GST/HST Memorandum 20-3
December 2023

This version replaces the one dated December 2019. This memorandum has been updated to reflect our current interpretation of the term affiliated college.

Except as otherwise noted, all statutory references in this publication are to the provisions of the Excise Tax Act (ETA). The information in this publication does not replace the law found in the ETA and its regulations.

If this information does not completely address your particular situation, you may wish to refer to the ETA or relevant regulation, or call GST/HST Rulings at 1-800-959-8287 for additional information. If you require certainty with respect to any particular GST/HST matter, you may request a ruling. GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, explains how to obtain a ruling or an interpretation and lists the GST/HST rulings centres.

If you are located in Quebec and wish to request a ruling related to the GST/HST, please call Revenu Québec at 1-800-567-4692. You may also visit the Revenu Québec website at revenuquebec.ca to obtain general information.

For listed financial institutions that are selected listed financial institutions (SLFIs) for GST/HST or Quebec sales tax (QST) purposes or both, whether or not they are located in Quebec, the CRA administers the GST/HST and the QST. If you wish to make a technical GST/HST or QST enquiry related to SLFIs, please call 1-855-666-5166.

GST/HST rates

Reference in this publication is made to supplies that are subject to the GST or the HST. 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%. If you are uncertain as to whether a supply is made in a participating province, refer to GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of Supply Rules for Determining Whether a Supply is Made in a Province.

Table of Contents

• General
• Qualifying as a university
  • Domestic entities
    • Affiliated colleges
    • Research bodies
  • Foreign-based entities
• Supplies made by universities
  • Courses in respect of professional or trade accreditations or designations.
    • Exception – election to make exempt supplies taxable
  • Credit courses toward a diploma or degree
  • Mandatory fees
  • Vocational courses
    • Exception – election to make exempt supplies taxable
    • Exception – zero-rated supplies
  • Second-language instruction
  • Course materials
  • Meals provided under a meal plan
  • Courses that are part of a program
    • Programs
    • Recreational courses
  • Service of instruction vs. admission to a seminar, activity or event
    • Supply of a service of instruction
    • Supply of an admission to a seminar, activity or event
  • Online supplies of instruction
• Supplies made to universities
  • Food services
• Input tax credits
• Public service bodies’ rebate

General

1. Supplies of many educational services, as well as certain specific supplies of related property and services, made by universities are exempt from the GST/HST. These exemptions are listed in Part III of Schedule V.

Qualifying as a university

2. Subsection 123(1) defines university to mean “a recognized degree-granting institution or an organization that operates a college affiliated with, or a research body of, such an institution”.

Domestic entities

3. For GST/HST purposes, three types of domestic entities qualify as universities:

• institutions that grant degrees and that are established as universities by legislation enacted by the appropriate Canadian jurisdiction in which they are situated, as well as colleges or similar organizations that are authorized by a relevant authority, such as a province under provincial legislation, to grant a degree where degree is defined by the relevant authority to mean a level of academic achievement, such as at the associate level or higher
• organizations that operate colleges affiliated with universities
• organizations that operate research bodies of universities

4. A university is usually established by legislation enacted by the government of the province in which the institution is situated. However, if a university is built on federal land, then the establishing legislation is enacted by the federal government. The Royal Military College in Kingston, Ontario, is an example of a degree-granting institution that was established by federal legislation.

5. For the purposes of the ETA, the term province is interpreted to include a territory of Canada.

Affiliated colleges

6. To qualify as a university for GST/HST purposes, an organization that operates a college affiliated with a university must clearly demonstrate that the college is, in fact, affiliated with the university.

7. The term affiliated must be interpreted within its ordinary meaning. Therefore, for a college to be considered affiliated with a university, the college needs to be associated or closely connected with the university.

Research bodies

8. An organization is considered to be a research body of a university if the organization is both:

• established and operated primarily to perform research
• owned and controlled by the university

9. To determine whether an organization was established primarily to perform research, the Canada Revenue Agency (CRA) normally looks to the instruments by which the organization was created, such as incorporating legislation, incorporating documents and by-laws. To determine whether the organization is operating primarily to perform research, the organization’s financial statements and/or information on the organization’s website may assist in making the determination.

10. An organization is considered to be owned by a university if one of the following conditions is met:

• the university owns all or substantially all (90% or more) of the shares or capital of the organization
• the university holds title to the organization’s assets or controls the disposition of these assets such that in the event of wind up or liquidation, these assets are vested in the university

11. An organization is considered to be controlled by a university if one of the following conditions is met:

• the university selects and appoints a majority of the members of the governing body of the organization (directors, governors, commissioners, etc.)
• the organization is required, by virtue of legislation, by-laws or an operating agreement, to submit its operating budget and, where applicable, its capital budget to the university for review and approval

Foreign-based entities

12. A foreign-based entity that is a degree-granting institution may qualify as a university for GST/HST purposes if it meets one or more of the following conditions:

• it currently grants degrees and is licensed or otherwise authorized under the appropriate government agency or department in their home jurisdiction to grant such degrees
• it qualifies as a university outside Canada for purposes of the tuition credit under paragraph 118.5(1)(b) of the Income Tax Act
• its degrees are accepted for entry into post-graduate studies in at least one recognized Canadian university

13. Where a branch or wholly owned subsidiary of a foreign-based entity is operating in Canada, the foreign-based entity, including the branch or wholly owned subsidiary, is still considered foreign based for purposes of determining whether it is a university. Therefore, if the foreign-based entity falls under any of the three categories described in the previous paragraph, it meets the definition of university for purposes of subsection 123(1).

14. Acceptable evidence that a foreign-based entity is an institution that grants degrees and is licensed or otherwise authorized to do so includes a letter from an official of the appropriate foreign government agency or department attesting to that fact.

15. Acceptable evidence that a foreign-based entity’s degrees are accepted for entry into post-graduate studies at a Canadian university includes a letter from an official of a Canadian university, on university letterhead, attesting to that fact.

Supplies made by universities

Courses in respect of professional or trade accreditations or designations

16. Section 6 of Part III of Schedule V exempts “a supply of

1. 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
2. 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”.

17. Regulatory body is defined under section 1 of Part III of Schedule V 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”.

18. An accreditation or designation is an official authorization that attests to the fact that an individual has met certain pre-determined standards set forth by a regulatory body. Examples include trade accreditations, such as welding tickets, and professional designations, such as P.Eng. (Professional Engineer).

19. The supply of a certificate or of a service of instruction or of administering an examination that is exempt under section 6 of Part III of Schedule V is exempt for all students in the course, including those who are not taking the course to obtain, maintain or upgrade an accreditation or designation.

20. Section 6 of Part III of Schedule V does not exempt the supply of a service of instruction or of administering an examination in a course that is not required for accreditation or designation but simply broadens one’s knowledge in a field. In addition, section 6 does not exempt the supply of a service of instruction or of administering an examination in a course that may be occupationally related and required for accreditation or designation by a professional association if there is no regulatory body.

Exception – election to make exempt supplies taxable

21. Under section 6 of Part III of Schedule V, a supplier may elect to have an exempt supply of a service of instructing individuals in courses in respect of a professional or trade accreditation or designation, or of a certificate, or a service of administering an examination, in respect of a course or in respect of a professional or trade accreditation or designation made taxable.

22 For additional information about this election, refer to GST/HST Memorandum 20-9, Election to Make Exempt Supplies of Educational Services Taxable, and Form GST29, Educational Services – Election and Revocation of the Election to Make Certain Supplies Taxable.

Credit courses toward a diploma or degree

23. Section 7 of Part III of Schedule V exempts “a supply made by a school authority, public college or university of a service of instructing individuals in, or administering examinations in respect of, courses for which credit may be obtained toward a diploma or degree”.

24. The supply made by a university of a service of instructing in credit courses is exempt even if the supply is made to students who are not enrolled in a diploma or degree program. Consequently, the exemption applies to supplies of instruction in courses for which credit toward a diploma or degree may be obtained where those courses are offered by a university, either at night as part of a continuing education program or during the day, even if some students are not taking the courses as part of a diploma or degree program.

Mandatory fees

25. Section 7.1 of Part III of Schedule V exempts “a supply of a service or membership the consideration for which is required to be paid by the recipient of a supply included in section 7 [of Part III of Schedule V] because the recipient receives the supply included in section 7” (for example, instruction in courses offered by a university for which credit may be obtained toward a diploma or degree).

26. Examples of the supplies referred to in section 7.1 of Part III of Schedule V include supplies of student union memberships and counselling services where the consideration for these supplies must be paid by students because they receive a supply that is exempt under section 7 of Part III of Schedule V.

27. There is no requirement that the supplies under section 7.1 and section 7 of Part III of Schedule V be made by the same supplier. As is the case with the exemption under section 7, the exemption under section 7.1 applies even if the supply is made to students who are not enrolled in a diploma or degree program.

28. The exemption under section 7.1 of Part III of Schedule V does not apply to mandatory fees in respect of a supply of tangible personal property, such as a musical instrument or lab equipment, that is required for use in a course. Such supplies may, however, be exempt under another section of the ETA.

