Bell T.C.J.:
This is an appeal from an Assessment for the period January 1, 1992 to December 31, 1992 made under Part IX of the Excise Tax Act (“Act”) in respect of Goods and Services Tax. Sectional reference, unless otherwise specified, will be to this Act.
Issue
The issue is whether camp programs conducted by the Appellant are exempt supplies within the meaning of the term “exempt supply” as defined in section 123(1) of the Act.
Facts:
The Appellant is a charity under the Income Tax Act and is therefore a charity for purposes of the Act by virtue of section 123(1) which defines “charity” as meaning:
a registered charity ... within the meaning of the Income Tax Act;
It operated a bible camp in which, in exchange for a fee, persons would receive accommodation, religious training and meals, and participate in educational and recreational activities. The Minister assessed the Appellant an amount of tax on the basis that it was providing a supply of taxable services which was not exempt pursuant to the Act. Specifically, the Minister alleged in the Notice of Decision (in response to a Notice of Objection filed by the Appellant) and in the Reply to the Notice of Appeal, that the Appellant was providing a supply of services involving instruction or supervision in a recreational or athletic activity which, pursuant to subsection 2() of Part VI of Schedule V of the Act was specifically excluded from the general exemption for supplies made by a charity.
Harvey Ray Sider, the first witness for the Appellant, described himself as moderator for the denomination of the Brethren in Christ Church. He stated that the denomination was evangelical in that it is the scriptural, spiritual or religious pervasiveness of a setting that it believes leads a person to understand who God really is. He said there were two aspects making the Appellant an integral arm of the Church, namely:
First of all, there is that specific religious teaching that goes on throughout the day, as well as specific times in the day, and then it’s the pervasive atmosphere which, whether they’re playing or fishing or whatever they’re doing, relates a person to the creator and what we are meant to be. So without that religious atmosphere, there would be no point in having Camp Kahquah.
He also said that while the camp provided recreation, people were there to focus on the spiritual nature of things. He stated that the camp was not a moneymaking venture and that it was subsidized annually. He also stated that:
...the whole issue is to have a time of spiritual renewal, getting closer to God in a setting that is conducive to that. What better is there than nature?
He described family camps as being held three weeks in a row in the summer time, that there was a camp pastor available 24 hours of the day and that there were both morning and evening sessions and sometimes campfires, all adding to the emphasis on the spiritual nature of the human individual. He stated that the employees may be members of any denomination but must,
have a personal relationship with the Lord Jesus Christ.
He said that most employees were volunteers and there were minimal salaries for the few paid members of staff. He stated that his denomination viewed these camps as different from commercial camps or sport camps.
Our Brethren in Christ Church sees it very differently, because we see it as a religious camp. And while sports are there, free time is there, we see it as an arm of the church. The camp is the church, just like Sunday school is the church.
He also said that the camp is located on a lake with 500 to 1,000 feet of waterfront and a sand beach. He testified that the campers can swim, use canoes and rowboats, play volleyball and baseball and use hiking trails.
The Appellant’s second witness, Larry J.Y. Hogg, a chartered accountant, is also a member of the Brethren in Christ Church. He stated that his parents were the first resident camp managers when the camp was run by the church as a ministry of the church. He stated that he and his brother, as children, both made personal confessions of faith to Jesus Christ at the chapel campfire. He served as a counsellor, served on the maintenance staff, and on the board of directors, having been chairman for a time. He is presently the treasurer of the denomination. He testified as to his belief in the importance of a personal confession of faith in Jesus Christ and dedication to the most important aspect of living, namely to attain salvation. He said that:
We believe that our faith should affect our whole life. It’s not a matter of practising our religion at any particular time or any particular place. For example, it’s not just Sunday morning at church. I take my faith with me everywhere, every day, all the time. And that’s what we believe God expects of us. He expects us to be a witness for him wherever we go.
He then emphasized the need for and importance of fellowship. He said that the purpose of Camp Kahquah is the evangelism and discipleship of people of all ages through a Christian camping program. He said that Jesus commanded his disciples to go into the world and spread the gospel and teach people about the gospel and baptise them. He then stated that what goes on at Camp Kahquah is very much about evangelism, and presenting the claims of Christ, giving people the opportunity to accept Christ as their personal saviour. He said it also is “about discipleship, about teaching campers more about God and about the teachings of Christ”.
