Cases
Alexander College Corp. v. Canada, 2016 FCA 269
The appellant was a private, for-profit college which offered a two-year program leading to an associate of arts degree. Its business depended on its students' ability to transfer their credits to public universities in B.C., which, unlike it, offered baccalaureate degrees. It was not authorized under the Degree Authorization Act (B.C.) (the "DAA") to refer to itself as a university, but was authorized under that Act to grant associate degrees.
Exemption of its fee income under Sched. V, Part III, s. 7 depended on it qualifying as a “university.” In reversing the finding below that the appellant did not so qualify, , Gleason JA stated (at paras 24 and 25):
…Had Parliament wished to define a “university” for the purposes of the ETA to mean only those institutions which are granted such status under provincial law, it would have been easy for it to have so defined the term or to have left it undefined. …
[A]ll that is required is that the institution be empowered to grant degrees by a relevant authority such as the province of British Columbia. …
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Schedules - Schedule V - Part III - Section 7 | private college granting associate degrees qualified | 146 |
| Tax Topics - Statutory Interpretation - Interpretation/Definition Provisions | "means" definition can depart from ordinary meaning | 132 |
See Also
SAE Education Ltd v. Revenue and Customs Commissioners, [2017] EWCA Civ 1116
SAE Education Ltd (SEL) was an English company which provided educational training in audio and digital media technologies and had established a relationship with Middlesex University (MU) whereby BA courses in Recording and Multimedia Arts were to be taught by "SAE Technology College" at specified campuses as "validated collaborative programs" of MU. Subsequent Memoranda of Co-operation ("MOC") eventually lead in 2007 to the validation by MU of three SAE programs comprising BA (Hons) degree courses in Applied Multimedia, Interactive Animation and Games Programming. By the 2009 MOC, students enrolled on the validated courses were to be "considered members of [MU]" but were not entitled to receive university student ID cards and access to university facilities and resources was very limited.
Before going on to find that SEL did not qualify as a “college…of…a university” for UK VAT purposes, Patten LJ stated (at paras 64-65):
The word "college" … denotes a group of people organised as an institution usually (but not necessarily) in the field of education. The use by SAE Institute of the word "college" to describe its Littlemore campus could not therefore be said to be a misuse of language, but whether it can properly be described as a college of MU is a different question which cannot in my view be answered simply by reference to a document under which the University agreed that SEL should be called an "associate college" of MU or the fact that for a long time the two bodies have collaborated in the delivery of a limited range of degree courses leading to an MU qualification.
The test is whether SEL (or SAE Institute) is or was part of the University in the constitutional or structural sense… . That test is not satisfied in this case… .
Alexander College Corp. v. The Queen, 2015 TCC 238, rev'd 2016 FCA 269
The appellant was a private, for-profit college which offered a two-year program leading to an associate of arts degree. Its business depended on its students' ability to transfer their credits to public universities in B.C., which, unlike it, offered baccalaureate degrees. It was not authorized under the Degree Authorization Act (B.C.) (the "DAA") to refer to itself as a university, but was authorized under that Act to grant associate degrees.
In finding that the appellant was not a "university" as defined in s. 123(1), so that its fee income was not exempted under Sched. V, Part III, s. 7, Lyons J stated (at paras. 68-70, 74):
[after citing Klassen and Zailo]...I find that an Associate Degree is insufficient and that a "degree" for the purposes of subsection 123(1)...must equate to a baccalaureate degree or higher.
...[T]he fact that the appellant has not sought, nor received, ...consent to call itself a "university" under section 4 of the DAA is a factor that undermines the appellant's position that it is recognized as an institution by the provincial government.
[C]onstruing the legislation...[literally] render[s] the phrase "organization that operates a college affiliated with" a university redundant if a degree-granting institution is interpreted as a "college" in subsection 123(1). Also, incorporating and construing the word "college" in the definition of "university" makes the definition of "public college" redundant in section 7.
[T]he appellant...is a college, not an institution.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Excise Tax Act - Schedules - Schedule V - Part III - Section 7 | private college was not a recognized institution, and its "associate" (non-baccalaureate) degrees were not degrees | 148 |
Administrative Policy
27 February 2020 CBA Roundtable, Q.22
Memorandum 20-3, para. 7 states:
An organization is only considered to be operating a college affiliated with a university where there is a formal affiliation agreement that states that the parent organization (the university) agrees to grant degrees to graduates of the affiliated college in exchange for a certain amount of control over the academic standards of, and the courses offered by, the affiliated college.
When asked to comment on this position being contrary to Fraser International, which held that a private college was “affiliated” with a university, and hence qualified as a “university”, even though the parent organization (Simon Fraser University) did not grant degrees to graduates of that college, CRA stated:
Th[is] lack of reference to … Fraser International … is an oversight on our part. We thank you for bringing this to our attention.
… [T]he CRA is reviewing Memorandum 20-3 to include additional information on whether an organization operating a college affiliated with a university qualifies as a university … . In the interim, where the facts in a case are materially similar to the facts in Fraser, the CRA will consider the organization to be a university for GST/HST purposes.
GST/HST Memorandum 20-3 “Universities” December 2019
Meaning of “recognized degree-granting institution” in domestic context
3. For GST/HST purposes, 3 types of domestic entities qualify as universities:
- institutions that grant degrees and that are established as universities by legislation enacted by the appropriate Canadian jurisdiction in which they are situated, as well as colleges or similar organizations that are authorized by a relevant authority, such as a province under provincial legislation, to grant a degree where degree is defined by the relevant authority to mean a level of academic achievement, such as at the associate level or higher
- organizations that operate colleges affiliated with universities
- organizations that operate research bodies of universities
University usually but not always established by provincial legislation
4. A university is usually established by legislation enacted by the government of the province in which the institution is situated. However, if a university is built on federal land, then the establishing legislation is enacted by the federal government. The Royal Military College in Kingston, Ontario, is an example of a degree-granting institution that was established by federal legislation.