Vocational courses

29. Section 8 of Part III of Schedule V exempts, in part, a supply, other than a zero-rated supply, made by a university of a service of instructing individuals in, or administering examinations in respect of, courses leading to certificates, diplomas, licences or similar documents, or classes or ratings in respect of licences, that attest to the competence of individuals to practise or perform a trade or vocation, except where the supplier has made an election under this section in prescribed form containing prescribed information.

30. For additional information on the application of the GST/HST to vocational courses, refer to GST/HST Memorandum 20-4, Vocational Schools and Courses.

Exception – election to make exempt supplies taxable

31. Under section 8 of Part III of Schedule V, a supplier may elect to have an exempt supply of a service of instructing individuals in, or administering examinations in respect of, vocational courses made taxable. For additional information about this election, refer to GST/HST Memorandum 20-9 and Form GST29.

Exception – zero-rated supplies

32. The exempting provision of section 8 of Part III of Schedule V does not apply to zero-rated supplies. An example of a zero-rated supply that would otherwise be exempt under section 8 of Part III of Schedule V is a supply made under section 18 of Part V of Schedule VI.

33. Section 18 of Part V of Schedule VI zero-rates a supply made to a non-resident person, other than an individual, who is not registered for GST/HST purposes of “a service of instructing non-resident individuals in, or administering examinations in respect of, courses leading to certificates, diplomas, licences or similar documents, or classes or ratings in respect of licences, that attest to the competence of the individuals to whom the service is rendered or the examination is administered to practise or perform a trade or vocation”.

34. Although section 18 of Part V of Schedule VI is similar to section 8 of Part III of Schedule V, there is no requirement under section 18 of Part V of Schedule VI that the supplier be a university or any other specified type of entity. Where all of the conditions in section 18 of Part V of Schedule VI are satisfied, the supply is zero-rated regardless of who is providing the service.

35. Under section 18 of Part V of Schedule VI, an otherwise exempt supply under section 8 of Part III of Schedule V is zero-rated when made to a non-resident person who is not an individual and is not registered for GST/HST purposes.

36. For additional information, refer to GST/HST Memorandum 20-8, Educational Services Made to a Non-resident.

Second-language instruction

37. Under section 11 of Part III of Schedule V, a supply by a university of a service of instructing individuals in, or administering examinations in respect of, language courses that form part of a program of second-language instruction in either English or French is exempt.

38. For additional information on the application of the GST/HST to second language instruction, refer to GST/HST Memorandum 20-7, Second-language Instruction.

Course materials

39. Students often purchase course materials that relate to a service of instruction, such as textbooks, dictionaries, notes and compact discs, from the person supplying the service of instruction. The course materials may either be part of a single supply of a service of instruction that consists of several elements or be supplied separately from the supply of a service of instruction. The tax status of the course materials that relate to a service of instruction must therefore be determined on a case-by-case basis.

40. If the service of instruction and course materials form part of a single supply of a service of instruction and the supply of the service of instruction is an exempt supply, the course materials included in the single supply are not subject to the GST/HST.

41. If the supply of course materials is a separate supply from the exempt supply of a service of instruction, the supply of the course materials is not exempt under Part III of Schedule V and would be taxable unless another exempting provision of the ETA applies to the supply.

42. GST/HST Policy Statement, P-077R2, Single and Multiple Supplies, provides guidance for determining whether a transaction consisting of several elements is a single supply or two or more supplies.

Meals provided under a meal plan

43. Under section 13 of Part III of Schedule V, a supply of meals provided under a plan at an on-campus restaurant or cafeteria at a university to students enrolled at the university is exempt from the GST/HST if the single fee paid for the plan is sufficient to provide the student with at least 10 meals each week for the period of the plan, which must be at least 1 month.

44. For additional information on meal plans, refer to GST/HST Memorandum 20-5, School Cafeterias, University and Public College Meal Plans, and Food Service Providers.

Courses that are part of a program

45. Section 16 of Part III of Schedule V exempts a supply made by a university of a service of instructing individuals in, or administering examinations in respect of, courses that are part of a program that consists of two or more courses and that is subject to review of, and is approved by, a council, board or committee of the university established to review and approve the course offerings of that university.

46. Specifically excluded from this exemption are courses in sports, games, hobbies or other recreational pursuits that are designed to be taken primarily for recreational purposes.

Programs

47. For the purposes of the exemption under section 16 of Part III of Schedule V, a program is understood to be a particular set of two or more courses that is:

• offered by a university
• identified as such by that university
• reviewed and approved by a council, board or committee of that university

48. Workshops, conferences, retreats and seminars are generally not considered to be courses. Refer to paragraphs 57 to 64 of this memorandum for information on the distinction between the supply of a service of instruction and that of an admission.

