Exemptions for non-profit organizations

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• Admission to a place of amusement
• Admission to athletic events
• Free supplies
• Fund-raising activities
• Gambling activities
• Admission fees
• Right to play
• Goods and services sold for direct cost
• Memberships
• Memberships in a professional organization
• Memberships in a registered party
• Public libraries
• Recreational programs
• Relief of poverty, suffering, or distress

GST/HST applies to most goods and services that non-profit organizations supply. However, taxable supplies may become exempt when they are sold under specific conditions. This section explains the exemptions that apply to non-profit organizations.

Admission to a place of amusement

An admission to a place of amusement is exempt if the maximum amount charged to your customer is $1 or less. For example, if you charge adults a $5 admission and children a $0.50 admission, both admissions (for adults and for children) are taxable.

Place of amusement means any place 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.

Admission to athletic events

Ticket sales to a performance or an athletic or competitive event are exempt if 90% or more of the performers, athletes, or competitors are not paid directly or indirectly for their participation. Government and municipal grants, and reasonable amounts as gifts, prizes, or compensation for travel or other incidental expenses are not considered remuneration. In addition, you cannot advertise the performance or event as featuring paid professional participants. This exemption does not apply to events where professional competitors compete for cash prizes such as professional golf tournaments.

Free supplies

Supplies of goods and services are exempt when all or substantially all (90% or more) are provided free of charge. This exemption does not apply to supplies of blood or blood derivatives that are zero-rated.

Fund-raising activities

Sales of goods (except alcoholic beverages and tobacco products) are exempt when all the following conditions are met:

• you are not in the business of selling those goods;
• all the salespersons are volunteers;
• the sale price of each item is $5 or less; and
• the goods are not sold at an event where similar goods are sold by persons in the business of selling such goods.

Gambling activities

Admission fees

Admissions to gambling events are exempt if you meet both of the following conditions:

• 90% or more of the administrative functions and taking of bets are carried out by volunteers; and
• for a bingo or casino event, the games are not held in a commercial hall or any other place used primarily for gambling activities (including a temporary structure such as a bingo tent put up on a fair ground).

Right to play

No GST/HST applies to revenues you receive from sales of lottery, break-open, and raffle tickets. However, lottery tickets you sell for a provincial or interprovincial lottery corporation are taxable. GST/HST is included in the price of these lottery tickets. Lottery corporations will tell you how to treat the proceeds from these lottery tickets.

If you operate your own bingo games and casino nights, you do not charge GST/HST on the sale of bingo cards or on bets taken during the event. You are the operator if you have the provincial licence to run the event.

However, if a commercial bingo hall runs the event for you, the admission fee is taxable.

Goods and services sold for direct cost

Some goods and services taxable under usual circumstances may become exempt when you sell them for direct cost.

The direct-cost exemption applies to sales of goods (other than capital property) and services that are bought for resale. Direct cost includes the following amounts:

• the amount you paid when you bought the good or service;
• the amount you paid for an article or material (other than capital property) directly used to manufacture, produce, process, or package the goods; and
• GST/HST, Quebec sales tax (QST), and non-recoverable provincial taxes, duties, and fees you paid when you bought the goods or services.

Direct cost does not include administrative or overhead expenses, employees' salaries, or the cost of services to produce the property that you incur to provide these goods or services.

If you want to recover only your direct cost, you can choose to make your sales either taxable or exempt.

The sale of goods and services is exempt if the amount you charge is equal to or less than your direct cost and you do not charge GST/HST to your customers. For example, you buy a T-shirt for $10 plus $0.60 GST. Your direct cost is $10.60. The sale of the T-shirt is exempt if you sell it for $10.60 or less and you do not charge GST to your customer.

The sale of goods and services is also exempt in cases where you charged GST/HST to your customers and the amount charged for the goods and services is less than the direct cost (not including GST/HST and QST, when the person is a QST registrant). For example, you buy a T-shirt for $10 plus $0.60 GST. The sale of this T-shirt is exempt if you sell it for less than $10, even if you charge GST to your customer. This tax would have been collected in error.

The sale of goods and services would be taxable if you charge GST/HST to your customer and the amount you charge is equal to or more than your direct cost (not including GST/HST and QST). For example, you buy a
T-shirt for $10 plus $0.60 GST and sell it to your customer for $10 plus $0.60 GST.

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Memberships

Memberships sold by non-profit organizations can be exempt or taxable depending on the type of benefits the members are entitled to. The following benefits are permitted when determining whether memberships sold by non-profit organizations are exempt:

• an indirect benefit that is intended to accrue to all members collectively;
• the right to receive services in the nature of investigating, conciliating, or settling complaints or disputes involving members;
• the right to vote or participate in meetings;
• the right to receive or acquire goods and services for an additional fee equal to the fair market value;
• the right to receive a discount for goods or services sold by the organization when the total value of all the discounts is insignificant (less than 30%) in relation to the membership fee. For example, a $100 membership fee provides members with a $5 discount for 10 admissions to the theatre. This membership would be taxable since the total value of the discounts is significant (30% or more) in relation to the membership fee whether or not the discounts are used; or
• the right to receive periodic newsletters, reports, or other publications if:
  • the value of the newsletters, reports, and publications is insignificant (less than 30%) in relation to the membership fee; or
  • the newsletters, reports, and publications provide information on the organization's activities or financial status except if their value is significant in relation to the membership fee and a fee is ordinarily charged to non-members.

Memberships in a club are taxable if the main purpose of the club is to provide dining, recreational, or sporting facilities to its members such as a membership in a golf club.

If your membership fees are exempt, you can choose to have them treated as taxable. This choice allows you to claim ITCs for any expenses related to the memberships. If your members are registered for GST/HST and are using their memberships in their commercial activities, they can also claim ITCs for the GST/HST they pay on their memberships. To have exempt memberships treated as taxable, you have to complete Form GST23, Election by a Public Sector Body to Have Its Exempt Memberships Treated as Taxable Supplies, or a statement containing prescribed information. You do not have to send us the form or the statement. However, you have to keep it with your books and records for audit purposes.

Memberships in a professional organization

Memberships in a professional organization are exempt if the members are required by law to be members in order to keep their professional status, such as a provincial law society membership. However, you can choose to have your memberships treated as taxable by completing Form GST24, Election to Tax Professional Memberships. You do not have to return this form to us. Instead, keep the completed form with your records for audit purposes.

Memberships in a registered party

Memberships in a registered party are always exempt. No election is available to make them taxable.

Public libraries

Library cards issued by public lending libraries are exempt.

Recreational programs

Membership fees and services for recreational programs established and operated by non-profit organizations are exempt if they consist of supervised instructional classes or activities involving athletics, outdoor recreation, music, dance, crafts, arts, hobbies, or other recreational pursuits in the following circumstances:

• The program is primarily provided to children 14 years old or younger, and a large part of it does not involve overnight supervision. For example, this exemption would apply to summer day camps.
• The program is provided primarily to underprivileged individuals or individuals with a disability. Programs including board, lodging, and recreational services at recreational camps or similar places may also be exempt when they are provided primarily to underprivileged individuals or individuals with a disability.

Relief of poverty, suffering, or distress

Food, beverages, or short-term accommodation provided to relieve the poverty, suffering, or distress of individuals are exempt. For example, GST/HST does not apply to charges for meals or accommodation at a shelter for needy individuals.

Prepared meals provided in an individual's home through programs designed for seniors, underprivileged individuals, or individuals with a disability, such as meals-on-wheels programs, are exempt. In addition, food and beverages sold by any person to a non-profit organization operating such a program are also exempt.

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