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
[Addressee]
Case Number: 179132
Business Number: […]
Dear [Client]:
Subject: GST/HST RULINGS
Children’s workshops, camps, […][professional development day camps], and events
Thank you for your fax of July 15, 2016, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to […] (the Corporation’s) supplies of children’s workshops, […][X], camps, [professional development day camps], and events. We apologize for the delay in providing our response.
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 facts based on information contained in your fax, further information obtained through subsequent telephone calls and documents, and a review of the Corporation’s website:
1. The Corporation is […][description of the corporation’s business].
2. The Corporation is governed by the […][Act] (Footnote 1). It was incorporated on [mm/dd/yyyy].
3. The Corporation registered for GST/HST purposes on […].
4. The Corporation is neither a charity nor a non-profit organization as those terms are defined in the ETA.
5. The Corporation offers a variety of programs geared towards children 4 to 14 years old, including:
- Workshops
- [X]
- Camps (spring, summer, and winter)
- [Professional development day camps]
- Events (Birthday parties)
Workshops
6. The Corporation offers unique […][educational] workshops for children aged 4 to 14 years old. […][Information on the incorporator].
7. […][Description of workshop activities in academic disciplines].
8. The purpose of each workshop is to teach children about different types of […] disciplines through fun experiments.
9. The workshops are neither approved for credit by, nor follow a curriculum designated by, a school authority. The completion of a workshop is not mandatory for admittance into a course that is approved for credit by, or that follows a curriculum designated by, a school authority.
10. The workshops are […] once per week, for a period of […] weeks […].
11. Scheduled time slots include after school, during the day, early evenings, or on weekends.
12. Workshops are geared to the age of the children attending:
[…][cost of workshops]
Drop-ins are welcome at a cost of $[…] each workshop.
13. Maximum number of attendees is […] for the […] workshops.
14. Parents are welcome to stay for the duration of the workshop but most will not stay and return later to pick up their children.
15. The Corporation currently charges GST on the supplies of the workshops.
[X]
16. [X] can be used to access either a workshop(s) or a camp(s).
17. The cost of [X] is dependent on the age of the child and how much credit they would like to purchase:
Prices for [X]: […]
According to the Corporation’s website, [X] may be used towards […][workshops and camps].
18. [X] will give the student a great cross section of different types of […] disciplines.
Camps
19. The Corporation offers spring, summer, and winter camps.[…][Dates of camps during school breaks]. (Hereafter “the Camps”.)
20. The Camps are for children 4 to 6 years old and 7 to 14 years old.
21. […][Options available for the Camps].
22. The hours of the Camps are as follows: […]
23. Different themes are offered during the Camps, like […].
24. Children are supervised by the staff of the Corporation while they are in its care.
25. The Corporation currently charges GST on these supplies.
[Professional development day camps]
26. The [professional development day camps] are offered on the same days as professional development days in the […] area’s schools.
27. The [professional development day camps] are offered for children 4 to 6 years old and 7 to 14 years old.
28. […][Options available for the professional development days].
29. The hours of the [professional development day camps] are as follows: […]
30. Children are supervised by the staff of the Corporation while they are in its care.
31. The Corporation currently charges GST on these supplies.
Events
32. Currently, the Corporation only offers birthday parties as their events.
33. The Corporation describes the birthday parties as: […]
34. There are themes for each birthday party.
35. The costs for the birthday parties range in price from $[…] to $[…]. There is a maximum number of participants and participants can be added for additional consideration.
36. The Corporation provides all the required tools and material.
37. The birthday party can take place at the Corporation’s centre or at another location.
38. The duration is from 60 to 90 minutes.
39. The Corporation currently charges GST on these supplies.
RULINGS REQUESTED
You would like to know if the supplies listed below are subject to GST/HST:
1. Workshops
2. [X]
3. Camps (spring, summer, and winter)
4. [Professional development day camps]
5. Events (Birthday parties)
RULINGS GIVEN
Based on the facts set out above, we rule that:
1. The supply of a workshop is taxable under section 165. Therefore, GST/HST should be charged on these supplies.
2. The supply of [X] is taxable under section 165. Therefore, GST/HST should be charged on this supply.
3. The Camps are exempt from GST/HST under section 1 of Part IV of Schedule V. Therefore, GST/HST should not be charged on these supplies.
4. The [professional development day camps] are exempt from GST/HST under section 1 of Part IV of Schedule V. Therefore, GST/HST should not be charged on these supplies.