49. A program is more than a miscellaneous collection of courses that relate to a given topic or area or that have been grouped under a particular heading. A program must consist of two or more courses that usually have a common subject matter or purpose and that fit together in a coherent way or in a logical sequence.

50. It is not necessary that all of the courses in a program be offered every year or semester, as long as the program includes two or more courses that are available on a periodic basis. It is also not necessary that a program be a recurring program. Provided it is made up of two or more courses, a program could, for example, be created to meet a need for a single year.

51. In addition, it is not necessary that an individual take all the courses in a program for the exemption to apply as the exempting provision is for the supply of instruction in a particular set of courses within a program offered by a university, not the planned course or program of studies of an individual.

52. The exemption under section 16 of Part III of Schedule V does not necessarily extend to all courses under a program and each course must be separately evaluated to determine whether the supply of the course meets the conditions set out in this section. In some cases, courses in a program may have different tax statuses as the program may include a combination of qualifying courses and courses designed to be taken primarily for recreational purposes, the supply of which is specifically excluded under section 16.

Recreational courses

53. For the purposes of the exemption under section 16 of Part III of Schedule V, an activity designed to be taken primarily for recreational purposes is understood to be an activity designed to be an enjoyable diversion or pastime. A recreational course may be informative but is mainly directed at satisfying the participant’s interest or desire for enjoyment or at enhancing the participant’s social activities.

54. In determining whether a course is recreational in nature, it is important to consider the design of the course being offered rather than the intention of the individual taking the course. Other factors that may be examined include the course’s objectives and subject matter; how the course is marketed; the methods of teaching, evaluating and monitoring course participants; and the instructors’ qualifications.

55. Examples of recreational courses include non-credit courses in subjects such as dancing, skating, cooking or sailing.

56. While a course may not be designed primarily for recreational purposes, it must still satisfy the other conditions set out in section 16 of Part III of Schedule V, as noted above. That is, in order for the supply of a service of instructing individuals in, or administering examinations in respect of, a course to be exempt, all of the following conditions must be met:

• the course must be one of at least two courses that make up a program offered by a university
• the program must be subject to review and approval by a council, board or committee of the university
• the council, board or committee that reviews and approves the program must be established by the university for the purpose of reviewing its course offerings

Service of instruction vs. admission to a seminar, activity or event

57. A university may offer seminars, activities or other events to its students or members of the general public. However, such events are generally not considered to be a supply of instruction in courses for GST/HST purposes.

58. The supply of instruction in courses is a service for GST/HST purposes and is exempt from the GST/HST if it meets the requirements set out in Part III of Schedule V or zero-rated if it meets the requirements set out in section 18 of Part V of Schedule VI.

59. By contrast, the supply of an admission to a seminar, activity or event is a supply of intangible personal property for GST/HST purposes and may be subject to the GST/HST.

60. Subsection 123(1) defines admission in respect of a place of amusement or a seminar, activity or event to mean “a right of entry or access to, or attendance at, the place of amusement or the seminar, activity or event”.

61. The factors listed in paragraph 63 of this memorandum are intended to assist a supplier in establishing whether a particular supply is the supply of a service of instruction or the supply of an admission to a seminar, activity or event. These factors are not all-inclusive, and the order in which they appear is not intended to assign a priority or weighting to any one factor.

62. For ease of reading, the word activity is used in paragraph 63 of this memorandum to refer to activities carried out for purposes of making the supply of a service of instruction (for example, in-class instruction) or of an admission (to seminar-based learning programs, conferences, workshops, etc.).

Supply of a service of instruction

63. The following are some of the factors that generally indicate that a given supply is a supply of a service of instruction:

• The activity involves the provision of systematic instruction.
• The supplier monitors or supervises the participant’s progress or learning.
• The supplier assesses the participant’s progress during the course of the activity and provides ongoing support, feedback and guidance to the participant.
• 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 participant’s competency upon completion of the activity by requiring the participant to formally demonstrate the knowledge 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 in order to complete assignments, read course material, etc.
• The participant may be required to successfully complete verified prerequisites before taking part in the activity.
• 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, such as a degree, diploma or licence.
• 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 (for example, 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 the single supply of a service (for example, the right to use a laboratory or a darkroom facility).
• The subject of the activity is broad (for example, writing).
• The supplier advertises or promotes the activity as being intended to instruct 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 that may lead to a formal recognition of skills, such as a diploma, degree or licence.
• The promotional material is aimed at persons who have the prerequisites required to participate in the activity.

