Harmonized Sales Tax for Prince Edward Island – Questions and Answers that Relate to Public Service Bodies, Health and Education

GST/HST Notices - Notice 282
March 2013

General

1. What is the HST rate for P.E.I. and when does it apply?

The HST rate for P.E.I. would be 14%, which would consist of a federal part at 5% and a provincial part at 9%. In general, the HST would apply to taxable supplies of property and services made in P.E.I. for which consideration becomes due, or is paid without having become due, on or after April 1, 2013. For more information on the transitional rules for the implementation of the HST in PEI, refer to question 106.

2. What is a "participating province"?

The participating provinces are: Nova Scotia, New Brunswick, Newfoundland and Labrador, Ontario and British Columbia. (British Columbia ceases to be a participating province after March 31, 2013). P.E.I. would become a participating province effective April 1, 2013.

3. What is a "public service body" (PSB)?

A "public service body" means a non-profit organization, a charity, a municipality, a school authority, a hospital authority, a public college or a university.

4. What is a "charity"?

"Charity" means a registered charity or a registered Canadian amateur athletic association for income tax purposes. A charity can issue official donation receipts for income tax purposes. For GST/HST purposes, a charity does not include a public institution.

5. What is a "public institution"?

A "public institution" means a registered charity for income tax purposes that is also a school authority, a public college, a university, a hospital authority, or a local authority determined by the Minister of National Revenue to be a municipality.

6. What is the current P.E.I. revenue tax (PST) treatment for PSBs?

For information relating to the current application of the PST in P.E.I., visit: www.taxandland.pe.ca.

7. Do supplies of property and services made by PSBs, which are currently exempt from the GST, become taxable under the HST?

Supplies of property and services made by PSBs that are currently exempt for GST purposes would be exempt supplies for HST purposes.

An "exempt supply" means a supply of property or service that is not subject to the GST/HST. When property or services are exempt, it means that, even if the PSB is a GST/HST registrant, it does not charge GST/HST on them. Also, it cannot claim input tax credits for the GST/HST paid or payable on the purchases and expenses that relate to the exempt supplies.

8. Are PSBs required to collect the HST on their supplies of property and services made in P.E.I.?

Supplies of property and services that are taxable under the GST would be taxable under the HST. As a result, PSBs that are GST/HST registrants would generally have to collect the HST on all taxable (other than zero-rated) supplies of property and services that they provide to their customers. This means that PSBs would need to collect the HST on property and services supplied in P.E.I. for which they currently collect the GST, unless a point-of-sale rebate applies. A registrant is a person that is registered or has to be registered for the GST/HST. A taxable supply is a supply made in the course of a commercial activity and includes zero-rated supplies.

Zero-rated supplies are supplies of goods and services that are taxable at the rate of 0%. This means there is no GST/HST charged on the supply of these goods and services, but GST/HST registrants can claim input tax credits for the GST/HST paid or payable on purchases and expenses made to provide them.

The Government of P.E.I. has announced point-of-sale rebates equal to the provincial part of the HST for a number of goods (children's clothing, children's footwear, heating oil and books). For more information on the point-of-sale rebates that would be available in P.E.I., refer to question 106.

9. A PSB makes zero-rated supplies. Does the tax status remain the same under the HST?

Supplies of property and services that are zero-rated under the GST would be zero-rated under the HST.

GST/HST registration

10. Are PSBs required to register for the HST?

A PSB that is engaged in commercial activities and that is not a small supplier is required to register for the GST/HST. If a PSB is registered for GST purposes, it would automatically be registered for the HST and it would continue to use the same GST/HST account number. This number, which has 15 characters, consists of the following three parts: a nine-digit business number (BN) that is unique to the PSB, followed by the GST/HST program identifier "RT" and a four-digit reference number (e.g., 123456789 RT 0001).

11. When is a PSB a small supplier under the HST?

The small supplier threshold under the HST would be the same as it is under the GST. A PSB that is a small supplier for GST purposes would be a small supplier for HST purposes.

A PSB is a small supplier for GST/HST purposes if its total revenue (including the total revenue of its associates) from taxable supplies does not exceed $50,000 in a calendar quarter and over the last four consecutive calendar quarters. Total revenues from taxable supplies include worldwide revenues from supplies of property and services subject to the GST/HST, including zero-rated supplies. It does not include sales of capital property, supplies of financial services, and certain payments for goodwill.

Charities and public institutions may also qualify as small suppliers if they apply another test called "the gross revenue test".

The limit for the gross revenue test for a charity or a public institution for a fiscal year is $250,000. Gross revenue is generally the total of business income, donations, grants, gifts, property income, investment income, and any amount considered a capital gain less any amount considered a capital loss from the disposal of property for income tax purposes. When calculating its gross revenue under this test, a charity or public institution does not have to determine if the property and services it supplies are subject to the GST/HST. The test works as follows:

• if it is in its first fiscal year, the charity or public institution does not have to register for GST/HST purposes;
• if the charity or public institution is in its second fiscal year, it calculates its gross revenue from its first fiscal year. If this amount is $250,000 or less, it does not have to register for GST/HST purposes;
• if this is neither its first fiscal year, nor its second fiscal year, the charity or public institution calculates its gross revenue in each of its two previous fiscal years. If this amount is $250,000 or less in either of these years, it does not have to register for GST/HST purposes.

A charity or public institution qualifies as a small supplier if either its revenue from taxable supplies is equal to or less than $50,000 in a calendar quarter and over the last four consecutive calendar quarters or its gross revenue is $250,000 or less.

12. Does a PSB have to apply for any special registration numbers in order to claim rebates of the provincial part of the HST?

If a PSB previously claimed a PSB rebate of the GST, it will have been issued a GST/HST account number. This number, which has 15 characters, consists of the following three parts:

• a nine-digit business number (BN) that is unique to the PSB and that will always be the first nine digits of any account number the PSB has with the CRA,
• the GST/HST program identifier "RT", and
• a four-digit reference number.

The entire 15-character number (e.g., 123456789 RT 0001) is referred to as a GST/HST account number.

A PSB that has previously claimed a PSB rebate of the GST would continue to use its GST/HST account number to claim PSB rebates of both the federal and provincial parts of the HST. A PSB that has not previously claimed a PSB rebate would need to complete Form GST66, Application for GST/HST Public Service Bodies' Rebate and GST Self-government Refund (and Form RC7066 SCH, Provincial Schedule – GST/HST Public Service Bodies' Rebate, to claim a rebate for the provincial part of the HST). After the CRA processes the first rebate application, we will send the organization a personalized version of the forms for the next rebate application (GST284, Application for GST/HST Public Service Bodies' Rebate and GST Self-government Refund and, to claim a rebate for the provincial part of the HST, Form GST284 SCH, Provincial Schedule – GST/HST Public Service Bodies' Rebate and GST Self-government Refund). Refer to Guide RC4034, GST/HST Public Service Bodies' Rebate, which includes Forms GST66 and RC7066 SCH, as well as completion instructions.

13. A PSB is registered for the GST/HST. Is that PSB entitled to claim input tax credits for the provincial part of the HST paid on property and services used to make taxable supplies?

A PSB (other than a charity) that is registered for the GST/HST would be entitled to claim input tax credits for both the federal and provincial parts of the HST paid on property and services to the extent that these have been acquired, imported or brought into a participating province for the purposes of making taxable supplies for consideration (including zero-rated supplies). Charities are generally required to use the net tax calculation for charities, which specifies the input tax credits that they may claim on certain limited items. Refer to questions 49 to 55 for more information on the net tax calculation for charities.

