Direct Cost

Points include:

• The direct cost exemption for a supply of services applies only if the service is sold in the same form as the form in which it was acquired – for example, the exemption is available where legal service are sold by an NPO to its clients at the NPO’s cost, whereas the exemption is not available where an NPO purchases résumé writing services and credit counseling services from two separate companies, bundles the services, and sells them to its client in the form of a life skills coaching service (i.e., the services are not resold in the same form as they were acquired.)
• Regarding the requirement that the charge at or at less than the direct cost be the "usual charge," the usual charge may vary depending on, for example, the volume or quantity purchased, and may also vary according to the type of recipient or its ability to pay.
• If charities and public service bodies are selling for precisely their direct cost, they can choose as to whether or not to charge GST/HST.