GST/HST Policy Statement P-214R

Date of issue: Issued: February 2, 1998, Revised: May 14, 1999

Legislative reference(s): Subsection 123(1) - definition of "university" in the ETA.

Subject: FOREIGN-BASED ENTITIES WHICH QUALIFY AS A "UNIVERSITY" IN THE EXCISE TAX ACT ("ETA")

National coding system file number(s): 11910-1

Effective date: January 1, 1991

Note: Please note that the following Policy Statement, although correct at the time of issue, may not have been updated to reflect any subsequent legislative changes.

Issue and Decision

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.

Sample Ruling: EXEMPTIONS

Facts

University A, based in Country X, has a Canadian branch which is offering an MBA correspondence program in Canada. University A grants degrees in Country X and is licensed by Country X's Educational Agency to do so. The MBA correspondence courses offered in Canada may be used for credit toward a Country X MBA degree from University A.

Ruling Given

Based on the information provided, University A, which is based in Country X, is a foreign-based institution that qualifies as a university for purposes of subsection 123(1) because it grants bachelors' degrees in Country X and has been licensed by the Educational Agency in Country X to do so.

However, in order for a course to be exempt of GST/HST, it must not only be offered by a "university" but it must also fall within one of the specific exempting provisions in Schedule V of Part III to the ETA. Section 7 exempts a supply by a university of instructing individuals in courses for which credit may be obtained toward a degree. Based on the information provided the MBA correspondence course offered by the Canadian branch of University A is a course for which credit may be obtained toward a Country X MBA degree from University A. Therefore, the MBA correspondence course offered by the Canadian branch of University A will be exempt under section 7.

Sample Ruling: REBATES

Facts

The University of B, based in Country Z, is an institution established under the Act Establishing the University of B (the "Act") and is granting bachelors' degrees in Country Z. The Act provides that the University of B is established otherwise than for profit. The University of B has a branch in Canada which offers language courses that may be used for credit toward a Country Z University of B bachelor's degree.

Ruling Given

The Department's position is that the University of B will qualify as a university for purposes of subsection 123(1) of the ETA because it grants bachelors' degrees in Country Z and has been authorized by an act of Country Z to do so.

However, in order to be eligible for the section 259 rebate of 67% available to a "selected public service body", which includes a "university", the university must be established and operated otherwise than for profit. Based on the information that you have provided - a copy of the Act setting out that the University of B is established otherwise than for profit - the Department accepts that the University of B is established otherwise than for profit. However, the determination of whether an entity is operated otherwise than for profit must be based on the facts of each case.

Further, pursuant to subsection 259(3) the rebate is applicable to "non-creditable tax", i.e. GST/HST paid on purchases that are related to making exempt supplies. Based on the information that you have provided, the tuition fees charged for courses offered by the Canadian branch of the University of B are GST/HST exempt pursuant to section 7 of Part III of Schedule V to the ETA. The tuition fees for these courses are GST/HST exempt because they are courses for which credit may be obtained toward a degree from the University of B. Therefore, as long as it is operated otherwise than for profit, the Canadian branch of the University of B qualifies for a 67% rebate of GST or the federal component of HST paid on purchases that are related to offering the language courses in Canada. In the harmonized provinces, the prevailing rebate rate for the provincial component of the HST in the particular harmonized province applies.