Supply of an admission to a seminar, activity or event

64. The following are some of the factors that generally indicate that a given supply is a supply of an admission to a seminar, activity or event:

• The supplier and the participant engage in minimal individualized interaction.
• The participant need only attend the activity 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 among, participants.
• The subject of the activity is narrowly focused (for example, study skills for first-year students or money management techniques).
• The activity is discrete from other activities offered by the supplier, with no formal prerequisites for attendance.
• The participant is not required to take part in the activity as a prerequisite for participating in another activity.
• The activity is promoted as a stand-alone activity.
• The activity is promoted to the general public.
• The activity is promoted as a seminar, workshop or similar event.
• The activity occurs during a brief, concentrated period of time (for example, a number of hours, a day or several consecutive days).

Online supplies of instruction

65. The exempt supplies described under sections 6, 7, 8, 11 and 16 of Part III of Schedule V may also be made where a university makes an online supply of a service of instructing individuals in courses via the Internet as opposed to a traditional classroom setting where the conditions of the respective sections are met. As well, section 18 of Part V of Schedule VI may also apply to zero-rate an online supply of a service of instructing non-resident individuals.

66. It can, however, be difficult to determine whether a supply made online is the supply of a service (and thus possibly exempt under section 6, 7, 8, 11 or 16 of Part III of Schedule V or zero-rated under section 18 of Part V of Schedule VI) or of intangible personal property as this determination is based on a number of factors, as well as the specific facts of the particular case.

67 Refer to GST/HST Technical Information Bulletin B-090, GST/HST and Electronic Commerce, for information on determining whether a supply made online is a supply of a service or of intangible personal property.

68. The CRA has also developed a set of factors to assist in determining whether a particular supply is a supply of a service of instruction, which could qualify for exemption under section 6, 7, 8, 11 or 16 of Part III of Schedule V or be zero-rated under section 18 of Part V of Schedule VI where the requirements of the respective sections are met, or a supply of intangible personal property. These factors are listed in paragraphs 57 to 64 of this memorandum. Note that these factors apply whether the supply is made online or in person.

Supplies made to universities

Food services

69. Section 14 of Part III of Schedule V exempts, in part, a supply of food and beverages, including catering services, made to a university and supplied under a contract to provide food or beverages to students under a meal plan referred to in section 13 of Part III of Schedule V.

70. Section 14 of Part III of Schedule V does not exempt supplies of food, beverages and services that are provided for a reception, conference or other special occasion or event.

71. For additional information on food services, refer to GST/HST Memorandum 20-5.

Input tax credits

72. Under subsection 169(1), a GST/HST registrant is generally eligible to claim an input tax credit (ITC) for the GST/HST paid or payable by the registrant on property or a service based on the extent to which the property or service is acquired by the registrant for consumption, use or supply in the course of the registrant’s commercial activities, where all of the conditions for claiming an ITC are met.

73. A commercial activity of a person is defined in subsection 123(1) to include “a business carried on by the person (other than a business carried on without a reasonable expectation of profit by an individual, a personal trust or a partnership, all of the members of which are individuals), except to the extent to which the business involves the making of exempt supplies by the person”.

74. For information on ITCs, refer to GST/HST Memorandum 8-1, General Eligibility Rules, and GST/HST Memorandum 8-3, Calculating Input Tax Credits.

Public service bodies’ rebate

75. Where a university cannot claim ITCs (for example, where it makes an exempt supply), a public service bodies’ rebate may be available.

76. Universities established and operated otherwise than for profit meet the definition of selected public service body in subsection 259(1) and may, therefore, be eligible to claim a public service bodies’ rebate of the GST or the federal part of the HST paid or payable on eligible purchases and expenses. A university that is established and operated otherwise than for profit and that is resident in a participating province may also be eligible to claim a rebate of the provincial part of the HST paid or payable on eligible purchases and expenses.

77. Note that a for-profit university does not qualify for a public service bodies’ rebate. Further, should a for-profit university make a supply of an educational service (or related property or services) that is exempt under Part III of Schedule V, it is not eligible to claim ITCs in relation to the exempt supply.

78. For information about the public service bodies’ rebate, refer to Guide RC4034, GST/HST Public Service Bodies’ Rebate.

79. In addition, universities may be eligible for rebates of the GST/HST payable on the purchase of printed books and other specified property. For more information about these book rebates, refer to Guide RC4034 or GST/HST Memorandum 13-4, Rebates for Printed Books, Audio Recordings of Printed Books, and Printed Versions of Religious Scriptures.

Further information