27 September 2000 GST/HST Interpretation 6177 - GST on Shared Cost of Bus Transportation of Students

This is in reply to your request of June 1, 2000, and our telephone conversation on September 21, 2000, concerning the application of the Goods and Services Tax (GST) to bus transportation costs and administrative costs charged by the XXXXX to the XXXXX.

In your letter, you ask whether the charge by the XXXXX to the XXXXX for the cost of transportation by bus in XXXXX of the XXXXX students qualifies as consideration for an exempt supply under s. 5 of Part III of Schedule V of the Excise Tax Act. You then indicate that even if s. 5 is not applicable, the charge qualifies as consideration for an exempt supply under s. 2 of Part VI of Schedule V.

As I indicated in our telephone conversation, we believe that the charge qualifies as consideration for an exempt supply under s. 2 of Part VI of Schedule V. Although we are not prepared to rule on the application of s. 5 of Part III of Schedule V, it appears that this section would not be applicable in the present case. Considering the wording of the section; i.e., "A supply made by a school authority to elementary or secondary school students of a service of transporting the students to or from a school that is operated by a school authority", we are of the view that the Board in this case is not supplying the service of bus transportation to the students of the XXXXX, but rather is making the supply to the XXXXX itself, which in turn is supplying the service to its students. As such, the supply made by the Board to the XXXXX would not fall under s. 5 of Part III of Schedule V, but rather is exempt under s. 2 of Part VI of Schedule V.