Some objects of the Letters Patent of the Appellant read as follows:
The Corporation shall establish, operate and maintain a camp facility for children and/or adults and such other facilities as may be necessary for the purpose of providing religious instruction, teaching, ministry and general promotion of the Christian faith and the maintenance of the doctrines and beliefs thereof, and in particular, the doctrines and beliefs of the Canadian Conference of the Brethren in Christ Church.
and
The Corporation shall establish and offer programs for the purpose of religious instruction, teaching, ministry and general promotion of the Christian faith...
and
The Corporation shall be entitled to make its facilities available to other charitable organizations and special interest groups for the purpose of providing religious instruction, teaching, ministry and general promotion of the Christian faith.
Mr. Hogg said that the corporation was and is not profitable and ran at a deficit.
The Notice of Decision relating to the Appellant’s Notice of Objection reads, in part, as follows:
A review of the facts indicates that the camping programs which you provide are supplies of services involving instruction or supervision in a recreational or athletic activity pursuant to subsection 2(j) of Part VI of Schedule V of the ETA and as such are taxable.
and also:
The fee paid for recreational camp is principally for the recreation provided.
Mr. Hogg said that he did not agree with that description and that it did not reflect what the church camp “is about”. He said that if it was principally for recreation the church would not be involved with it. He stated that the camp was a very effective method to implement the church’s evangelical policies and that it was simply one means of many that the church used in carrying out its work of spreading the gospel. He then said that in the past year there were 50 campers who “accepted Christ as their personal saviour”. He also said that board meetings commence with prayer, each person around the table praying and that they pray that through the work at camp people will “come into God’s kingdom and accept Christ as their saviour”. He stated that that was the most important thing to them and that the recreation was simply a vehicle that the church used but that it was not the principal thing.
A statement of the Camp philosophy dated January, 1980 reads in part as follows:
...that spiritual benefits will be derived as the claims of Christ are upheld, as opportunity is given to accept Christ...
To show the relevance of Christianity in all areas of life to all age groups through experiences in a setting where campers live, work, play and worship together.
He stated that they believe that God created the heaven and the earth and they talk about it that way with the campers. He then said that the camp provides an opportunity for people to serve and that that is part of their discipleship - to share their faith with others.
Mr. Hogg then described the different camps including the Junior Children’s Camp, Senior Children’s Camp, Teen Camp, Family Camp, Senior’s Retreat and Off-season rentals. He stated that there was a tuck shop at the camp where candy, soft drinks and other things were sold. He said that the sum of $19,915 would include sales at the tuck shop and meals at the Family Camp which were paid for directly.
On cross-examination Mr. Hogg said that any child, not necessarily children of members of the denomination, could attend the camp. He stated that these are mostly friends of denomination members and that some of these children have “accepted Christ”. He referred to the canoeing, swimming, soccer, football, snorkelling and other recreational activities available at the camp. Instruction and supervision were available for all such activities. He said that if the children have fun they will want to come to the camp and will want to bring their friends and would want to return the following year. He said that if children were at the camp they could be taught about the gospel. He said that they couldn’t be successful if they couldn’t have fun and also that Christian camping is a fairly well recognized method of Christian ministry.
Mr. Cornell, the third witness for the Appellant described the camp facilities, including the hiking trail where the hikers have a God Hunt where they could discover God in different ways as they travel along the trail through scripture and through the nature that is around them. He made other comparisons between religious experience and camping experiences.
Analysis and Conclusion:
The submissions in this case were complex and extended. Lord Widgery, CJ, in reference to the judgment of Lord Denning, MR in British Railways Board v. Customs & Excise Commissioners, [1977] 2 All E.R. 873 (Eng. C.A.) at p. 876 said:
...that it is to hope when answering Lord Denning, MR’s question in the future in this type of case people do approach the problem in substance and reality ... I think it would be a great pity if we allowed this subject to become over-legalistic and over-dressed with legal authorities when, to my mind, once one has got the question posed, the answer should be supplied by a little common sense and concern for what is done in real life...
I have attempted to employ this wisdom in preparing these Reasons.
Section 165 of the Act states that:
Subject to this Part, every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada a tax in respect of the supply equal to 7% of the value of the consideration for the supply.
(emphasis added)
A “taxable supply” is defined in section 123(1) to mean a supply made in the course of a commercial activity: “Commercial activity” means a business carried on or an adventure or concern in the nature of trade except, in each case, to the extent to which exempt supplies are made.
Section 166 provides that where a person makes a taxable supply and the consideration or part thereof for the supply becomes due or is paid when the person is a small supplier and not a registrant, the consideration shall not be included in calculating tax payable. At the time in question the Appellant was not a registrant under the Act.