Temporary recapture of input tax credits

14. Will the temporary recapture of input tax credits apply to PSBs?

PSBs would be excluded from the temporary requirement to recapture input tax credits.

15. Is a person that has been determined to be a municipality subject to the temporary recapture of input tax credits?

A person that has been determined to be a municipality by the Minister of National Revenue is a municipality for all purposes under the GST/HST. This person is therefore a PSB for purposes of the GST/HST and would be excluded from the requirement to recapture input tax credits.

16. Is a person that has been designated to be a municipality subject to the temporary recapture of input tax credits?

A person can be designated by the Minister of National Revenue to be a municipality in respect of certain activities specified in the designation or, in certain circumstances, for a specific exempting provision. In such cases, the person is not a municipality for purposes of the definition of "public service body". Accordingly, a person that has been designated by the Minister of National Revenue to be a municipality in respect of activities specified in the designation is not a PSB, unless that person is otherwise included in the definition of "public service body" such as a charity or a non-profit organization. Therefore, it is possible that a person that has been designated to be a municipality would be subject to the recapture of input tax credits. Refer to Revenue Tax Guide 186, Temporary Recapture of Certain Provincial Input Tax Credits, for more information.

17. Is a para-municipal organization, such as a public utility, subject to the temporary recapture of input tax credits?

The definition of public service body does not include a para-municipal organization. In order for a para-municipal organization to be a PSB, the organization must be a non-profit organization, a charity, a municipality, a school authority, a hospital authority, a public college or a university. If a para-municipal organization is not a PSB, it must be determined to be a municipality by the Minister of National Revenue in order to be a municipality and a public service body. Where a para-municipal organization is a PSB, it would be excluded from the requirement to recapture input tax credits.

Reporting GST/HST

18. How does a PSB report the amount of the HST it collects?

A PSB that is a GST/HST registrant is required to periodically file GST/HST returns using Form GST34, Goods and Services Tax/Harmonized Sales Tax Return for Registrants. This is a personalized form sent to GST/HST registrants. The GST collected or that the PSB is required to collect is reported on this form. The HST would also be reported on this form in the same manner. A non-personalized Form GST62, Goods and Services Tax/Harmonized Sales Tax Return (Non-personalized) is also available and can be requested by calling the CRA at 1-800-959-2221. A charity that is a GST/HST registrant would use the same form to report the HST; however, the charity would be required to use the net tax calculation for charities to determine the amounts to be reported. Refer to questions 49 to 55 for more information.

19. How often is a PSB required to report its HST?

At the time of registration for GST/HST, a PSB (other than a charity) is assigned annual, quarterly or monthly reporting periods based on the amount of consideration it received for its taxable supplies and those of its associated persons. Conversely, charities that register for GST/HST are generally assigned an annual reporting period, regardless of their revenues, unless they elect to file their GST/HST returns either monthly or quarterly. PSBs, including charities, may wish to file their GST/HST returns more often than the period assigned. They can do so by filing Form GST20, Election for GST/HST Reporting Period or calling the CRA at 1-800-959-5525.

20. Do the same reporting periods that apply to GST returns apply to HST returns?

Yes, a PSB would report its HST using the same reporting periods it uses to report its GST. More frequent filing may be required if the PSB files an election or the PSBs' revenues, including those of its associated persons, exceed the filing frequency thresholds.

21. Do the requirements for a GST/HST registrant to electronically file its GST/HST returns apply to charities?

Charities are generally excluded from the requirement to file an electronic return but may voluntarily file their returns electronically. This exclusion does not apply to public institutions or in certain circumstances where charities are builders of housing. For more information on the electronic filing of GST/HST returns, refer to GST/HST Notice 249, Questions and Answers on the New Reporting Requirements for GST/HST Registrants.

22. Do the requirements for a GST/HST registrant to electronically file its GST/HST returns apply to PSBs other than charities?

A PSB that is not a charity may be required to file its GST/HST returns electronically. For more information on electronic filing of GST/HST returns, refer to GST/HST Notice 249.

23. A division of a PSB does not exceed $50,000 in taxable supplies in a calendar quarter and over the last four consecutive calendar quarters. Is the division required to be registered for the GST/HST?

A PSB that is not a small supplier is required to be registered for the GST/HST. Although branches or divisions cannot register separately, if a branch or division of a PSB has revenue from taxable supplies that is equal to or less than $50,000 in a calendar quarter and over the last four consecutive calendar quarters, and it has separate accounting records and either its location or its activities are separately identifiable, then the head office of the PSB may apply to have that branch or division considered a small supplier division. This would relieve that branch or division of the requirement to collect the GST/HST on its taxable supplies as long as it remains a small supplier division. However, neither the PSB nor the small supplier division would be eligible to claim input tax credits with respect to the purchases or expenses of the small supplier division.

To apply for this designation, the head office completes and submits Form GST31, Application by a Public Service Body to Have Branches or Divisions Designated as Eligible Small Supplier Divisions. This form is available on the CRA Web site at www.cra.gc.ca/orderforms or by calling 1-800-959-2221.

Supplies made by PSBs

24. The fees paid by a PSB to acquire some services are not subject to the PST in P.E.I. Are these fees for services subject to the HST?

Fees for taxable services supplied by a person who is not a small supplier would generally be subject to the HST, even when the service is acquired by a PSB.

25. In P.E.I., a consumer is not liable to pay the tax in respect of an admission to certain events. Are admissions subject to the HST?

Admissions supplied by any person to spectators of a performance, athletic event or any competitive event would be exempt from the GST/HST if 90% or more of the performers, athletes or competitors are not remunerated, directly or indirectly, for their participation provided that the performance or event is not specially advertised or represented to be a performance or event featuring the professional participants. (Government grants and reasonable gifts, prizes and compensation for travel or other incidental expenses are not considered to be remuneration.)

This exemption would not apply to events in which individuals who are professional competitors compete for cash prizes (e.g., a pro-am golf tournament).

For all PSBs, the supply of an admission to a place of amusement would be GST/HST exempt if the maximum amount charged to the customer is $1 or less. For example, if a PSB charges adults a $5 admission and children a $0.50 admission to the same place of amusement, both supplies of admissions to the place of amusement (for adults and for children) would be taxable.

For GST/HST purposes, a "place of amusement" generally means any place, whether or not enclosed, presenting any type of amusement or recreation such as a film, slide show, artistic presentation, fair, circus, race, or athletic contest. It also includes a museum, historical site, wildlife park, zoo, and a place where bets are taken.

Also, for all PSBs, admissions to gambling events would be exempt if:

• volunteers run the event and take the bets,
• for bingo or casino events, the games are not held in a commercial hall or temporary structure (such as a bingo tent put up on a fair ground) used mainly for gambling activities.

For all charities and public institutions, admissions to a fund-raising dinner, ball, concert, show or like fund-raising event would be exempt where part of the admission qualifies for a charitable donation receipt for income tax purposes. For example, an admission to a fund-raising dinner for $100 is exempt from the GST/HST where $75 of the ticket price qualifies as a charitable donation for income tax purposes.

Also for all charities and public institutions, admissions (other than admissions to a gambling event) sold in the course of a fund-raising activity would be exempt except where the admissions are sold, or the recipients of the supply of admissions are entitled to receive the admissions, on a regular or continuous basis throughout the year or a significant part of the year.

