30 September 1998 GST/HST Interpretation HQR0001291 - Whether a Choir Activity Constitutes Exempt Music Lessons Pursuant to Paragraph 9(b), Part III of Schedule V

As requested in your e-mail to Paule Labbé dated August 17, 1998, we have reviewed your draft letter to XXXXX on the application of GST/HST to the XXXXX. Specifically, your letter of August 17, 1998 deals with the application of paragraph 9(b), Part III of Schedule V to the Excise Tax Act and whether a choir activity constitutes exempt music lessons pursuant to that paragraph.

I agree with all of the rulings that you have provided in your letter to XXXXX except ruling no. 1. The supply of the XXXXX raffle ticket is a separate supply, and is incidental to the supply of the tuition fees. The supply of the raffle ticket is supplied together with the supply of the tuition fees and is insignificant in the context of the supply of the tuition fees. Because the supply of the raffle ticket is incidental to the supply of the tuition fees, the supply of the raffle ticket is deemed to form part of the supply of the tuition fees and accordingly, no GST should be charged on the supply.

While I agree with the rest of your rulings, I would suggest three small changes to your letter. First, under the Explanation heading, I would give reasons why the Department considers that these choir lessons constitute "music lessons". Essentially the reasons are (as you have outlined in the Log of Action) that the lessons are designed to result in a progression or development of skills toward a pre-set lesson goal or objective and that there is an evaluation of the student's performance against pre-set lesson activities and goals. Giving these reasons will serve to differentiate past rulings where we have said that choir activity does not constitute exempt music lessons.

The second change I would suggest involves paragraph 6 of the Explanation. I think you want to make clear that the registrant will only be involved in commercial activity regarding the Tour if admission is charged for the Tour performances. From the facts that are outlined in the Log of Action, the only concert the registrant charges an admission to is the year-end concert. Therefore, the situations where it is involved in commercial activity are very limited.

The third change I would suggest involves your description of the Regulations on page 4 of the letter. You state that music lessons are prescribed equivalents of music courses when they follow a curriculum designated by a school authority. This is not the case. The music courses do not need to follow a curriculum designated by a school authority; the music courses are prescribed to do so.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact Paule Labbé, Manager at (613) 954-7957 or me at (613) 952-0370.

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