Example of degree authorization test being satisfied
Example 1
The Degree Authority Act (DAA) of a province requires private and out-of-province public post-secondary institutions to obtain consent from the Minister of Advanced Education (Minister) if they wish to grant or confer a degree in the province.
Under the DAA, degree means “academic achievement that is specified in writing to be an associate, baccalaureate, masters, doctoral or similar degree”.
The DAA prevents a person from directly or indirectly granting or conferring a degree unless the person is authorized to do so by the Minister and the Minister is satisfied that the person has met the necessary conditions.
Private College XYZ is a private, post-secondary institution that operates in the province. Private College XYZ has met the necessary requirements such that the Minister has granted Private College XYZ permission to grant or confer associate degrees under the DAA.
Private College XYZ is a university as defined in subsection 123(1) of the Act because the college has been authorized by the Minister to grant associate degrees, degree is defined in the applicable legislation and the definition of degree includes associate degrees. All of the conditions necessary for Private College XYZ to qualify as a university as defined in the Act have been met.
Meaning of “affiliated” organization
7. An organization is only considered to be operating a college affiliated with a university where there is a formal affiliation agreement that states that the parent organization (the university) agrees to grant degrees to graduates of the affiliated college in exchange for a certain amount of control over the academic standards of, and the courses offered by, the affiliated college.
Meaning of research body
8. An organization is considered to be a research body of a university if the organization is both:
- established and operated primarily to perform research
- owned and controlled by the university
9. To determine whether an organization was established primarily to perform research, the Canada Revenue Agency (CRA) normally looks to the instruments by which the organization was created, such as incorporating legislation, incorporating documents and by-laws. To determine whether the organization is operating primarily to perform research, the organization’s financial statements and/or information on the organization’s website may assist in making the determination.
Meaning of owned and controlled
10. An organization is considered to be owned by a university if one of the following conditions is met:
- the university owns all or substantially all (90% or more) of the shares or capital of the organization
- the university holds title to the organization’s assets or controls the disposition of these assets such that in the event of wind up or liquidation, these assets are vested in the university
11. An organization is considered to be controlled by a university if one of the following conditions is met:
- the university selects and appoints a majority of the members of the governing body of the organization (directors, governors, commissioners, etc.)
- the organization is required, by virtue of legislation, by-laws or an operating agreement, to submit its operating budget and, where applicable, its capital budget to the university for review and approval
Example re ownership and control test
Example 3
Organization C, which was incorporated under the legislation of a province, is established and operated primarily to undertake research activities related to the agricultural industry. It operates in space provided to it by University D.
Organization C receives funding from, and submits related expenditure statements to, the province. However, Organization C’s incorporating documents provide that upon dissolution, its assets shall be conveyed to University D. As such, Organization C is considered to be owned by University D.
The board of directors of Organization C has 14 seats in total and is made up of:
- 4 representatives from University D
- 2 representatives from the province
- 1 representative from the Government of Canada
- 5 representatives from private sector producers of agricultural products
- 2 members at large representing the purchasers of agricultural products
University D selects nominees representing University D, the private sector producers and the members at large (a total of 11 of the 14 members of the board). The province and the Government of Canada select their representatives. Once all 14 nominees are selected, University D appoints the board of directors. Organization C is not required to submit operating or capital budgets to University D for review and approval. However, because a majority of the members of Organization C’s board of directors are selected and appointed by University D, Organization C is considered to be controlled by University D.
Because Organization C was established and is operated primarily to perform research and is both owned and controlled by University D, Organization C qualifies as a university for GST/HST purposes.
29 September 2011, Ruling Case No. 132884
CRA stated:
It is the Canada Revenue Agency's position that a "recognized degree granting institution" means an institution that grants degrees and meets the accreditation requirements for degree granting institutions in the country where it is based. Please note that the ability to grant degrees is insufficient to satisfy the definition in subsection 123(1) of the ETA. Rather, the institution must currently be offering programs for which degrees are granted upon completion of the program. As [the Corporation] does not currently grant degrees to its students and it is not an organization that operates a college affiliated with, or a research body of, a recognized degree-granting institution, it does not meet the definition of "university" in subsection 123(1) and therefore would not be eligible to claim PSB rebates using the PSB rebate factors for a university.
GST/HST Policy Statement P-214R
3 categories of qualifying foreign universities
Foreign-based entities which qualify as a "university" in the Excise Tax Act ("ETA")
The definition of "university" includes the phrase "a recognized degree-granting institution". The Department's position is that there are three categories of foreign-based entities which would qualify as a "university". The three categories are:
1. a foreign-based degree-granting institution that grants degrees at least at the bachelor or equivalent level and is licensed or otherwise authorized under the appropriate governmental agency or department in its home jurisdiction to do so; or
2. a foreign-based degree-granting institution that qualifies under the Income Tax Act as a "university outside Canada" for purposes of the tuition credit in paragraph 118.5(1)(b) of that Act; or
3. a foreign-based degree-granting institution whose degrees are accepted for entry into post-graduate studies in at least one recognized Canadian university.
For purposes of this policy statement, "foreign-based" includes either a branch or a wholly-owned subsidiary of a foreign degree granting entity operating in Canada.