Election to Make Exempt Supplies of Educational Services Taxable

GST/HST Memorandum 20-9
December 2019

In this publication, all legislative references to the “Act” are to the Excise Tax Act, unless otherwise specified. The information in this publication does not replace the law found in the Act and its regulations.

If this information does not completely address your particular situation, you may wish to refer to the Act or relevant regulation, or call GST/HST Rulings at 1-800-959-8287 for additional information. If you require certainty with respect to any particular GST/HST matter, you may request a ruling. GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, explains how to obtain a ruling or an interpretation and lists the GST/HST rulings centres.

If you are located in Quebec and wish to request a ruling related to the GST/HST, please call Revenu Québec at 1‑800‑567‑4692. You may also visit the Revenu Québec website at revenuquebec.ca to obtain general information.

For listed financial institutions that are selected listed financial institutions (SLFIs) for GST/HST or Quebec sales tax (QST) purposes or both, whether or not they are located in Quebec, the CRA administers the GST/HST and the QST. If you wish to make a technical GST/HST or QST enquiry related to SLFIs, please call 1‑855‑666‑5166.

GST/HST rates

Reference in this publication is made to supplies that are subject to the GST or the HST. The HST applies in the participating provinces at the following rates: 13% in Ontario and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%. If you are uncertain as to whether a supply is made in a participating province, see GST/HST Technical Information Bulletin B‑103, Harmonized Sales Tax – Place of Supply Rules for Determining Whether a Supply is Made in a Province.

Table of Contents

• General
• Courses in respect of professional or trade designations
• Vocational courses
• Election
• Election under both sections 6 and 8 of Part III of Schedule V

General

1. Supplies of many educational services, as well as certain specific supplies of related property and services, are exempt from the GST/HST. These exemptions are listed in Part III of Schedule V.

2. A supplier of certain exempt educational services may elect to have the supplies treated as taxable, provided they are not exempt under another provision.

Courses in respect of professional or trade designations

3. Section 6 of Part III of Schedule V exempts “a supply of

1. a service of instructing individuals in courses leading to, or for the purpose of maintaining or upgrading, a professional or trade accreditation or designation recognized by a regulatory body, or
2. a certificate, or a service of administering an examination, in respect of a course, or in respect of an accreditation or designation described in paragraph (a),

where the supply is made by a professional or trade association, government, vocational school, university or public college or by the regulatory body, except where the supplier has made an election under this section in prescribed form containing prescribed information”.

4. Section 1 of Part III of Schedule V defines regulatory body to mean “a body that is constituted or empowered by an Act of Parliament or of the legislature of a province to regulate the practice of a profession or trade by setting standards of knowledge and proficiency for practitioners of the profession or trade”.

5. For the purposes of the Act, the term province is interpreted to include a territory of Canada.

6. For information about supplies that are exempt under section 6 of Part III of Schedule V, refer to GST/HST Memorandum 20-2, Public Colleges, GST/HST Memorandum 20-3, Universities, and GST/HST Memorandum 20-4, Vocational Schools and Courses.

Vocational courses

7. Section 8 of Part III of Schedule V exempts “a supply, other than a zero-rated supply, made by a government, a school authority, a vocational school, a public college or a university of a service of instructing individuals in, or administering examinations in respect of, courses leading to certificates, diplomas, licences or similar documents, or classes or ratings in respect of licences, that attest to the competence of individuals to practise or perform a trade or vocation, except where the supplier has made an election under this section in prescribed form containing prescribed information”.

8. For information about supplies that are exempt under section 8 of Part III of Schedule V, refer to GST/HST Memorandum 20-4.

Election

9. A supplier may make an election under section 6 and/or section 8 of Part III of Schedule V to treat otherwise exempt supplies of a service of instructing individuals in, providing certificates for, or administering examinations in respect of, eligible courses, as taxable supplies. To make the election, the supplier should complete Form GST29, Educational Services – Election and Revocation of the Election to Make Certain Supplies Taxable.

10. If a supplier elects to have the GST/HST apply to its supplies of services of instructing individuals in, providing certificates for, or administering examinations in respect of, eligible courses, it must include revenues from those supplies in its calculation of its worldwide revenues from taxable supplies to determine its GST/HST registration and reporting requirements. Where the supplier is a GST/HST registrant, it must charge and collect the GST/HST on those supplies beginning on the effective date of the election unless the supplies are exempt under another provision in Schedule V.

11. Where an election has been made under section 6 and/or section 8 of Part III of Schedule V, a GST/HST registrant supplier may be eligible to claim an input tax credit (ITC) for the GST/HST paid or payable by the registrant on property or a service based on the extent to which the property or service is acquired by the registrant for consumption, use or supply in the course of the registrant’s commercial activities, where all of the conditions for claiming an ITC are met. Where the GST/HST registrant supplier has made the election, it may be required to apply the change-in-use rules for capital personal property and capital real property.

12. If a supplier revokes a previously made election, its supplies of instructing individuals in, providing certificates for, or administering examinations in respect of, eligible courses will be exempt beginning on the effective date of the revocation. As of that date, the GST/HST registrant supplier will not be eligible to claim ITCs for the GST/HST paid or payable on property and services acquired to make those supplies. Also, the GST/HST registrant supplier may be required to apply the change-in-use rules for capital personal property and capital real property.

13. For information on ITCs, refer to GST/HST Memorandum 8-1, General Eligibility Rules, and GST/HST Memorandum 8-3, Calculating Input Tax Credits. For more information regarding the change in-use rules, refer to GST/HST Guide RC4022, General Information for GST/HST Registrants.

14. There is no need to submit the election form to the CRA, but it must be retained in the supplier’s books and records while an election is in effect and for 6 years from the end of the year to which an election relates.

Election under both sections 6 and 8 of Part III of Schedule V

15. Schedule V sets out a number of exempting provisions that must be considered and applied independently. As it is possible that a supply may meet the requirements of more than one section of Schedule V, all sections of Schedule V must be examined when determining if a particular supply is exempt.

16. If a particular supply meets the requirements for exemption under both section 6 and section 8 of Part III of Schedule V, the supplier must make an election under both sections to ensure that the supply will not be exempt under either of these sections. Although a single form may be used to make the elections, the Act is clear that these are 2 separate exempting provisions that have different criteria and different persons who may elect. Where the criteria of both exempting provisions are met, a person must make both elections so that neither exempting provision will apply.

17. Even where an election is made under section 6 and/or section 8 of Part III of Schedule V, the supply will remain exempt if it meets the requirements of another section of Schedule V. For example, section 7 of Part III of Schedule V exempts “a supply made by a school authority, public college or university of a service of instructing individuals in, or administering examinations in respect of, courses for which credit may be obtained toward a diploma or degree”, and section 1 of Part V.1 of Schedule V provides for a general exemption for supplies made by charities except for those supplies listed in that section.

Further information