Admissions that are supplied by a school authority primarily to elementary or secondary school students as part of an extra-curricular activity organized by the school would also be exempt of the GST/HST.

26. Is the HST charged on supplies of memberships in a PSB?

A membership in a PSB that is a membership in a club the main purpose of which is to provide dining, recreational or sporting facilities would be subject to the HST when supplied by a GST/HST registrant.

Any other membership in a PSB would be exempt if a member does not receive any benefit from the membership, other than:

• an indirect benefit available to all members;
• the right to receive services supplied by the body that are in the nature of investigating, conciliating or settling complaints or disputes involving members;
• the right to vote at or participate in meetings;
• the right to purchase supplies for which the member pays an amount separate from the membership fee and the amount is equal to the fair market value of the supply;
• the right to receive discounts on supplies made by the PSB where the total value of all such discounts is insignificant in relation to the amount paid for the membership; or
• the right to receive periodic newsletters, reports or publications, the value of which is insignificant in relation to the membership fee, or that provide information on the activities of the body or its financial status, other than publications which have a significant value in relation to the consideration for the membership and for which a fee is ordinarily charged by the organization to non-members.

However, the PSB would be able to elect to make such an exempt supply taxable for GST/HST purposes by filing Form GST23, Election and Revocation of the Election by a Public Sector Body (Other than a Charity) to Have Its Exempt Memberships Treated as Taxable Supplies.

27. Is the HST charged on summer camps operated by PSBs?

Overnight camps, regardless of the age of those attending, operated by PSBs would be subject to the HST if the camp includes both instruction in, or supervision of, recreational or athletic activities, and overnight supervision, unless the overnight camps are supplied primarily to individuals who are disabled or underprivileged. Other summer camps may be exempt. For more information on the tax status of camps operated by PSBs, refer to GST/HST Info Sheet GI-037, Children's Camps Operated by Public Sector Bodies.

28. Is the HST charged on money received for being a foster parent?

Fostering children is not considered to be a commercial activity for purposes of the GST/HST. Therefore the HST would not be payable on any money received by foster parents for fostering children.

PSB rebates

29. Does a PSB have to register for the GST/HST to receive a rebate of the HST?

It is not necessary for a PSB to be registered for the GST/HST to claim a PSB rebate of the HST.

30. Do the PSB rebate rates for the GST remain the same for the federal part of the HST?

The PSB rebate rates for the federal part of the HST have not changed. A PSB is generally eligible to claim a PSB rebate for a percentage of the GST or federal part of the HST paid or payable in the course of performing the activities of:

• a municipality – 100%
• a university or public college (established and operated otherwise than for profit) – 67%
• a school authority (established and operated otherwise than for profit) – 68%
• a hospital authority, facility operator or an external supplier – 83%
• a charity or qualifying non-profit organization – 50%.

For more information on PSB rebate eligibility and restrictions, refer to Guide RC4034, GST/HST Public Service Bodies' Rebate.

31. What is a "facility operator"?

A facility operator is a charity, a public institution or a qualifying non-profit organization (other than a hospital authority) that operates a qualifying facility. Refer to question 78 for more information on facility operators.

32. What is an "external supplier"?

An external supplier is a charity, a public institution or a qualifying non-profit organization (other than a hospital authority or a facility operator) that makes ancillary supplies, facility supplies or home medical supplies. Refer to question 79 for more information on external suppliers.

33. What is a "qualifying non-profit organization"?

Non-profit organizations whose percentage of government funding in a particular fiscal year (or in the two previous fiscal years) is at least 40% of their total revenue are "qualifying non-profit organizations". For more information, refer to Guide RC4081, GST/HST Information for Non-Profit Organizations. For instructions on calculating the percentage of government funding, refer to Form GST523-1, Non-Profit Organizations – Government Funding.

34. What is a "selected public service body"?

For purposes of the PSB rebate, a selected public service body means a hospital authority, a school authority that is established and operated otherwise than for profit, a university that is established and operated otherwise than for profit, a public college that is established and operated otherwise than for profit, a municipality, a facility operator, or an external supplier.

35. What are non-selected public service body activities?

Non-selected public service body activities are activities other than:

• those activities for which a person was designated as a municipality; or
• activities engaged in by the person in the course of:
  • fulfilling responsibilities as a local authority;
  • operating a public hospital, an elementary or a secondary school, a post-secondary college or technical institute, a recognized degree-granting institution or a college affiliated with, or research body of, such a degree-granting institution; or
  • making facility supplies, ancillary supplies or home medical supplies or operating a qualifying facility to make facility supplies.

36. Who is eligible to claim a PSB rebate for the provincial part of the HST in P.E.I.? What are the proposed rebate rates?

In general, charities and qualifying non-profit organizations that are not selected public service bodies and that are resident in P.E.I. would be eligible to claim a rebate of 35% of the provincial part of the HST paid or payable in the course of their activities. Charities, public institutions and qualifying non-profit organizations resident in P.E.I. that are selected public service bodies would also be eligible to claim a rebate of 35% of the provincial part of the HST paid or payable but only in respect of their non-selected public service body activities. For more information on PSB rebate eligibility and restrictions, refer to Guide RC4034, GST/HST Public Service Bodies' Rebate.

37. What is the PSB rebate rate for facility operators and external suppliers in P.E.I.?

Facility operators and external suppliers resident in P.E.I. are eligible to claim a PSB rebate of 83% of the GST and would be entitled to an 83% rebate of the federal part of the HST and would be eligible to claim a rebate of 35% of the provincial part of the HST but only in respect of their non-selected public service body activities. Refer to questions 78 and 79 for additional information.

38. What form does a PSB have to use to apply for a PSB rebate for the provincial part of the HST paid?

To claim a rebate for the provincial part of the HST, a PSB would complete Form RC7066 SCH, Provincial Schedule – GST/HST Public Service Bodies' Rebate. The PSB completes only the lines that apply to its province(s) of residence and its activity type(s). The total provincial amount claimed on the provincial schedule is entered on line B of Part E of the rebate application, Form GST66, Application for GST/HST Public Service Bodies' Rebate and GST Self-government Refund.

After the CRA receives the PSB's first rebate application, the CRA will start sending the PSB Form GST284, Application for GST/HST Public Service Bodies' Rebate and GST Self-government Refund, and, if applicable, Form GST284 SCH, Provincial Schedule – GST/HST Public Service Bodies' Rebate and GST Self-government Refund, which are personalized rebate applications, for all of future claims.

The PSB would attach a copy of the provincial schedule, Form RC7066 SCH (or the personalized provincial schedule, GST284 SCH) to its rebate application Form GST66 (or the personalized rebate application GST284) and would send both to the CRA.

A PSB that is a GST/HST registrant claiming a PSB rebate on its GST/HST return would send the provincial schedule and the application with its return.

A PSB that files its returns electronically using GST/HST NETFILE may file its PSB rebate application and the provincial schedule electronically as well, or can send us a paper copy of its rebate application and the provincial schedule.

39. How does a resident of a non-participating province claim a PSB rebate for the provincial part of the HST paid in the province of P.E.I.?

A PSB that is not a resident of a participating province would not be eligible for a PSB rebate of the provincial part of the HST. Such a PSB can claim a PSB rebate only for the federal part of the HST incurred in participating provinces in addition to any PSB rebate for GST incurred.

