4 February 1999 GST/HST Ruling HQR0001292 - Tax Treatment of Second Language Instruction

This is in reply to your telephone inquiry of August 10, 1998, on the above-noted subject. Our comments are set out below.

On April 1, 1997, the harmonized sales tax (HST) replaced the goods and services tax (GST) and the provincial sales tax (PST) in the three participating provinces of Nova Scotia, New Brunswick and Newfoundland with a harmonized tax rate of 15%. It is our understanding that, in this case, no supplies are made in the participating provinces and for this reason our response will address only the GST.

Statement of Facts

Our understanding of the facts of your case, based on the documentation submitted and information provided in several telephone conversations between you and I are set out below.

1. XXXXX is an organization which teaches English as a second language in XXXXX[.]

2. There are two types of programs offered. The XXXXX is a one month immersion course with 20 hours of formal English instruction per week, accommodation, meals, up to 25 hours of activities, tours, and informal English instruction per week and transportation. (The transportation would involve airport pick-ups and drop-offs and transportation to go on the field trips, such as to the XXXXX[).] The cost of this program is $XXXXX plus an optional fee of $XXXXX for health insurance.

3. XXXXX is for students who wish to stay for longer periods of time and offers 25 hours of formal English classes per week and optional XXXXX preparation. The cost of this program is as follows: one month is $XXXXX three months is $XXXXX; six months is $XXXXX; one year is $XXXXX[.] Accommodation, optional activities and excursions can be arranged for an extra fee.

Rulings Requested

1. That the supply of instruction in English as a second language through the XXXXX[.] XXXXX is exempt of GST pursuant to section 11 of Part III of Schedule V of the Excise Tax Act ("section 11" and "the Act").

2. That the supply of instruction in English as a second language through the XXXXX is exempt of GST pursuant to section 11.

Rulings Given

1. Based on the facts above, we rule that the XXXXX is a single supply of instruction in English as a second language and this supply is exempt pursuant to section 11.

2. We rule that only the portion of the XXXXX consisting of the supply of instruction in English as a second language is exempt of GST pursuant to section 11. Further, we rule that other supplies that are provided under this Program for additional fees are separate supplies and that the tax status of each of these additional supplies must be determined on a case by case basis.

We do not have sufficient information to conclusively determine the tax status of other additional supplies provided under the XXXXX[.] We can advise only that the tax treatment of each supply must be determined on a case by case basis. For example, there is an exemption for residential rental accommodation and meals in sections 6 and 6.2 of Part I of Schedule V of the Act and this may apply depending on the particulars of the supply. Similarly, supplies of transportation and admissions to activities should be examined to ascertain their tax status.

Should you have any further questions or require clarification of the above matter, please do not hesitate to contact me at 954-5125.