The term “exempt supply” is defined in section 123(1) to mean a supply included in Schedule v. Section 2 of Part VI of that Schedule includes a supply made by a charity of any personal property or a service, but not including a supply of certain enumerated properties and services.
Respondent’s counsel submitted that section 2(j) applied to the Appellant thereby constituting an exception to the exemption. It reads as follows:
a service involving, or a membership or other right entitling a person to, supervision or instruction in any recreational or athletic activity.
He said that:
Although the camp may have some additional purpose in mind in operating the camp, that doesn’t change the fundamental fact that what we have here is a camp that is providing supervision or instruction in recreational or athletic activities ... Just because there is a religious or spiritual component to the camp doesn’t mean that the activities of swimming and baseball playing and canoeing and hiking, just to name a few, cease to be recreational in nature. They are recreational. They may occur in the context of a camp that has a religious component to it, but that doesn’t mean that the activities themselves ceased to be recrea- tional or athletic in nature just because they are being done by Christian people or under the supervision of Christian people.
He sought to minimize the religious aspect of the camps and, in so doing, emphasized the recreational aspect of same. He presented the view that section 2() excepted the Junior Children’s Camp, Senior Children’s Camp, Teen Camp, Family Camp and Seniors’ Retreat from the exemption from tax.
I accept the extensive evidence of the Appellant’s witnesses who emphasized the stated purpose and actual operation of the camp to that end. In particular, I accept the evidence that the camps in question would not exist if it were not for the religious component and the opportunity of extending evangelical exposure and the conversion of campers. Although the evidence does not indicate that the recreational activities are, in terms of time, incidental to the Christian activities taking place, I accept the testimony indicating that the Appellant’s Christian principles are taught and demonstrated through the activities available. Further, it is understandable, as the evidence stated, that children would not be particularly interested in going to a religious camp which lacked some of the summer sports opportunities available at this camp. Obviously, an environment including such opportunities in the summer time would be far more attractive than one which lacked those facilities. Part of the mission of the Brethren in Christ Church is to provide religious instruction and guidance in a happy and attractive environment. A camp organized in the desert would certainly lack some of the appeal of Camp Kahquah’s facilities.
Paragraph 2(j) uses the word “involving” in referring to a “service involving ... supervision or instruction in any recreational or athletic activity”. The french version of this provision reads as follows:
d’un service de supervision ou d’enseignement dans le cadre d’une activité récréative ou sportive, ou d’un droit d’adhésion ou autre droit permettant à une personne de bénéficier d’un tel service;
It does not use a word equivalent to “involving”. It refers directly to a service of supervision or instruction and, in so doing, indicates that the supply must be supervision or instruction and not just a component or an aspect of an overall supply.
With respect to paragraph 2(j) I conclude that the five camps under examination do not fall within the exception to the exemption.
In Cosmopolitan Music Society v. R., [1995] G.S.T.C. 19 (T.C.C.), Mogan, J. characterized certain activities as both taxable supply and exempt supply. In so doing, he found that 70 percent of the Society’s time, energy and efforts aimed at providing members with a recreational activity in music was a taxable supply and 30 percent at performing concerts was an exempt supply. He said, at 19-7:
The primary purpose of the Appellant society is to provide a meeting place and qualified conductors for those amateur music lovers who enjoy choral singing or orchestral music as a recreational activity. That is a taxable supply under para. 2(j) of Part VI of Schedule v. The secondary purpose of the Appellant society is to perform in public after achieving an acceptable level of competence. This is an exempt supply under s. 11 of Part VI of Schedule V.
My interpretation of the evidence in this case is that the Appellant’s sole purpose was the conduct of a Christian camp including evangelising for the conversion of persons to the religious beliefs it espoused. There was no secondary purpose such as the public performances that took place in the Cosmopolitan situation, the provision of recreational facilities and instruction being part of and incidental to its purpose.
Respondent’s counsel also submitted that, in the alternative, the Seniors’ Camp and the Family Camp fell within the exception of section 2([h)). It reads as follows:
an admission in respect of
(i) a place of amusement
The term “place of amusement” is defined to mean:
any premises or place, whether or not enclosed, at or in any part of which is staged or held any
(a) film, slide show, sound and light or similar presentation;
(b) artistic, literary, theatrical, musical or other performance, entertainment or exhibition;
(c) fair, circus, menagerie, rodeo or similar event, or
(d) race, game of chance, athletic contest or other contest or game,
and includes a museum, historical site, zoo, wildlife or other park place where bets are placed, and any place, structure, apparatus, machine or device the purpose of which is to provide any type of amusement or recreation.