40. Does a PSB that claims PSB rebates for the federal and provincial parts of the HST have to track the federal and provincial parts of the HST separately?

PSBs would have to separately track the federal and provincial parts of the HST to claim a PSB rebate.

Eligible PSBs resident in P.E.I. would be able to claim a PSB rebate of the GST and the federal part of the HST at the rebate rate applicable to the PSB. With the introduction of HST in P.E.I., eligible PSBs resident in P.E.I. would be entitled to a PSB rebate of the provincial part of the HST.

There are some purchases where the provincial part of HST would not be paid (for example, where a point-of-sale rebate would be available). Where this is the case, no PSB rebate of the provincial part of the HST would be available.

41. Does a PSB have to enter the PSB rebate for the federal part of the HST and the provincial part of the HST separately, or can it calculate and report the federal and provincial PSB rebate at a combined rate on the form?

A PSB would have to calculate and report the PSB rebate for the federal and provincial parts of the HST separately on the PSB rebate application form. Therefore, A PSB would have to separately track the federal and provincial parts of the HST to make a PSB rebate claim.

42. What PSB rebate rate does a PSB resident in P.E.I. that falls into two PSB categories (e.g., the PSB is both a charity and a hospital authority) use to apply for a PSB rebate of the HST?

A PSB may be a charity, public institution, or qualifying non-profit organization that is also a selected public service body. In this situation, the PSB would possibly have to calculate the PSB rebate using more than one rebate rate. If the PSB acquires property or services for use in different activities, it would claim its rebate to the extent it intended to use, consume or supply the property or services in each activity type.

If the PSB is in more than one selected public service body activity and it acquires property or services to be used primarily (more than 50%) as one type of selected public service body, the rebate rate would be based on the primary use of those items.

The PSB would file only one rebate application for the claim period. It allocates the amount of the GST or the federal part of the HST eligible for the rebate between each of the activity types. For each of these allocated amounts, the PSB would calculate the amount of the rebate separately. It would use the assigned rebate factor for each activity type, and would enter the appropriate amounts on the PSB rebate form.

If the PSB were to qualify for a rebate of the provincial part of the HST, it would calculate the rebate for the provincial part separately. The PSB would use the rebate rate for the provincial part of the HST for each activity type for the province(s) in which it is a resident and would enter the amounts on the appropriate lines of the provincial schedule. If the PSB is resident in a participating province, it would have to determine the extent to which it intended to consume, use or supply property or services in the course of its activities in the province in which it is resident. For more information on special rules for claimants with multiple activity types, refer to Guide RC4034, GST/HST Public Service Bodies' Rebate.

Charities, public institutions or qualifying non-profit organizations that are selected public service bodies and resident in P.E.I. would only qualify for a rebate of the provincial part of the HST for non-selected public service body activities.

43. Does a PSB that is a resident in P.E.I. and a resident in another province apply for a PSB rebate of the provincial part of the HST at the rebate rate of a PSB in P.E.I.?

If the PSB is resident in more than one province, one of which is a participating province, it would have to calculate the PSB rebate for the provincial part of the HST using the applicable rebate rate based on the extent it intended to consume, use or supply property or services in the course of its activities in each province in which it is resident. For more information on special rules for claimants resident in more than one province refer to Guide RC4034.

Other rebates

44. Is the HST charged on the sale of books in P.E.I.?

In P.E.I., a point-of-sale rebate equal to the provincial part of the HST would be available to all persons who purchase:

• a printed book;
• an audio recording of a printed book;
• a printed version of religious scripture;
• a printed book and a read-only medium (such as a CD-ROM) sold together as a single package, where 90% or more of the read-only medium is reasonably attributable to a reproduction of the printed book and/or makes specific reference to the printed book and its content, and that supplements and is integrated with that content;
• a printed book with a read-only medium and/or a right to access a Web site sold together as a single package, which is specially designed for students enrolled in a qualifying course, where the read only medium or Web site contains material related to the subject matter of the printed book; and
• a printed book and another item (such as a toy) in a package sold together for a single consideration where 90% or more of the value of the items in the package is attributable to the printed book.

There is no point-of-sale rebate of the GST or the federal part of the HST on a printed book, an audio recording of a printed book, or a printed version of religious scripture. However, a rebate of the GST or the federal part of the HST paid or payable on a printed book, an audio recording of a printed book, or a printed version of religious scripture is available to specified persons. For a list of specified persons, refer to question 46.

45. Is a PSB eligible for a rebate for printed books?

Currently, specified persons can claim a rebate for the GST or federal part of the HST paid or payable on a printed book, an audio recording of a printed book, or a printed version of religious scripture purchased other than for resale. In addition, prescribed charities and prescribed non-profit organizations whose primary purpose is the promotion of literacy can claim a rebate of the GST and the federal part of the HST that becomes payable after March 29, 2012, on acquisitions or importations of a printed book, an audio recording of a printed book, or a printed version of religious scripture that is to be given away at no cost.

For more information on the federal rebate for printed books, refer to GST/HST Memorandum 13.4, Rebates for Printed Books, Audio Recordings of Printed Books, and Printed Versions of Religious Scriptures or Guide RC4034, GST/HST Public Service Bodies' Rebate.

46. Who is a specified person for purposes of the rebate for printed books, audio recordings of printed books, and printed versions of religious scriptures?

Specified persons are:

• a municipality;
• a school authority;
• a university;
• a public college;
• a charity, public institution or qualifying non-profit organization that operates a public lending library; or
• a prescribed charity or a prescribed qualifying non-profit organization whose primary purpose is the promotion of literacy.

To become a prescribed charity or a prescribed qualifying non-profit organization, send your request, including the name of the organization, its governing documents, and a statement of its purposes and activities, to the following address:

Director
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
320 Queen Street, Tower A, 11th floor
Ottawa ON  K1A 0L5

We will pass our recommendation on to the Department of Finance Canada, which will make the final determination. For more information, refer to GST/HST Memoranda 13.4.

47. What is a printed book for purposes of the rebate for printed books, audio recordings of printed books, and printed versions of religious scriptures?

The definition of a printed book is one of exclusion. The definition lists the types of items that are not considered to be a printed book. For example, a printed book does not include certain items such as magazines and periodicals that are not purchased by subscription or that have more than 5% of their printed space devoted to advertising, newspapers, books designed primarily for writing or drawing on, brochures or pamphlets, agendas and calendars, directories, and rate books. Goods eligible for the book rebate would include a printed book, an audio recording of a printed book, or a printed version of religious scripture.

48. Can a charity or public institution that exports goods outside Canada claim a rebate for the HST paid on goods acquired in P.E.I. and sold abroad?

A charity or public institution can claim a rebate for 100% of the GST/HST paid on property or services that are exported outside of Canada. To be eligible for the rebate, the charity must have paid the GST/HST and have exported the property or services. Charities would be able to claim 100% of the HST paid (i.e., for both the federal and provincial parts of the HST) in P.E.I. on qualifying exported property and services.

