CRA Indicates Meals Supplied by Charities to Seniors Are Not Generally Taxable

November 2019 Charity & NFP Law Update

Ryan M. Prendergast

On November 6, 2019, the CRA released a GST/HST Ruling in document 189695r concerning the application of the goods and services tax (“GST”) and harmonized sales tax (“HST”) to prepared meals supplied by a charity (“Charity”) to seniors in a seniors’ residence facility (the “Facility”). The Charity is a registered charity for income tax purposes, and is a charity for GST/HST purposes, though it is not registered for GST/HST purposes. The Charity leases and operates a cafe in the Facility where it “provides food security to marginalized individuals” by preparing and serving food almost exclusively to senior residents of the Facility for consideration.

The CRA found that the Charity made supplies of food and beverage to seniors at their place of residence, i.e. the Facility, and was doing so under a program for that purpose. Based on this, the CRA ruled that the Charity’s supplies of food and beverages to residents of the Facility would be exempt supplies pursuant to section 4 of Part V.1 of Schedule V to the Excise Tax Act (“ETA”) and that such supplies would not be subject to GST/HST. This section provides a GST/HST exemption for supplies of food or beverages that are made by charities to seniors, underprivileged individuals, or individuals with a disability, and which are made under a program established and operated to provide prepared food to these individuals in their places of residence. Given this provision, the CRA added that a supply of food and beverage to a guest of the Facility would be subject to GST/HST, unless the supply was to another senior, or to an underprivileged or disabled individual.
The CRA also added that no tax is payable in terms of the Charity’s taxable supplies, because the Charity is not registered for GST/HST, provided however that it is a small supplier for GST/HST purposes and is not required to be registered for the GST/HST.

Read the November 2019 Charity & NFP Law Update