GST/HST Rulings and Interpretations
Directorate
Place Vanier, Tower C, 10th Floor
25 McArthur Avenue
Vanier, Ontario
XXXXX XXXXX
This letter is in response to the memorandum of September 30, 1997 from XXXXX concerning the definition of vocational school in section 1 of Part III of Schedule V to the Excise Tax Act (ETA) and its application to XXXXX XXXXX[.]
Statement of Facts
Our understanding of the facts is as follows:
1. XXXXX has been certified by the Minister of Employment and Immigration for the purposes of subsection 118.5(1) of the Income Tax Act (ITA) effective January 1, 1996.
2. XXXXX is registered under the XXXXX XXXXX[.]
3. XXXXX provides accounting, bookkeeping and tax services.
4. XXXXX also offers a XXXXX comprehensive diploma course in the field of bookkeeping and accounting.
5. The following information concerning XXXXX 19 xx and 19 xx revenue and payroll hours were submitted for review:
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
XXXXX
Does XXXXX qualify as a vocational school as defined in subsection 1 of Part III of Schedule V to the ETA.
Response
Based on the information provided, it is our opinion that that XXXXX is not a vocational school as defined in subsection 1 of Part III of Schedule V to the ETA.
The definition of vocational school was amended for supplies made after 1996. Prior to that date, an organization that was certified by the Minister of Employment and Immigration for purposes of subsection 118.5(1) of the Income Tax Act (ITA), was automatically considered to be a vocational school. If that organization made supplies that met the requirement of section 6 or 8 of Part III of Schedule V, such supplies would be exempt. However, as a result of the amendment, an organization that is certified by Human Resources and Development Canada (formerly, Minister of Employment and Immigration) no longer automatically qualifies as a vocational school. Such an organization must meet the amended definition as set out in subsection 1 of Part III of Schedule V.
In order to be considered a vocational school an organization must be established and operated primarily to provide correspondence courses or instruction in courses that develop or enhance students' occupational skills. In order to determine whether an organization is established as a vocational school, the Department will review the organization's governing documents to ascertain its mandate for which it was established. These documents include, letters patent, articles of incorporation, memoranda of agreement, by-laws, and articles.
Further, the Department will consider an organization to be operated primarily to provide correspondence courses, or instruction in courses that develop or enhance students' occupational skills if most of its revenues and human resources are attributable to the provision of the skill enhancing courses. Other factors the Department will consider in determining whether the organization is primarily engaged in providing courses that enhance students occupational skills, include qualification of staff, courses offered (i.e., curriculum), adherence to provincial vocational school legislation and how the organization promotes itself.
Based on facts above, XXXXX does not meet the operated primarily requirement as most of its revenues is derived from its accounting, bookkeeping and tax services and not from the provision of instruction.
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
| Legislative References: |
section 1 Part III of Schedule V |
| NCS Subject Code(s): |
R-119152 |
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