GST/HST Policy Statement P-233

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.

Date of Issue

August 31, 1999

Subject

Tutoring or Instructing in Courses Approved for Credit by a School Authority

Legislative Reference(s)

Paragraphs 9(a) and 9(c) of Part III of Schedule V to the Excise Tax Act ("ETA").

National Coding System File Number(s)

11601-2

Effective Date

December 17, 1990

Text

Issue and Decision:

This policy statement clarifies the circumstances under which the supply of tutoring or instructing an individual in a course that is approved for credit by a school authority will be exempt under paragraph 9(a) of Part III of Schedule V to the ETA. It also outlines the circumstances under which a course which is a mandatory prerequisite for a course described in paragraph 9(a) is exempt under paragraph 9(c).

The supply of a course will be exempt of tax pursuant to paragraphs 9(a) and 9(c) based on a "supply-by-supply" basis. That is, the exemption under 9(a) only applies to supplies to those individuals in a class for whom the course is approved for credit by a school authority. Where only a portion of the individuals in a class may receive a credit from a school authority, and others may not, the exemption will apply only to the supplies made to those individuals who may receive the credit.

The same principle applies to exempt the supply of mandatory prerequisite courses under 9(c). That is, only the individual who is eligible to receive a credit for a course exempted under 9(a) will be able to receive a supply of the mandatory prerequisite course exempt of tax. Further, only immediate mandatory prerequisite courses are exempt pursuant to paragraph 9(c). Earlier levels that are not mandatory for admittance into a course that is approved for credit by a school authority, are not exempt of GST/HST.

SAMPLE RULINGS

Sample Ruling 1

Statement of Facts

1. Springfield Private School, a school authority for GST/HST purposes, recognizes for a high school gym credit the successful completion of the Level III ballet class offered by the Lakeside Dance School.

2. The dance school has a letter from the school authority indicating that students of Springfield Private School are able to get a gym credit if they successfully complete the Level III ballet class.

3. In the Spring of 1997, only one of Lakeside's dance students attended Springfield Private School. Before this student could take the Level III ballet class, the student had to complete Level II ballet and in order to take Level II, the individual had to complete Level I ballet.

4. Upon the completion of Level I and Level II ballet classes, the student took Level III ballet.

Ruling Given

The consideration paid for the supply of Level II ballet to the student from Springfield Private School will be exempt of tax, since it is a mandatory prerequisite for the Level III ballet class. Also, the consideration charged for Level III ballet to the student who is eligible to receive a school credit from Springfield Private School will be exempt of tax.

However, the Level I ballet class will be a taxable supply, since it is an earlier level that is not an immediate mandatory prerequisite for the Level III ballet class.

Furthermore, the consideration charged for the supply of lessons to the other dance school students who are not eligible to receive a credit will be subject to tax, even if they are in the same dance class as the Springfield student.