On November 10, 2016, Canada Revenue Agency (“CRA”) posted a response to an inquiry received by a registered charity (“Charity”) regarding the application of Goods and Services Tax and Harmonized Sales Tax as it relates to overnight camps designed for individuals who have a disability. In this regard, CRA was asked by the Charity whether a particular medical condition (not disclosed in CRA’s response) was considered a disability under the Excise Tax Act [“ETA”]. This inquiry was made to determine whether paragraph 1(f) of Part V.1 of Schedule V of the ETA, applied to the Charity’s camp. Subparagraph 1(f)(ii) outlines an exception from an exclusion to an exemption from H.S.T. for recreational or athletic activities where such “services, memberships or rights supplied by the charity are intended to be provided primarily to individuals who are underprivileged or who have a disability.” In other words, a Charity providing services that fall under paragraph 1(f) would generally have to charge H.S.T on the recreational or athletic activities provided unless they are provided to individuals who are disadvantaged and/or disabled and fall within the exception. Based on the facts presented, CRA ruled that the Charity’s supplies of services provided as part of the camp were exempt under section 1 of Part V.1 of Schedule V.
In its response, CRA indicated that “disability” generally “refers to a long-term impairment that restricts an individual in carrying out his or her activities of daily living,” which can include congenital disabilities, disabilities as a result of an injury, neuromuscular disorders, or disabilities resulting from conditions such as “Cerebral Palsy, paraplegia, amputation, pulmonary disease, heart disease, arthritis, diabetes, and back disorders.” When considering whether subparagraph 1(f) (ii) of Part V.1 of Schedule V applies to camps designed for individuals who have a disability, CRA indicated it is not necessary to consider whether the individuals attending the camp in fact have a disability. Instead, CRA considers the “charity’s intention in providing the camp” and examines the camp as a whole. A few of the factors CRA takes into consideration include; “the purpose of the organization/program as set out in its governing documents,” “the nature of the activities provided,” “the qualifications of instructors/staff,” “whether healthcare services are provided as part of the program” as well as other criteria. In its closing comments CRA also noted that “whether an individual is eligible for the income tax disability tax credit is not relevant for purposes of subparagraph 1(f) (ii) of Part V.1 of Schedule.” This interpretation will be helpful for charities that offer camp services to beneficiaries with a disability to determine the application of GST/HST to their services.