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.
[Addressee]
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 101761
Business Number: [...]
March 11, 2011
Dear [Client]:
Subject:
GST/HST INTERPRETATION
[...][Student meal plans]
Thank you for the letter of January 18, 2008 from your representative [...], and your subsequent letter of March 2, 2009 clarifying some of the points raised in the original submission concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies provided by [...][Company A]. At your request, we are responding directly to you and providing a copy to your representative. We apologize for the delay in our response.
HST applies at the rate of 15% in Nova Scotia, 13% in Ontario, New Brunswick, and Newfoundland and Labrador, and 12% in British Columbia. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
We understand the following: [...]
Interpretation Requested
You would like to know
1. In the event a student does not use the balance of his or her Meal Plan Account, can a carry forward of unused meal plan amounts be done without jeopardizing the GST/HST exempt status of the plan (either in whole or in part)?
2. Section 13 of Part III of Schedule V states that a student may receive for a single consideration only the right to receive at a restaurant or cafeteria at the university or college not less than 10 meals weekly throughout the period. As such, can a refund of unused meal plan amounts be allowed under the ETA?
3. Notice 196R Application of the GST/HST to University and Public College Meal Plans states that "the calculation of whether the amount for the plan is enough for 10 meals a week should be based on the average price of a meal at the university or public college cafeteria or restaurants." As such, what is the Canada Revenue Agency's (the CRA's) definition of an average price of a meal? How does the CRA define the term "meal"?
4. If a dollar amount is transferred from a taxable [...] Plan Account to an exempt Meal Plan Account, does this change the exempt status of the Meal Plan Account?
5. If a dollar amount is transferred from an exempt Meal Plan Account to a taxable [...] Plan Account, does this change the exempt status of the Meal Plan Account?
6. Items such as chips or candy can be purchased from the cafeteria or restaurant on campus. Can a student purchase taxable confectionaries (chips, chocolate bars, etc.,) on their Meal Plan Account without paying taxes? Alternatively, can these items be purchased with meal plan dollars if GST/HST is charged thereon?
Interpretation Given
Under section 13 of Part III of Schedule V to the ETA, the following supply is exempt of the GST/HST:
"A supply of a meal to a student enrolled at a university or public college where the meal is provided under a plan that is for a period of not less than one month and under which the student purchases from the supplier for a single consideration only the right to receive at a restaurant or cafeteria at the university or college not less than 10 meals weekly throughout the period."
Therefore, meals provided to a student under a meal plan that meets all of the following conditions (herein after referred to as a "qualifying meal plan") are exempt under section 13 of Part III of Schedule V to the ETA:
• The meals are provided to a student enrolled at the university or public college who lives either on-campus or off-campus.
• The student pays a single consideration for the plan.
• The single consideration is sufficient for the student to receive at least 10 meals each week for the period of the plan.
• The plan is for a period of at least one month.
• The meals are served only at an on-campus restaurant or cafeteria (i.e., on the property of the university or public college). A private operator may own or operate the restaurant or cafeteria where the meals are served provided it is on campus.
Taking into consideration the requirements of section 13 of Part III of Schedule V, we will respond to each of your questions separately:
1. In the event a student does not use the balance of his or her Meal Plan Account, can a carry forward of unused meal plan amounts be done without jeopardizing the GST/HST exempt status of the plan (either in whole or in part)?
The tax status of a supply for purposes of section 13 of Part III of Schedule V is to be determined at the time the student initially enters into the agreement with the supplier and will not be impacted if, at the end of the plan period, unused funds may be carried forward for use in the future.
2. Section 13 of Part III of Schedule V states that a student may receive for a single consideration only the right to receive at a restaurant or cafeteria at the university or college not less than 10 meals weekly throughout the period. As such, can a refund of unused meal plan amounts be allowed under the ETA?
The tax status of a supply for purposes of section 13 of Part III of Schedule V is to be determined at the time the student initially enters into the agreement with the supplier and will not be impacted if, at the end of the plan period, unused funds may be refunded to the student.
3. Notice 196R Application of the GST/HST to University and Public College Meal Plans states that "the calculation of whether the amount for the plan is enough for 10 meals a week should be based on the average price of a meal at the university or public college cafeterias or restaurants." As such, what is the Canada Revenue Agency's (the CRA) definition of an average price of a meal? How does the CRA define the term "meal"?
The CRA considers the average price of a meal to mean the "average retail price" of a meal available to students at the restaurants and cafeteria at which the qualifying meal plan may be used. The CRA cannot set a minimum or maximum price that would be acceptable globally as overhead and food costs may vary from institution to institution. It is expected that the "average retail price" will take into consideration a combination of the types of meals [that is, breakfasts, lunches (i.e., mid-day meals) or dinners (i.e., evening meals)] offered under the qualifying meal plan.
4. If a dollar amount is transferred from a taxable [...] Plan Account to an exempt Meal Plan Account, does this change the exempt status of the Meal Plan Account?
The CRA considers "top-ups" or the addition of funds to a qualifying meal plan to be additional consideration for the same supply. As such, the tax status of meals under a qualifying meal plan is not impacted by "top-ups" or the addition of funds to the qualifying meal plan.
5. If a dollar amount is transferred from an exempt Meal Plan Account to a taxable [...] Plan Account, does this change the exempt status of the Meal Plan Account?
The CRA questions whether an arrangement where students are given the full discretion to transfer or withdraw funds from an account at any time during the academic year would be a meal plan (qualifying or otherwise). Such agreements do not appear to fall within the exemption found in section 13 of Part III of Schedule V.
6. Items such as chips or candy can be purchased from the cafeteria or restaurant on campus. Can a student purchase taxable confectionaries (chips, chocolate bars, etc.,) on their Meal Plan Account without paying taxes? Alternatively, can these items be purchased with meal plan dollars if GST/HST is charged thereon?
We will answer this question under separate cover.
Additional comments:
In fact #4 you indicate that a university or college sells a meal plan to its students and that generally [Company A] is remunerated by the university or college to supply meals and other sundry services. Such supplies made by [Company A] to a university or college would not be exempt under section 13 of Part III of Schedule V. However, where [Company A] supplies food and beverages, including catering services, to a person that is a university or public college, section 14 of Part III of Schedule V may exempt that supply. Under section 14 of Part III of Schedule V, the following is exempt of the GST/HST:
A supply of food and beverages, including catering services, made to a person that is a school authority, university, or public college under a contract to provide food or beverages
(a) to students under a plan referred to in section 13; or
(b) in an elementary or secondary school cafeteria primarily to students of the school,
except to the extent that the food, beverages and services are provided for a reception, conference or other special occasion or event.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, do not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-4206. 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,
Carol A. Gaudet
Charities, Non-Profit Organizations and Educational Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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