Net tax calculation for charities that are GST/HST registrants

49. What is the net tax calculation for charities?

The net tax calculation for charities is a special calculation method that must be used by charities that are GST/HST registrants to determine the net tax that must be reported on their GST/HST returns. Under this method, a charity generally remits 60% of the GST/HST collected or collectible on its taxable supplies and retains the remaining 40% in lieu of claiming input tax credits on most purchases of property and services. A charity may claim input tax credits on certain specific items (e.g., real property and capital property used primarily in commercial activities). A charity is also eligible to claim PSB rebates for the GST/HST paid or payable on purchases and expenses (subject to limited exceptions) for which it cannot claim input tax credits. For detailed information concerning the net tax calculation for charities, refer to GST/HST Info Sheet GI-066, How a Charity Calculates the Net Tax to be Reported on its GST/HST Return.

50. Do all charities that are GST/HST registrants have to use the net tax calculation for charities?

Generally, yes. All charities that are GST/HST registrants are required to use the net tax calculation for charities to determine their net tax. However, a charity, as a whole, can elect not to use the net tax calculation for charities if it makes supplies outside Canada or zero-rated supplies (i.e., taxable at 0%) in the ordinary course of its business, or if 90% or more of its supplies are taxable. For more information on the GST/HST and charities, refer to Guide RC4082, GST/HST Information for Charities.

Public institutions, which are not considered to be charities for GST/HST purposes, and designated charities ^{Footnote 1} cannot use the net tax calculation for charities. Public institutions and designated charities follow the general rules when calculating net tax that must be reported on their GST/HST returns, or they may be eligible to use the Special Quick Method of accounting to calculate their net tax. Refer to the section "Special Quick Method of accounting for PSBs" in this notice.

51. How does a charity elect not to use the net tax calculation for charities?

An eligible charity may elect not to use the net tax calculation for charities by completing and filing Form GST488, Election or Revocation of an Election Not to Use the Net Tax Calculation for Charities. A charity that makes this election can calculate its net tax using the general rules. The charity can revoke the election no earlier than one year after the election takes effect by completing and filing another GST488. If the charity revokes the election, it must use the net tax calculation for charities. The same election process would apply under the HST.

52. Does a charity that reports for GST purposes using the net tax calculation for charities continue to use that method for HST purposes?

A charity that uses the net tax calculation for charities would continue to use this calculation method for HST purposes.

53. In P.E.I., does a charity that uses the net tax calculation for charities remit its HST collected or collectible at the rate of 60%?

The remittance calculation for the net tax calculation for charities would be 60% for both the federal and provincial parts of the HST.

54. Is a charity that is a GST/HST registrant, and therefore required to use the net tax calculation for charities, still entitled to claim a PSB rebate?

Yes. For charities using the net tax calculation, eligible amounts of the GST/HST paid or payable that are not included as an input tax credit in the net tax calculation qualify for a PSB rebate. As mentioned in question 49, a charity may only claim input tax credits on certain specific items.

55. How does a charity that is not a GST/HST registrant recover the HST paid on its purchases?

A charity that is not a GST/HST registrant would recover some of the HST paid on its purchases by claiming a PSB rebate at the applicable rate. Refer to question 36 for more details.

Special quick method of accounting for PSBs

56. What is the special quick method of accounting for PSBs?

The special quick method of accounting for PSBs is a simplified accounting option available to some PSBs that are GST/HST registrants.

When a PSB uses the special quick method for PSBs, it collects the GST/HST on the taxable (other than zero-rated) property or services it supplies. To calculate the amount of the GST/HST to be remitted, the PSB would multiply the amount of its GST/HST-included supplies for the reporting period by the remittance rate, or rates, that apply in its situation.

57. What are the benefits of the special quick method of accounting for PSBs?

The special quick method of accounting for PSBs reduces paperwork and makes it easier to calculate the GST/HST remittances and file GST/HST returns because it eliminates the need to keep track of the actual GST/HST paid on purchases, or to separate purchases that are for commercial activities versus those for making exempt supplies.

58. How does an eligible PSB make the switch to the special quick method of accounting for PSBs?

A PSB must apply to use this method by filing Form GST287, Election or Revocation of the Election by Public Service Bodies to Use the Special Quick Method of Accounting and sending it to its tax services office. If a PSB has branches or divisions, its election to use this method would apply to all of its branches or divisions, whether or not they file separate GST/HST returns. Once the PSB decides to use the special quick method of accounting for PSBs, it is required to use the method for at least one year. A PSB can keep using the special quick method without having to re-elect, as long as it remains eligible. The special quick method would apply in the same manner for HST purposes.

59. Why is the special quick method of accounting for PSBs not available to most charities?

The special quick method of accounting for PSBs is not available to most charities because charities are required to use the net tax calculation for charities. (Refer to questions 49 to 55 for more information on the net tax calculation for charities.) This would remain the same for HST purposes.

60. What are the remittance rates under the special quick method of accounting for PSBs located or with a permanent establishment in P.E.I.?

The remittance rates under the special quick method of accounting for PSBs would be as follows:

¹ "Designated charity" refers to a charity that provides employment assistance to individuals with disabilities, supplies services that are performed by such individuals to clients, and has been approved by the Minister of National Revenue to make its supplies of these services taxable when provided to a GST/HST registrant.
² These rates are used if vending-machine sales (and certain other retail sales) are at least 25% of an amount determined by a formula.
³ These rates are used if vending-machine sales (and certain other retail sales) are less than 25% of an amount determined by a formula.

61. For PSBs that provide point-of-sale rebates on eligible goods made in a participating province, what are the remittance rates under the special quick method of accounting for PSBs?

If you are a PSB that provides a point-of-sale rebate on eligible goods and you use the special quick method of accounting for PSBs, you would use these rates:

¹ These rates would be used if vending-machine sales (and certain other retail sales) are at least 25% of an amount determined by a formula.
² These rates would be used if vending-machine sales (and certain other retail sales) are less than 25% of an amount determined by a formula.

62. Does a PSB that uses the special quick method of accounting for PSBs have to collect the HST?

A PSB that uses the special quick method would be required to collect the HST on the taxable (other than zero-rated) property or services it supplies in a participating province.

63. Can a PSB that uses the special quick method of accounting for PSBs claim a PSB rebate?

There would be nothing that precludes a PSB from claiming a PSB rebate to recover some of the HST paid on its purchases when it uses the special quick method of accounting for PSBs. Refer to questions 29, 30 and 36 for additional information.

Municipalities

64. Who qualifies as a "municipality" for GST/HST purposes?

For GST/HST purposes, a "municipality" means an incorporated city, town, village, metropolitan authority, township, district, county or rural municipality, or other incorporated municipal body, however designated. Examples of other incorporated municipal bodies include incorporated communities in Newfoundland and Labrador, incorporated northern hamlets, and incorporated northern settlements in Saskatchewan.

In addition, the Minister of National Revenue may grant either total or partial municipal status to a local authority or other person by:

• determining a local authority to be a municipality (this means that all the GST/HST legislative provisions that relate to municipalities would apply to the local authority as a whole); or
• designating a person to be a municipality for certain municipal services that it provides. (Municipal designation only applies to those municipal activities for which the person has been designated. This restriction recognizes that the designated activities represent the only capacity in which the person is like a municipality.)

For more information on determining or designating a local authority to be a municipality, refer to Guide RC4049, GST/HST Information for Municipalities.

65. What are the proposed rebate rates for the provincial part of the HST for municipalities in P.E.I.?

In P.E.I., there would be no PSB rebate of the provincial part of the HST for municipalities. Municipalities would continue to be entitled to a PSB rebate of the federal part of the HST at the rate of 100%.

66. An organization has been determined to be a municipality for GST purposes. Does that organization have to request to be determined to be a municipality for HST purposes?

No, an organization that has been determined by the Minister of National Revenue to be a municipality for GST purposes would not have to reapply to be determined to be a municipality for HST purposes. Municipal determination that was granted for GST purposes would apply for purposes of the HST.

67. Is an organization that has been determined to be a municipality entitled to claim a rebate of the HST?

A determined municipality is eligible for a PSB rebate of the GST and the federal part of the HST at the rate of 100%. There would be no PSB rebate of the provincial part of the HST for a determined municipality. An organization that has been determined to be a municipality is considered to be a municipality for all GST/HST purposes. All of the activities of a determined municipality are considered to be done in the course of fulfilling its responsibilities as a local authority.

68. Is a Fire District in P.E.I. entitled to claim a rebate of the HST?

If a Fire District in P.E.I. is determined to be a municipality, it would be entitled to a PSB rebate of the federal part of the HST at the rate of 100%. There would be no rebate of the provincial part of the HST for a determined municipality.

A Fire District in P.E.I. that is not a selected public service body would not be entitled to a rebate of the HST.

69. An organization that supplies unbottled water has been designated as a municipality for GST purposes. Does the organization need to make a new request for designation under the HST?

A designation as a municipality for GST purposes to supply unbottled water would apply for HST purposes provided there have been no changes to the organization that could affect its status as a designated municipality.

70. Is an organization that has been designated as a municipality entitled to claim a rebate of the HST?

A designated municipality would be eligible for a PSB rebate of the GST and the federal part of the HST in respect of its designated activities at the rate of 100%. If an organization that has been designated as a municipality also engages in activities as a registered charity or a qualifying non-profit organization that are non-selected public service body activities, the organization is eligible to claim a PSB rebate at the rate of 50% of the GST or the federal part of the HST and would be eligible to claim a PSB rebate at the rate of 35% of the provincial part of the HST in respect of those non-selected public service body activities. Refer to question 35 for the definition of non-selected public service body activities.

71. Are garbage collection services exempt from the HST when supplied by a municipality?

Garbage collection services, including the collection of recyclable materials and special collections, are exempt from the GST and would be exempt from the HST when supplied by a government or municipality or by a board, commission, or other body established by a government or municipality.

72. In P.E.I., a municipality can acquire certain goods for municipal use without paying the PST. Is the same exemption available for the HST?

No, municipalities would be required to pay the HST on their acquisition of taxable property and services.

Municipalities that are GST/HST registrants may qualify for input tax credits of the tax paid or payable on the acquisition of property and services for use in making taxable supplies for consideration. They may be further entitled to claim a full rebate of the federal part of the HST paid or payable on their other acquisitions of property and services.

Municipalities that are not GST/HST registrants may claim a full rebate of the federal part of the HST paid on their acquisitions of property and services.

73. In the past, some municipal services supplied by a municipality in P.E.I. to property owners or occupants were not subject to the PST. Are these services subject to HST?

Municipal services, such as sewerage services, that a municipality provides on a non-optional basis to owners or occupants of real property in the municipality are exempt from the GST and would be exempt from the HST. This exemption applies only when the person paying for the service is the property owner or occupant. Further, services that a municipality provides to owners or occupants of real property would be exempt if they are supplied because of the owner or occupant's failure to comply with a legal obligation (for example, failure to cut overgrown weeds).

74. Municipal transit services are currently exempt from the PST in P.E.I. Are these services subject to the HST?

Municipal transit services that are provided directly to the public by municipalities would be exempt from the HST. A public passenger transportation service made directly to the public that has been designated as a municipal transit service by the Minister of National Revenue would also be exempt.

However, a supply of a service of operating a municipal transit system made by a person to a municipality would be subject to the HST. The HST would also apply to:

• charter services provided by a municipal transit authority;
• city tour services provided by a transit authority if, in addition to the transportation services, passengers get a commentary by a tour guide; and
• any transit services supplied by a private company and charged to a municipality.

Health

75. An organization has been designated as a hospital authority under the GST. Does the organization need to reapply for this designation under the HST?

If an organization has been designated by the Minister of National Revenue as a hospital authority for GST purposes, it would not have to reapply to be designated as a hospital authority for HST purposes. Such an organization would automatically be designated for HST purposes.

76. An organization that is a hospital authority is entitled to an 83% rebate of the GST paid on its purchases used in its hospital. Is the organization entitled to the same rebate under the HST?

Hospital authorities in P.E.I. are entitled to an 83% rebate of the GST, and would be entitled to an 83% rebate of the federal part of the HST, paid or payable on property or services consumed, used, or supplied in activities engaged in by the person in the course of operating a public hospital, of operating a qualifying facility for use in making facility supplies, or of making facility supplies, ancillary supplies, or home medical supplies.

If the hospital authority is a charity, public institution, or a qualifying non-profit organization, it is also entitled to a PSB rebate equal to 50% of the GST, and would be entitled to a 50% rebate of the federal part of the HST, paid or payable on property or services consumed, used, or supplied in the course of non-selected public service body activities. In addition, the hospital authority that is a charity, public institution, or a qualifying non-profit organization would be entitled to a PSB rebate equal to 35% of the provincial part of the HST paid or payable on property or services consumed, used, or supplied in the course of non-selected public service body activities.

77. Does the HST apply to purchases of goods and services such as medical, surgical and diagnostic equipment by hospitals?

Generally, hospitals would have to pay the HST on the goods and services they acquire and are able to claim a partial rebate of the tax paid or payable. Certain exceptions would apply, such as hospital beds which are zero-rated (i.e., taxable at 0%) when supplied to the operator of a health care facility.

78. A community care clinic that meets the definition of a "facility operator" under the GST has been claiming an 83% rebate for the GST paid on expenses of operating the clinic. Does this change under the HST?

A person that meets the definition of a facility operator for GST/HST purposes is entitled to an 83% rebate of the GST, and would be entitled to an 83% rebate of the federal part of the HST, paid or payable on property or services consumed, used, or supplied in activities engaged in by the person in the course of operating a qualifying facility for use in making facility supplies, in making facility supplies in another person's facility or in making ancillary supplies or home medical supplies.

If the facility operator in P.E.I. is also a charity, public institution or qualifying non-profit organization, it is also entitled to a PSB rebate equal to 50% of the GST, and would be entitled to a 50% rebate of the federal part of the HST, paid or payable on property or services consumed, used or supplied in the course of non-selected public service body activities. In addition, the facility operator that is a charity, public institution, or a qualifying non-profit organization would be entitled to a PSB rebate equal to 35% of the provincial part of the HST paid or payable on property or services consumed, used or supplied in the course of non-selected public service body activities.

79. A regional health authority that meets the definition of an "external supplier" under the GST has been claiming an 83% rebate for the GST it pays on expenses incurred in the course of organizing and coordinating health care services in its region. What rebates can be claimed under the HST?

A person that meets the definition of external supplier for GST/HST purposes is entitled to an 83% rebate of the GST, and would be entitled to an 83% rebate of the federal part of the HST paid or payable on property or services consumed, used or supplied in activities engaged in by the person in the course of making facility supplies, ancillary supplies or home medical supplies.

If the external supplier in P.E.I. is also a charity, public institution or qualifying non-profit organization, it is also entitled to a PSB rebate equal to 50% of the GST and would be entitled to a 50% rebate of the federal part of the HST paid or payable on property or services consumed, used or supplied in the course of non-selected public service body activities. In addition, the external supplier that is a charity, public institution or qualifying non-profit organization would be entitled to a PSB rebate equal to 35% of the provincial part of the HST paid or payable on property or services consumed, used or supplied in the course of non-selected public service body activities.

