Federal Court of Appeal finds Associate Degree tuition fees are GST exempt

Published by Natasha Reid

In Alexander College Corp. v. Canada, 2016 FCA 269, the Federal Court of Appeal recently overturned the Tax Court of Canada on the issue of whether a private college offering an associate degree program must charge GST on its tuition and related fees.  The appellant college was a private for-profit college in British Columbia, authorized by the province of British Columbia to grant associate degrees.  The Canada Revenue Agency (CRA) had reassessed the college for GST collectible on tuition fees, on the basis that the college did not qualify as a “university” as defined in subsection 123(1) of the Excise Tax Act (the Act).  “University” is defined in the Act as a “recognized degree-granting institution” (or certain affiliated or research bodies).  “Degree” is not defined in the Act.  The CRA’s view was that the college was not a “recognized degree-granting institution” because an associate degree is not a “degree” for the purposes of the Act.  As such, the college’s degree-program tuition fees were not exempt from GST under section 7, Part III, Schedule V.  The Tax Court of Canada upheld the reassessment, finding that the college’s tuition fees were not exempt because the college was not authorized to call itself a university under provincial law and because an associate degree is not a “degree” for the purposes of the Act.  The Federal Court of Appeal overturned the Tax Court’s decision, finding that the definition of “university” in the Act is clear: an institution is a “recognized degree-granting institution” if it is empowered to grant a degree under provincial law, regardless of whether the institution is also authorized to use “university” in its name.   The college was a “recognized degree-granting institution” by virtue of its authorization to grant associate degrees, which are recognized as degrees under provincial law in British Columbia.  As a “recognized degree-granting institution,” the college met the definition of “university” in the Act and its tuition fees were exempt from GST.  The decision recognizes the intent of the Act to generally exempt educational services from GST and is a welcome one for students of private colleges pursuing associate degrees.