23 February 2001 GST/HST Interpretation 35035; 30908 - Tax Treatment of the Reading Course

Dear XXXXX:

This is further to our interpretation of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the XXXXX Reading Course supplied by the XXXXX (the Centre). The previous interpretation stated that the course was taxable since no exemption applied. More specifically, the response stated that section 9 of Part III of Schedule V of the Excise Tax Act did not exempt the supply of the course. After considering your additional submissions, and further review of XXXXX Board of Education curriculum, we are providing the following revised response. For reasons cited in the original interpretation, this revised response is in the form of an interpretation letter rather than an application ruling.

It is our understanding that the Centre is a partnership that was founded in 1968 to meet the needs of students who were required to improve their reading skills. It is registered for GST purposes and offers two types of courses, one of which is the XXXXX Reading Course. Students register in the XXXXX Reading Course to improve their reading proficiency. This course is the only one at issue.

Although some students register in the XXXXX Reading Course to assist them in passing scholastic aptitude tests, most students (i.e., 90% or more) referred to the course are attending junior high school or high school and are referred to the XXXXX Reading Course by school counselors.

The XXXXX Reading Course consists of teaching by an XXXXX certified school teacher of concepts such as word recognition, vocabulary, concentration, comprehension, retention and recall. Although the XXXXX Reading Course is not approved for credit by a school authority, many of the course materials are the same as those used in the XXXXX Board of Education curriculum. Testing is done at the beginning, end and during the XXXXX Reading Course to measure the level of proficiency in different areas. A file is also kept for each student including their test results, and a course completion card is issued upon successful completion of the program.

Listed in the XXXXX Board of Education curriculum is an optional course at the Grades 11 and 12 level entitled "Literacy Skills: Reading and Writing." This course emphasizes the strengthening of essential reading and writing skills. One of the overall expectations is that the students will "use a variety of strategies to understand words encountered in texts." Four specific expectations exist: (a) understanding the meaning of texts, (b) understanding the forms of texts, (c) understanding the elements of style, and (d) building vocabulary.

Interpretation Requested

Is the supply of the XXXXX Reading Course exempt under section 9 of Part III of Schedule V?

Interpretation Given

Section 9 of Part III of Schedule V sets out, in part, that a supply of a service of tutoring or instructing an individual in a course that follows a curriculum designated by a school authority is exempt.

The tutoring or instructing need not be limited to material contained in the course but could also include tutoring or instructing in general concepts dealing with the relevant subject matter in order to assist the student to understand the material contained in a course designated by a school authority. For example, if a student receives tutoring or instruction in general math concepts to assist with material in a course that follows the provincial math curriculum, that tutoring or instruction is exempt under paragraph 9(a) of Part III of Schedule V. In order for the exemption to apply, it must be evident that there is some connection between the supply of the instruction or tutoring in question, and the curriculum designated by a school authority.

On the basis of additional information we reviewed, it is evident that "reading skills" courses are part of the XXXXX provincial high school curriculum being presented as optional courses. Therefore, tutoring or instruction in effective reading skills, for the purpose of assisting students to meet the requirements of their school curriculum, will meet the requirements of paragraph 9(a). On this basis and contrary to the view expressed in our letter of XXXXX, it is our view that the XXXXX Reading Course is exempt under section 9 of Part III of Schedule V to the ETA.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the Excise Tax Act, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Canada Customs and Revenue Agency with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-0420.

Yours truly,

Lorrie McAnulty
Charities, NPO's and Educational Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate