GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Road
Vanier, Ontario
XXXXX K1A 0L5
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Subject:
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GST/HST INTERPRETATION
XXXXX
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Dear XXXXX
This letter is in response to the memorandum of October 16, 1996, from XXXXX of the XXXXX Tax Services, regarding the XXXXX and the definition of vocational school in section 1 of Part III of Schedule V to the Excise Tax Act (ETA). We apologize for the delay in responding to the query.
Statement of Facts
Our understanding of the facts is based on the information in the memorandum and the brochure submitted by XXXXX and is as follows:
1. Prior to July 24, 1995, XXXXX operated XXXXX as a sole proprietorship.
2. At that time XXXXX was registered for purposes of the GST XXXXX[.]
3. XXXXX was subsequently incorporated under the name XXXXX[.]
4. The incorporated entity was registered and received a Business Number XXXXX[.]
5. XXXXX was registered under XXXXX prior to incorporation, and is still registered under that Act.
6. XXXXX provides the following courses:
7. XXXXX XXXXX[.]
8. XXXXX[.]
9. XXXXX - XXXXX[.]
10. XXXXX[.]
11. XXXXX[.]
12. XXXXX[.]
13. XXXXX[.]
14. Students receive certification by the XXXXX which as indicated in the brochure, is duly registered as a union in Canada.
15. The brochure states that career opportunities related to XXXXX are available in "private practice, employment with or under contract to physicians, psychologists, stress, weight loss and other clinics, or under private contract with XXXXX.
Issues
1. Was XXXXX a "vocational school" as defined in subsection 1 of Part III prior to its incorporation?
2. Does XXXXX currently qualify as a vocational school?
Response
Based on the information in the brochure, it is our opinion that XXXXX is providing instruction in courses that enhance students' occupation skills. If XXXXX is established and operated primarily to provide these courses, then it would qualify as a vocational school as defined in section 1 of Part III of Schedule V. However, there is insufficient information to rule on this conclusively. We have set out in the explanation below, the circumstance under which the Department will consider that an organization is a vocational school for purposes of the ETA.
XXXXX would be considered a vocational school for supplies of instruction provided prior to 1996, if it was certified by the Minister of Employment and Immigration for the purpose of subsection 118.5(1) of the Income Tax Act (ITA). If it was not certified for purposes of the ITA, XXXXX would still be considered a vocational school if it met the other requirements of the definition (i.e., established and operated primarily to provide instruction in courses that enhance students' occupational skills). For supplies made after 1996, XXXXX would only qualify as a vocational school if it meets the requirements in the definition.
Explanation
A "vocational school" as defined in section 1 of Part III means "an organization that is established and operated primarily to provide students with correspondence courses, or instruction in courses, that develop or enhance students' occupational skills." The definition of "vocational school" was amended by Bill C-70 effective for supplies made after 1996. Prior to 1996, the definition also included organizations that were certified by the Minister of Employment and Immigration for purposes of subsection 118.5(1) of the Income Tax Act (ITA). However, as a result of the change, an organization is only considered a vocational school if it is established and operated primarily to provide instruction in courses that develop or enhance students' occupational skills.
To determine whether an organization is established primarily to provide courses that enhance students' occupational skills, we will examine its governing documents. These documents including letters patent, articles of incorporation, memoranda of agreement, and by-laws should contain information as to the reason or purpose for the establishment of the organization. In circumstances where that information is not readily available, how the organization is operated will be evidence of the purpose for its establishment.
The Department will consider an organization to be providing instruction in skill enhancing courses if the courses it provides are not in respect of sports, games, hobbies, or other courses that are designed to be taken for recreational purposes or for personal interest. The purpose or the intent of the courses may be obtained from a review of the curriculum and the organization's promotional material. Further, with respect to the operated primarily requirement, most of the organization's revenue and human resources should be attributed to the provision of the courses that enhance students' occupational skills.
Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 954-4206.
Yours truly,
Dwayne Moore
Charities and Non-profit Organizations
Public Service Bodies and Governments Division
GST/HST Rulings and Interpretations Directorate
Encl.:
| Legislative References: |
section 1/Part III/Schedule V |
| NCS Subject Code(s): |
R[-]119152 |
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