80. Are dental services taxable under the HST?

A consultative, diagnostic, treatment or other health care service provided by a dentist would generally be exempt from the GST and would generally be exempt from the HST. However, a surgical or dental service performed for cosmetic purposes and not for medical or reconstructive purposes, such as teeth whitening, would be subject to the HST, unless the dentist is a small supplier who would not be required to charge and collect the HST.

81. Are doctor's services subject to the HST?

Consultative, diagnostic, treatment or other health care services provided by a medical practitioner are generally exempt from the GST and would generally be exempt from the HST. However, a surgical service performed for cosmetic purposes and not for medical or reconstructive purposes, such as liposuction, would be subject to the HST unless the doctor is a small supplier who would not be required to charge and collect the HST.

82. Are acupuncture services taxable under the HST?

Acupuncture services are generally subject to the GST and would generally be subject to the HST. However, the HST would not apply if the acupuncture services are rendered to an individual as part of an institutional health care service in a health care facility by the operator of the facility. Acupuncture services rendered by a medical practitioner, registered nurse, midwife, dentist, chiropractor or physiotherapist, in the course of their regulated profession to an individual may also be exempt. In addition, the supply of acupuncture in a particular province may be exempt from the HST to the extent that the consideration for the service is covered by the health insurance plan of that particular province. Finally, acupuncture services that are supplied by a charity or public institution may be exempt.

83. Are services provided by midwives taxable under the HST?

Midwifery services are exempt from the GST and would generally be exempt from the HST, if they are rendered to an individual by a practitioner of the service. To be a practitioner, an individual must be licensed or certified to practice the profession, where required by the province in which the services are provided. If the province does not require midwives to be licensed or certified in order to practice the profession, then the individual must have qualifications equivalent to those necessary to be licensed or certified in another province.

84. Are services rendered by health care practitioners exempt from the HST?

The following services are exempt from the GST and would generally be exempt from the HST, when rendered to an individual by a practitioner of that service:

• optometric services,
• chiropractic services,
• physiotherapy services,
• chiropodic services,
• podiatric services,
• osteopathic services,
• audiological services,
• speech-language pathology services,
• occupational therapy services,
• psychological services, and
• midwifery services.

To be a practitioner, an individual must be licensed or certified to practice the profession where required by the province. If the province does not require the person to be licensed or certified in order to practice the profession, then the person must have qualifications equivalent to those necessary to be licensed or certified in another province.

If the individuals rendering these services are not practitioners, they would be required to charge the HST on their services unless they are small suppliers who would not be required to charge and collect the HST.

85. Are services of a naturopath or an herbalist taxable under the HST?

Naturopaths and herbalists are not included in the list of practitioners whose services would be exempt from the HST. Therefore, the services provided by these persons would be subject to the HST, unless the individuals in question are small suppliers who would not be required to charge and collect the tax.

86. Are flu shots given by a nurse in a community centre or shopping mall taxable under the HST?

The administration of a flu shot in the course of a nursing service rendered to an individual by a registered nurse within a nurse-patient relationship is exempt from the GST and would be exempt from the HST.

87. A call to 911 results in an individual being rushed to the hospital. Does the HST apply to the charge for the ambulance service?

An ambulance service provided by a person who carries on the business of providing ambulance services is exempt from the GST and would be exempt from the HST.

88. Are conflict resolution sessions conducted by a social worker exempt or taxable?

A service rendered in the practice of the profession of social work is exempt from the GST and would be exempt from the HST, under the following circumstances:

• the service is rendered to an individual within a professional-client relationship for the prevention, assessment or remediation of, or to assist the individual in coping with, a physical, emotional, behavioural or mental disorder or disability of the individual. The service may also be rendered to another individual to whom the individual is related or to whom the individual provides care or supervision otherwise than in a professional capacity;
• the social worker must be licensed or otherwise certified to practice the profession of social work in the province in which the service is supplied. If the supplier is not required to be licensed or otherwise certified to practice that profession in that province, the supplier must possess the qualifications equivalent to those necessary to be licensed or certified to practice that profession in a province in which such a requirement exists.

Medical devices

89. What is the definition of "medical device"?

The term "medical device" is not defined for GST/HST purposes. Refer to GST/HST Memoranda 4.2, Medical and Assistive Devices for detailed information on zero-rated medical and assistive devices.

Zero-rated supplies are supplies of goods and services that are taxable at the rate of 0%. This means there is no GST/HST charged on the supply of these goods and services, but GST/HST registrants can claim input tax credits for the GST/HST paid or payable on purchases and expenses made to provide them.

90. Is the purchase of prescription eyeglasses or contact lenses subject to the HST at 14%?

No. The supply of corrective eyeglasses or contact lenses that are or would be sold under prescription by an eye-care professional is zero-rated.

91. Is the purchase of dentures subject to the HST at 14%?

No. The supply of artificial teeth is zero-rated.

92. Is the purchase of hearing aids and their batteries subject to the HST at 14%?

No. The supply of a hearing aid is zero-rated. Batteries that are specially designed for a hearing aid are also zero-rated.

93. Is the purchase of a blood-glucose monitor or its testing strips subject to the HST at 14%?

No. The supply of a blood-glucose monitor or meter is zero-rated. Supplies of blood-sugar testing strips, blood-ketone testing strips, urinary-sugar testing strips, reagents, or tablets, or urinary-ketone testing strips, reagents or tablets are also zero-rated.

94. Is a distributor selling heart monitoring devices to a hospital required to charge the HST on the devices?

The supply of a heart monitoring device is only zero-rated when supplied on the written order of a medical practitioner for use by a consumer with heart disease who is named in the order. Therefore, the supply between the distributor and the hospital would be taxable under the HST at a rate of 14% in P.E.I.

95. Is the purchase of prescription drugs subject to the HST at 14%?

No. Drugs dispensed directly by a medical practitioner or on the prescription of a medical practitioner or authorized individual such as a pharmacist are zero-rated.

96. Are fees for dispensing services on prescriptions subject to the HST at 14%?

No. The service of dispensing zero-rated prescription drugs is zero-rated.

97. Is the purchase of controls for operating a motor vehicle by disabled persons subject to the HST at 14%?

No. The supply of an auxiliary driving control that is designed for attachment to a motor vehicle to facilitate the operation of the vehicle by an individual with a disability is zero-rated.

Education services

98. Is the HST charged on tuition fees paid to a private school?

The supply by a school authority of instructing individuals in a course that is provided primarily to elementary or secondary school students is exempt from the GST and would be exempt from the HST where the instruction meets the standards of educational instruction established by the government of the province in which the school is operated.

99. Is the HST charged on tuition fees paid to a university or a public college?

The supply by a university or public college of a service of instructing individuals in, or administering examinations in respect of, courses for which credit may be obtained towards a diploma or degree is exempt from the GST and would be exempt from the HST.

The supply by a university or public college of instructing individuals in, or administering examinations in respect of, courses (other than courses in sports, games hobbies, or other recreational pursuits that are designed to be taken primarily for recreational purposes) that are part of a program that consists of two or more courses and that is subject to the review of, and is approved by, a council, board or committee of the university or public college established to review and approve the course offerings of the university or public college is exempt from the GST and would be exempt from the HST.