5. The birthday party packages are taxable. Therefore, GST/HST should be charged on theses supplies.
EXPLANATION
Workshops
Paragraph 9(a) of Part III of Schedule V exempts “a supply of a service of tutoring or instructing an individual in (a) a course that is approved for credit by, or that follows a curriculum designated by, a school authority”. “School authority” is a term defined in the ETA to mean “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.”
As such, 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. The exemption applies to tutors or instructors who help students learn the material of a course offered at an elementary school in the province.
The Canada Revenue Agency (CRA) takes the position that a tutoring or instruction service provider that promotes its method as a brain development program or an introduction to a topic/discipline is too broad to be considered to be relating to the specific, relevant subject matter of any particular school’s course.
Common characteristics of tutoring or instruction services that are not exempt pursuant to paragraph 9(a) of Part III of Schedule V include:
- The tutor/instructor has negligible interaction with the child because the tutoring/instruction method is based on self-learning exercises, or activities (e.g. games) that strengthen a variety of cognitive skills.
- The tutoring/instruction program provides a series of levels of attainment which every child must complete without consideration of the child’s specific needs in respect of a school authority’s course or curriculum.
The Corporation’s workshop(s) are not tutoring or instruction in a course approved for credit by, or that follows a curriculum designated by, a school authority. Therefore, a workshop is not exempt under this provision. There are no other exempting provisions available in the ETA for this type of supply, therefore the supply of a workshop is taxable for GST/HST purposes.
[X]
[X] entitle[s] the purchaser to register for workshops or camps. There are no restrictions in the use of [X] such as when it can be used or the type of workshop(s) or camp(s) that can be attended. Consequently, the supply of [X] is for the right to attend a future workshop(s) or camp(s) supplied by the Corporation. The supply of [X] is taxable for GST/HST purposes.
Camps and [professional development day camps]
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, is exempt from GST/HST. This exemption does not apply to a supply of a service of supervising an unaccompanied child made by a person in connection with a taxable supply by that person of a passenger transportation service.
The Corporation provides child care services during its Camps and [professional development day camps]. Although the Camps and [professional development day camps] are enriched by educational activities, the primary purpose of the Camps and [professional development day camps] is to provide care and supervision to children 14 years of age and under for periods normally less than 24 hours per day. Therefore, the Corporation’s supplies made during its Camps and [professional development day camps] are exempt from GST/HST.
Events (birthday parties)
The supply of the birthday party package is a single supply of a service. The dominant part of the supply is the service of instructing/entertaining children. The nature of the service is both informative and entertaining. Therefore, the supply is a service of instruction and entertainment. There are no provisions that would exempt the supply. Therefore, the supplies of the birthday parties are taxable.
Generally, a GST/HST registrant is eligible to claim input tax credits (ITCs) to recover the GST/HST it pays to the extent that its purchases and expenses are inputs into making taxable supplies for consideration. No ITC is available where an expense was incurred for the purpose of making exempt supplies, or for a purpose other than the making of supplies. For more information, see Guide RC4022, General Information for GST/HST Registrants.
GST/HST collected in error
Any amounts the Corporation collects as or on account of GST/HST, including GST/HST collected in error (e.g., tax collected in error on an exempt supply), must be included in its net tax calculation for the reporting period in which the tax became collectible or was collected.
Under subsection 232(1), where the Corporation has charged an amount as GST/HST in error on an exempt supply, it has the option to adjust, refund or credit the excess tax to the person within two years after the day the amount was so charged or collected. If the Corporation chooses to adjust, refund, or credit the excess amount of GST/HST, a credit note containing prescribed information must be issued to the person within a reasonable time by the Corporation. The Corporation may also make an adjustment to its net tax calculation to account for any adjustment, refund or credit of an amount of tax paid in error to the extent that the amount was included in determining the net tax for the reporting period or a prior reporting period.
Alternatively, persons that paid an amount as GST/HST on supplies that are exempt may file an application for a rebate of amounts paid in error. Form GST189, General Application for Rebate of GST/HST, is used to apply for the rebate. The time limit to apply for this rebate is within two years after the day the amount was paid.
Additional information concerning tax collected in error may be found in GST/HST Memorandum Series 12.2, Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act. Additional information concerning the claiming of rebates of tax paid in error may be found in Guide RC4033, General Application for GST/HST Rebates.
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.
If you require clarification with respect to the workshops and [X] discussed in this letter, please call Connie Carnegie at 613-670-7909. If you require clarification with respect to any of the other issues discussed in this letter, please call me directly at 613-670-7943. 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,
Desneiges Arbour
Charities and Non-profit Organizations Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
FOOTNOTES
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