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Are you running a forest school program for children in Canada, wondering how the Goods and Services Tax/Harmonized Sales Tax (GST/HST) applies to you? I’ve done some research and talked to the CRA to clarify this question. This article aims to clear the path (Forest School joke, check ✓) on how GST/HST applies to forest school operators and child care services in Canada.
Child Care Services Exempt from GST/HST
One of the essential aspects to consider is whether your forest school program qualifies as a child care service. According to the GST/HST memorendum 21-1, child care services are exempt from GST/HST. The Canada Revenue Agency (CRA) does not provide a clear definition of “child care services”, but they consider services whose “primary purpose is to provide care and supervision to children 14 years of age or under for periods normally less than 24 hours per day” to be exempt under this memorandum.
It's important to note that the definition of "child care" under various licensing and regulations acts is not the same as the CRA’s child care service exemption, although those licensed under the act all fall under this exemption.
Examples of Child Care Services Exempt from GST/HST
Child care services encompass a wide range of activities, and your forest school program may fall within this category. Here are some examples of child care services:
Babysitter: Individual caregivers who look after children for short durations, such as evenings or weekends, fit into this category.
Home Daycare: Operating a childcare service in your home, whether regulated or unregulated.
Day Care Centre: Licensed facilities that provide care and supervision for children during working hours.
Pre-school or Nursery School: Programs designed to care for and educate young children.
Day Camp: Summer or holiday camps where children are supervised and engaged in activities.
Educational Institution: Programs that offer before and after-school care with the primary goal of supervision.
Enriching Activities in Child Care Services
Child care services are not limited to mere supervision. Recreational and instructional activities can be part of the program, as long as the primary purpose remains care and supervision. Here's how the CRA views it:
"A degree of basic care and supervision is normally provided although the program may also involve activities and instruction which enrich the program."
Several factors determine whether a program qualifies as child care. These include the age of participating children, the qualifications of program staff, the measurement of progress and goal-orientation, and the time devoted to the program.
Distinguishing Child Care from Recreational Training or Education
It's crucial to distinguish between child care and programs primarily focused on recreational training or education. If the main purpose of your forest school program is recreational or educational, it may not be considered child care, and GST/HST could apply.
For instance, if your program includes professional instructors, goal-oriented activities, and specific training methods, it may not fall under the child care exemption.
For more information on GST/HST regulations regarding services that may not be exempt for your forest school, refer to this article:
GST/HST Implications for Forest School Operators
Generally, according to the information provided by CRA, forest school programs should fall under the child care services exemption as long as the main purpose of the program is to provide care and supervision to children 14 years of age or younger. Understanding the GST/HST implications for your forest school program is essential, especially if you offer additional products or services alongside your main program. Here's an example to illustrate:
If you provide forest school programs to children ages 5-13 on Mondays and Fridays (qualifying as child care services) and also offer a one-hour survival skills program on Wednesdays (focused on instruction), the Wednesday program may not be GST/HST exempt. However, the Monday and Friday programs should fall under the child care exemption.
Ensuring proper tax compliance for any supplementary services or products you offer is crucial to avoid tax-related issues down the road.
Forest school operators in Canada should understand the GST/HST implications for their services. The key factor is whether their program primarily provides care and supervision to children 14 years or under for less than 24 hours a day. Child care services, including forest school programs, typically fall under the GST/HST exemption. However, if your program's primary focus is on education or recreation, it may not qualify for this exemption. Another important distinction to consider is what other sources of revenue come from outside of primary caretaking, such as additional program that are focused on skills training with a defined goal outlined, or whether you sell goods and services in addition to your child care services, such as sales of mittens, cups, jackets, etc. For clarity on your specific tax obligations, consulting with a tax professional or the Canada Revenue Agency is recommended.
Common Q&As that may help clarify your questions:
Do I need to be a licensed childcare facility to fall in the childcare exemptions.
No. Licensing is a provincial matter. The CRA does not consider licensing when determining whether your service is considered childcare.
Does the childcare exemption apply to all of Canada?
Does my business registration affect whether I fall under this exemption?
What if I’m registered as a private school?
How does the qualifications of the staff affect the status of the operation?
Disclaimer:
The information on this website is for general informational purposes only and should not be considered financial or tax advice. It is intended as supplementary information and should not be used as the sole basis for making important financial or tax decisions. For personalized advice, consult a qualified professional. We do not endorse specific products or services mentioned here. Your use of this website is at your own risk.
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