It is noted that the words “the purpose” are employed. This indicates that the sole purpose of the “place of amusement” was to provide amusement or recreation. Words such as those used in subsection 55(2) of the Income Tax Act, namely, “one of the purposes of which” are not used in this definition. The whole context of the “place of amusement” resists the submission of Respondent’s counsel in this regard.
With respect to off-season rentals, Respondent’s counsel submitted that such supply was excepted from the exemption by virtue of section 25() of Schedule V which reads as follows:
A supply of real property made by a public service body (other than a financial institution or a government) but not including a supply of ...
(f) real property (other than short-term accommodation) made by way of
(i) a lease, where the term of the lease is less than a month; or
(ii) a licence,
where the supply is made in the course of a business carried on by the body.
The term “public service body” is defined in section 123(1) to include a charity. The property rented by the Appellant is real property within the definition of that term in section 123(1).
The term “short-term accommodation” is defined as follows:
“short term accommodation” means a residential complex or a residential unit that is supplied by way of lease, licence, or similar arrangement for the purpose of its occupancy by an individual as a place of residence or lodging, where the complex or unit is occupied by the same individual for a period of less than a month.
The term “residential unit” is defined as follows:
(a) a detached house, semi-detached house, row house unit, condominium unit, mobile home, floating home or apartment;
(b) a suite or room in a hotel, a motel, an inn, a boarding house, a lodging house or a residence for students, elderly persons, infirm persons or other individuals, or
(c) any other similar premises,
or that part thereof that
(d) is occupied by an individual as a place of residence or lodging,
(e) is supplied by way of lease, licence or similar arrangement for the occu- pancy thereof as a place of residence or lodging for individuals,
(f) is vacant, but was last occupied or supplied as a place of residence or lodging for individuals, or
(g) has never been used or occupied for any purpose, but is intended to be used as a place of residence or lodging for individuals.
The use of the camp property was provided to persons in the off-season by way of an arrangement in the nature of a licence. Appellant’s counsel and Mr. Hogg both used the word “rent”, “rentals” and “renting”. I agree with Respondent’s counsel that the phrase “any other similar premises” in the definition of “residential unit” should be interpreted ejusdem generis to include only things of the same genus as the items which precede it in the definition. The use of the campsite premises is not like a temporary accommodation as is typically the case with a room in a hotel, motel, inn, boarding house or lodging house. I also agree with counsel that the supply was made in the course of a business carried on by the Appellant. The term “business” is defined in section 123(1) to include an “undertaking of any kind whatever, whether the activity or undertaking is engaged in for profit”. The Appellant’s activities fall within that definition. Accordingly, the offseason rental activities fall within an exception to the exemption and are, therefore, a taxable supply.
Finally, Appellant’s counsel submitted that the revenue from the tuck shop and family camp meals was not taxable on the basis that the Appellant was a small supplier. Section 166 of the Act reads as follows:
Where a person makes a taxable supply, other than a supply of real property by way of sale, and the consideration or a part thereof for the supply becomes due, or is paid before it becomes due, at a time when the person is a small supplier who is not a registrant, that consideration or part thereof, as the case may be, shall not be included in calculating the tax payable in respect of the supply.
As stated above, the Appellant was not a registrant at the time in question.
By virtue of subsection 148(1) a person is a small supplier throughout a particular calendar quarter and the first month immediately following if:
the total of all amounts each of which is the value of the consideration ... that became due in the four calendar quarters immediately preceding the particular calendar quarter, or that was paid in those four calendar quarters without having become due, to the person or an associate of the person at the beginning of the particular calendar quarter for taxable supplies ... does not exceed the total of... $30,000.
Respondent’s counsel submitted that there was no evidence before the Court as to what the total supplies were in the four calendar quarters that precede any quarter under examination and no breakdown into the calendar quarters in which the supplies were made. Because no such evidence exists, the Appellant cannot escape inclusion of those amounts in taxable supply.
The appeal is allowed to the extent that the supply of the Junior Children’s Camp, Senior Children’s Camp, Teen Camp, Family Camp and Seniors’ Retreat was an exempt supply. The supply of the off-season rentals and the tuck shop and Family Camp meals were taxable supplies.
Having regard to the mixed success, no costs are awarded.
Appeal allowed in part.
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