The supply by a university or public college 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 is exempt from the GST and would be exempt from the HST. Additionally, a supply of a certificate or a service of administering an examination in respect of a course or in respect of an accreditation or designation described above is exempt from the GST and would be exempt from the HST. However, the university or public college would be able to elect to make such an exempt supply taxable for GST/HST purposes by completing Form GST29, Educational Services: Election and Revocation of the Election to Make Certain Supplies Taxable.

The supply by a university or public college 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 is exempt from the GST and would be exempt from the HST. However, the university or public college would be able to elect to make such an exempt supply taxable for GST/HST purposes by completing Form GST29.

The supply by a university or public college of instructing individuals in, or administering examinations in respect of, language courses that form part of a program of second language instruction in either English or French is exempt from the GST and would be exempt from the HST.

100. Is the HST charged on tuition fees paid to a vocational school?

The supply by a vocational school 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 is exempt from the GST and would be exempt from the HST. Additionally, a supply by a vocational school of a certificate or a service of administering an examination in respect of a course or in respect of an accreditation or designation described above is exempt from the GST and would also be exempt from the HST. However the vocational school can elect to make such an exempt supply taxable for GST/HST purposes by completing Form GST29, Educational Services: Election and Revocation of the Election to Make Certain Supplies Taxable.

The supply by a vocational school 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 is exempt from the GST and would be exempt from the HST. However, the vocational school would be able to elect to make such an exempt supply taxable for GST/HST purposes by completing Form GST29.

The supply by a vocational school of instructing individuals in, or administering examinations in respect of, language courses that form part of a program of second language instruction in either English or French is exempt from the GST and would be exempt from the HST.

101. Is the HST charged on second language instruction provided by an entity other than a university, public college, school authority or vocational school?

The supply of instructing individuals in, or administering examinations in respect of, language courses that form part of a program of second language instruction in either English or French would be exempt from the GST if the supply is made in the course of a business established and operated primarily (i.e., more than 50%) to provide instruction in languages and would be exempt from the HST under the same circumstances.

102. Is the HST charged on music lessons?

No. A supply of a service of tutoring or instructing an individual in music is exempt from the GST and would be exempt from the HST.

103. In P.E.I., certain classroom supplies (refer to Revenue Tax Guide: 163, Classroom Supplies Exempt From Revenue Tax (PST) ) may be purchased exempt of provincial revenue tax (PST) when purchased by students, teachers, or the parents or tutors of students, for use by a student attending an approved educational institution. Is the same exemption from paying the tax available for the HST?

No. Students, teachers, or the parents or tutors of students, who purchase a classroom supply listed in RTG:163 are required to pay the GST and would be required to pay the HST on the supply. For information relating to the current application of the PST in P.E.I., visit www.taxandland.pe.ca.

104. In P.E.I., a school board is not liable to pay the PST in respect of the purchase of prepared food products that are to be supplied primarily to elementary or secondary school students. Is the same exemption from paying the tax available for the HST?

Supplies of certain food and beverages to or for students by or to educational institutions may be exempt of the GST/HST. Here is a brief summary of these exemptions:

• Elementary or secondary school cafeteria meals provided primarily to students would be exempt. The exemption does not extend to sales through vending machines or sales of certain prescribed items, such as candies, bottled or canned carbonated beverages, potato chips and snack foods. In addition, the exemption does not include catering services for private events provided through a school cafeteria.
• Meal plans offered by universities and public colleges would be exempt when sold to students if the amount paid for the plan is sufficient to provide the student with at least 10 meals per week for the period of the plan, which must not be less than one month. The cost per meal must be based on the average cost of a meal at the educational institution.
• Supplies of food, beverages, services or admissions that are supplied by a school authority primarily to elementary or secondary school students as part of an extra-curricular activity organized by the school are exempt from the GST/HST. The exemption under this section does not extend to sales of goods other than food and beverages, for example, sales to students of school rings or sweaters by a school authority that is registered for GST/HST purposes are generally subject to tax in the normal manner.
• Supplies of food and beverages, including catering services, supplied under contract to a school authority, university or public college would be exempt where the resupply of the food, beverage or service by the institution is an exempt supply.

105. Are school authorities, public colleges and universities entitled to claim a rebate of the HST?

A school authority in P.E.I. that is established and operated otherwise than for profit, is entitled to a 68% rebate of the GST, and would be entitled to a 68% rebate of the federal part of the HST, paid or payable on property or services consumed, used, or supplied in activities engaged in by the person in the course of their activities related to operating an elementary or secondary school.

If the school authority that is established and operated otherwise than for profit is a charity, public institution, or a qualifying non-profit organization, it is also entitled to a PSB rebate equal to 50% of the GST, and would be entitled to a 50% rebate of the federal part of the HST, paid or payable on property or services consumed, used or supplied in the course of non-selected public service body activities. In addition, the school authority that is established and operated otherwise than for profit and is a charity, public institution, or a qualifying non-profit organization would be entitled to a PSB rebate equal to 35% of the provincial part of the HST paid or payable on property or services consumed, used or supplied in the course of non-selected public service body activities.

A university in P.E.I. that is established and operated otherwise than for profit is entitled to a 67% rebate of the GST, and would be entitled to a 67% rebate of the federal part of the HST, paid or payable on property or services consumed, used, or supplied in activities engaged in by the person in the course of their activities related to operating a recognized degree-granting institution or a college affiliated with, or research body of, such a degree-granting institution.

If the university that is established and operated otherwise than for profit is a charity, public institution or a qualifying non-profit organization, it is also entitled to a PSB rebate equal to 50% of the GST, and would be entitled to a 50% rebate of the federal part of the HST, paid or payable on property or services consumed, used, or supplied in the course of non-selected public service body activities. In addition, the university that is established and operated otherwise than for profit and is a charity, public institution or a qualifying non-profit organization would be entitled to a PSB rebate equal to 35% of the provincial part of the HST paid or payable on property or services consumed, used, or supplied in the course of non-selected public service body activities.

A public college in P.E.I. that is established and operated otherwise than for profit is entitled to a 67% rebate of the GST, and would be entitled to a 67% rebate of the federal part of the HST, paid or payable on property or services consumed, used, or supplied in activities engaged in by the person in the course of their activities related to operating a post-secondary college or post-secondary technical institute.

If the public college that is established and operated otherwise than for profit is a charity, public institution or a qualifying non-profit organization, it is also entitled to a PSB rebate equal to 50% of the GST, and would be entitled to a 50% rebate of the federal part of the HST, paid or payable on property or services consumed, used or supplied in the course of non-selected public service body activities. In addition, the public college that is established and operated otherwise than for profit and that is a charity, public institution or a qualifying non-profit organization would be entitled to a PSB rebate equal to 35% of the provincial part of the HST paid or payable on property or services consumed, used or supplied in the course of non-selected public service body activities.

For more information on PSB rebate eligibility and restrictions refer to Guide RC4034, GST/HST Public Service Bodies' Rebate.

For more information

106. Where can I find more information on P.E.I.'s transition to the HST?

Info sheets and notices discussing the transitional rules can be found on the CRA Changes to Harmonized Sales Tax Web page which is under the menu headings for “Links for businesses”, “GST/HST” and then “What’s new for GST/HST”.

Enquiries by telephone

All technical publications on GST/HST are available on the CRA Web site at www.canada.ca/gst-hst-tech