Date: 20001206
Docket: A-663-99
CORAM: LINDEN, J.A.,
ISAAC, J.A.,
SHARLOW, J.A.
BETWEEN:
HER MAJESTY THE QUEEN
Applicant
- and -
GASTOWN ACTORS' STUDIO LTD.
Respondent
Heard at Vancouver, B.C. on Tuesday, the 5th day of December 2000
JUDGMENT delivered from the Bench at Vancouver, B.C. on Tuesday, the 5th day of December 2000
REASONS FOR JUDGMENT BY: SHARLOW J.A.
Date: 20001206
Docket: A-663-99
CORAM: LINDEN, J.A.,
ISAAC, J.A.,
SHARLOW, J.A.
BETWEEN:
HER MAJESTY THE QUEEN
Applicant
- and -
GASTOWN ACTORS' STUDIO LTD.
Respondent
REASONS FOR JUDGMENT
(Delivered orally from the Bench at
Vancouver, British Columbia, on December 5, 2000)
SHARLOW, J.A.
The Crown has applied for judicial review of a decision of a Tax Court Judge that the respondent Gastown Actors Studio Ltd., an acting school, is not required to collect GST on tuition fees charged for its two year full-time program or its independent study program because they are exempt supplies. It is conceded that the respondent's part-time programs are taxable supplies and that the respondent is liable to remit any GST collected with respect to them.
In order to be exempt supplies, the two year full-time program and the independent study program must meet the requirements of section 8 of Part III of Schedule V to the Excise Tax Act:
| 8. A supply ... made by a ... vocational school ... of a service of instructing individuals in ... courses leading to certificates ... or similar documents ... that attest to the competence of individuals to practice or perform a trade or vocation where ... the supplier is governed by ... legislation respecting vocational schools. |
The principle issue in the appeal before the Tax Court Judge was whether this requirement was met, and in particular, whether the certificate issued for the two programs attests to the competence of individuals to practice or perform the trade or vocation of acting.
The Crown argues that the certificate does not meet this test because it simply says that the person named in the certificate "completed" the program and does not say that the person "successfully completed" the program. The Crown also argues that the courses themselves were deficient in the sense that the progress of students was not sufficiently tested or judged.
There is nothing in the legislation that prescribes the form of certificate that must be issued to establish that the requirements of section 8 are met, or that sets out any particular requirements for the content or quality of the course of instruction to which a certificate refers. The Tax Court Judge reasoned that what the certificate attests to is not a question of form, but of fact. In our view, that was the correct approach.
In concluding that, as a matter of fact, the certificates issued by the respondent attest to the competence of individuals to be actors, the Tax Court Judge relied on evidence of the language of the certificate, evidence that the certificates were issued to those who completed the two year full time program or the independent study program, evidence that the respondent provided acting instruction of good quality, and evidence that the certificates said to those knowledgeable in the industry that the holder had received such instruction. In our view, that was a sufficient basis for the factual conclusion reached by the Tax Court Judge that the certificates sufficiently complied with section 8 and that the courses in question were exempt supplies.
The Crown argued that even if this conclusion was justified with respect to the two year full time program, it was not justified with respect to the independent study program because there was no evidence or insufficient evidence with respect to that program. We disagree. A review of the record indicates that there was evidence from which the Tax Court Judge could infer that the requirements of section 8 were met for both programs.
A second issue raised by the Crown was whether GST liability arose because the respondent in fact collected GST for its part-time courses, which were admitted to be taxable supplies, as well as for the full-time and independent study programs that have now been found to be exempt supplies.
The Tax Court Judge held that with respect to the exempt supplies, no GST was collected because none was exigible. He also doubted that he had the jurisdiction to deal with this point, because he saw it as a collection matter rather than an issue addressed to the correctness of the notice of assessment under appeal. Perhaps because of his conclusion on these points, he did not address the argument of the respondent that the Crown's pleadings did not fairly raise the issue of whether GST had been collected.
In our view, the respondent is responsible for remitting any GST it has collected with respect to its two year full time program and its independent study program, even though they are exempt supplies, as well as its part-time programs. We agree with the Crown that a taxpayer who has in fact collected GST, whether for services that are taxable or for services that are later determined to be exempt supplies, must remit those amounts and is liable to be assessed if they are not remitted. In this case, however, the question of whether the respondent collected GST, and if so how much, are questions of fact that we are not prepared to determine on the record before us. A new trial is required on these points.
We are also of the view that the Tax Court Judge had the jurisdiction to deal with this point. The Crown says that the subject of the Tax Court appeal was the assessment of GST under subsection 225(1), issued on the basis of an allegation that GST was collected and not remitted. The Tax Court Judge had the jurisdiction to consider the correctness of that assessment, and should have done so. He also should have considered, as a preliminary matter, the respondent's argument that the Crown's pleadings were insufficient to raise the factual question of whether the respondent had collected but failed to remit GST.
A third issue raised by the Crown was that the Tax Court Judge erred in awarding costs. It is conceded by the respondent that the Tax Court Judge erred in that respect.
For these reasons, this application for judicial review will be allowed in part. The decision of the Tax Court will be set aside and the appeal will be remitted to the Tax Court for retrial on the basis that the respondent's two year full time program and its independent study program are exempt supplies. This is without prejudice to the right of the respondent to raise before the Tax Court Judge the question of the sufficiency of the pleadings on the question of whether and how much GST was in fact collected.
As success is divided, no order will be made as to the costs of this application.
(Sgd.) "K. Sharlow"
J.A.
December 6, 2000
Vancouver, British Columbia