […][subject 2 and subject 3].
27. Parents are encouraged not to attend the programs as their presence can interfere in the class and may stifle the child’s independence. If the parent wishes to stay they may, but this rarely occurs.
28. Parents are not required to purchase course materials. You provide markers, coloring paper, copies of the […] posters, pencils as well as face make-up for the play. The children only keep their coloring paper and copies of the posters. The parents may be asked to bring in clothes their child is to wear in the play.
RULING REQUESTED
1. You have asked […][whether] “the supplies of the Programs by […] are taxable supplies subject to the GST/HST”.
RULINGS GIVEN
1. Based on the facts set out above, we confirm that the following programs are taxable:
- the After-school program
- the Saturday program
- All Virtual programs
- the Group program
2. The following in-person programs are exempt supplies of child care services under section 1 of Part IV of Schedule V:
- […][teacher professional development] Day Camps
- March Break Camps
- Summer Camps
- Winter Camps
EXPLANATION
Generally, most supplies of property and services made in Canada are taxable, unless they are specifically identified as being exempt. Exempt supplies are listed in Schedule V to the ETA and are not subject to the GST/HST.
Paragraph 9(a) of Part III of Schedule V
Paragraph 9(a) of Part III of Schedule V exempts a supply of a service of tutoring or instructing an individual in a course that is approved for credit by, or that follows a curriculum designated by, a school authority.
School authority means an organization that operates an elementary or secondary school in which it provides instruction that meets the standards of educational instruction established by the government of the province in which the school is operated.
We understand that under […][the provincial education act, the education minister] issues curriculum guidelines and school authorities deliver courses of study developed from these guidelines. The courses of study offered by school authorities in [the province] and the provincial curriculum guidelines would not be one and the same. For example, a language course at one school may be different than a language course at another school, even though both courses would be developed from the provincial guidelines and must address the […] expectations therein.
Paragraph 9(a) refers specifically to a course that follows a curriculum designated by a school authority. As such, our original letter stated “it is not the provincial curriculum which is the basis for determining if a particular supply of tutoring or instruction is exempt. Rather, there must be a direct relationship evident between the tutoring or instruction and a course offered by a school authority.”
A supply of a service of tutoring or instructing individuals must relate to a course offered by a school authority to be exempt under paragraph 9(a). GST/HST Memorandum 20-6, Tutoring and Equivalent Services, explains the application of section 9 of Part III of Schedule V. Paragraph 9 of that memorandum states:
9. Courses that are approved for credit by a school authority are generally courses offered at the secondary school level. Courses that follow a curriculum designated by a school authority refers to courses for which credits may not be given but where there is a curriculum designated by a school authority. These courses are generally offered at the elementary school level. For example, reading, writing, spelling and math instruction are generally part of a school curriculum for lower grades. Tutoring or instruction in effective reading, writing, spelling and math for the purpose of assisting children in meeting the requirements of their school curriculum will generally meet the requirements of paragraph 9(a) of Part III of Schedule V. [emphasis added]
As you noted, the examples provided in paragraph 9 are not exhaustive. We acknowledge that elementary schools offer courses in many other subjects. Supplies of a service of tutoring or instruction in a subject for the purpose of assisting children in meeting the requirements of their school curriculum will generally be exempt under paragraph 9(a) of Part III of Schedule V. However, based on the information provided, your supplies of instruction in acting are not for the purpose of assisting children in meeting the requirements of their school curriculum.
Paragraph 10 of Memorandum 20-6 states:
10. The service of tutoring or instructing an individual need not be limited to material contained in a course approved for credit by, or that follows a curriculum designated by, a school authority. The tutoring or instructing of an individual could also include general concepts dealing with the relevant subject matter, or material from lower grades, in order to assist the individual in understanding the material contained in a course approved for credit by, or that follows a curriculum designated by, a school authority. For example, where an individual receives a service of tutoring or instruction in general math concepts to assist with material in a course that follows the provincial math curriculum, that service of tutoring or instruction is exempt under paragraph 9(a) of Part III of Schedule V. In order for the exemption to apply, it must be evident that there is some direct connection between the supply of the service of tutoring or instructing in question and the course approved for credit by, or the curriculum designated by, a school authority. [emphasis added]
Some courses, although aimed specifically at elementary or secondary school students, may have no clearly defined relationship with any specific course offered by a school authority nor would they follow a curriculum designated by a school authority. Your […] acting programs contain some elements from […][the provincial] curriculum […][in subject 1, subject 2, and subject 3]. However, the programs are not focused on tutoring or instructing a student in a course that follows a curriculum designated by a school authority. Although school authorities in [the province] provide courses […][in subject 1] that include […] based on the provincial curriculum guidelines, your activities do not assist in meeting the […] expectations in the […][subject 1] curriculum for a particular grade.
Given the above, the acting programs, namely the after-school program, the Saturday program, all virtual programs, and the group program, are not a supply of a service of tutoring or instructing an individual in a course that is approved for credit by, or that follows a curriculum designated by, a school authority. Therefore, paragraph 9(a) of Part III of Schedule V does not apply. As no other exemption applies to these specific programs, the supplies of these programs are taxable and the GST/HST is to be charged.
Child care services
Section 1 of Part IV of Schedule V exempts “A supply of child care services, the primary purpose of which is to provide care and supervision to children 14 years of age or under for periods normally less than 24 hours per day […]”.
Child care services may include services provided at a day camp. The facts indicate that in-person [teacher professional development] Day Camps, March Break Camps, Summer Camps, and Winter Camps require the child to be engaged in one of these programs for up to 6 hours a day and all the children are under the age of 14. As the parents are generally not in attendance, it is reasonable to expect that you would be responsible for the care and supervision of the children while they are attending these in-person camps. Therefore, due to the length of time a child is in your care, there is a sufficient degree of child care even though the program is enriched by acting activities. The supplies of these specific four camps are exempt under section 1 of Part IV of Schedule V meaning the GST/HST is not to be charged.
Supplies of the after-school program, the Saturday program, the virtual programs, and the group program are not child care services and are not exempt under section 1 of Part IV of Schedule V.
For more information, see GST/HST Memorandum 21-1, Child Care Services.
[...]
A GST/HST registrant may claim input tax credits (ITCs) in respect of the GST/HST paid or payable for property and services acquired for consumption, use or supply in the course of making taxable supplies for consideration. Since you make both taxable and exempt supplies, you will need to apportion the GST/HST you paid for property or services between these two activities. For more information on ITCs, please refer to Guide RC4022, General Information for GST/HST Registrants.
DISCLAIMER
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the rulings given in this letter provided that: none of the issues discussed in the ruling 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 additional information given in this letter 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 ruling 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 873-455-1962. 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.
Sincerely,
Connie Carnegie
Senior Rulings Officer
Public Service Bodies and Rebates Unit
Public Service Bodies and Governments Division
GST/HST Rulings Directorate
FOOTNOTES
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