12 November 1999 GST/HST Interpretation HQR0001826 - Tax Status of Certain Safety Courses

This is in response to your memorandum of May 25, 1999, sent to Pierre Bertrand, Director, Public Service Bodies & Governments Division. At issue is the tax status of certain safety courses.

Our understanding of the facts is as follows.

1. XXXXX XXXXX XXXXX[.]

2. XXXXX XXXXX[.]

3. XXXXX XXXXX[.]

4. XXXXX is not registered under XXXXX XXXXX for purposes of operating a vocational school, XXXXX. XXXXX[.]

5. All courses require the participants to pass a written and a practical exam. The XXXXX course has a verbal exam.

6. XXXXX[.]

7. XXXXX XXXXX. The acceptability of the parties depends on the competency of the instruction which cannot be judged solely by a listing of the content and duration of first aid courses being delivered. According to XXXXX the responsibility lies with the employer to ensure the required course content and duration as well as the competency of the instruction.

8. You further indicated that XXXXX recommends that individuals employed in certain occupations should be certified in some of the courses offered by XXXXX. However, you were told that this Division does not have the authority to require individuals employed in certain occupations to be certified.

Hereafter a description of the courses that XXXXX offers:

A. Certified Courses

Individuals who successfully pass the written and practical tests receive certificates from the XXXXX certifying that they completed and passed the course. If the individual fails the course, they receive a "participation acknowledgement", but not a certificate.

: - XXXXX - XXXXX

B. Non-Certified Courses

The second category of courses that XXXXX "non-certified courses." These courses are provided to individuals for informational purposes only- no certificate is issued upon completion of the course.

: - XXXXX - XXXXX

C. Course Combinations

The third category of courses that XXXXX "courses combinations". These courses are a combination of XXXXX[.] As in the first category of courses, individuals who successfully pass the written and practical tests receive certificates from the XXXXX certifying that they completed and passed the course. If the individual fails the course, they receive a "participation acknowledgement", but are not certified.

: - XXXXX - XXXXX

D. Recertification Courses

The last category of courses that XXXXX "recertification courses." An individual's certification obtained in courses described in categories (a) and (c) above expires two years after obtaining certification. The recertification courses are required so that the individual is re-qualified to provide XXXXX - XXXXX[.]

Questions

1. What is the meaning of "occupational skills" as set out in the definition of "vocational school" in section 1 of Part III of Schedule V to the Excise Tax Act (ETA)?

2. Do the courses described above qualify as courses that "develop or enhance students' occupational skills"?

3. What is the tax status of the above courses provided by XXXXX?

4. Is XXXXX entitled to claim input tax credits for the GST paid on course materials (e.g. course manuals)?

Answers

1. The definition of "vocational school" in section 1 of Part III of Schedule V to the ETA stipulates that to be considered a vocational school, the correspondence courses, or instruction in courses offered by an organization must develop or enhance students' occupational skills.

At the present time there is no definition of occupational skills. However, Policy P-229 Definition of "vocational school" in section 1 of Part III of Schedule V to the Act provides some guidance as to what is not an occupational skill. We do not consider the following courses to develop or enhance a student's occupational skills: sports, games, hobbies; or other recreational or cultural pursuits, that are designed for personal interest.

2. The courses offered by XXXXX qualify as courses that "develop or enhance students' occupational skills".

3. The tax status of the courses in groups A, B, C, and D are taxable as the conditions of section 8 of Part III of Schedule V to the ETA are not met.

4. XXXXX will be able to claim input tax credits for the GST paid on purchases related to commercial activities. (e.g. course manuals).

Analysis

Section 8 of Part III of Schedule V to the ETA exempts:

"A supply, other than a zero-rated supply, made by a school authority, vocational school, public college or university of a service of instructing individuals in, or administering examinations in respect of, courses leading to certificates, diplomas, licenses or similar documents, or classes or ratings in respect of licenses, that attest to the competence of individuals to practice or perform a trade or vocation where

(a) the document, class or rating is prescribed by federal or provincial regulation;

(b) the supplier is governed by federal or provincial legislation respecting vocational schools; or

(c) the supplier is a non-profit organization or a public institution."

Although XXXXX may qualify as a vocational school the criteria contained in section 8 of Part III of Schedule V to the ETA are not met. Specifically, neither of paragraphs (a), (b) or (c) are met. First, paragraph (a) is not met as the certificates provided by XXXXX are not documents, classes or ratings prescribed by federal or provincial regulation. The XXXXX do not prescribe the certificates. Further, these Regulations do not establish requirements to be fulfilled in order to obtain the certificate. Second, paragraph (b) is not met as XXXXX is not governed by federal or provincial legislation respecting vocational schools as indicated in fact no 4. Finally, paragraph (c) is not met as XXXXX is not a non-profit organization or a public institution.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 957-1175.