Athabasca University v. R. - TCC: Books supplied to students enrolled in distant learning eligible for GST rebates

Athabasca University v. R. - TCC:  Books supplied to students enrolled in distant learning eligible for GST rebates

Ahtabasca University v. The Queen (November 4, 2016 – 2016 TCC 252, Lyons J.).

Précis:  Athabasca University provided courses in distant learning and, as part of the tuition for such courses, provided printed books (the “Books”) to their students which became the property of the students.  They applied for an HST rebate on the books and were denied the rebate on the basis that there was a “sale” of the books to the students. Athabasca appealed to the Tax Court which ruled that  the Books were part of a single supply of tuition to the students and therefore gave rise to a valid rebate claim. The appeal was allowed with costs.

Decision:  The facts of this case were not complex:

[18]        Undergraduate students were charged a single, all-inclusive fee for all courses calculated by combining tuition, learning resources (“LRF”) and student union and alumni relations fees.  Prior to September 1, 2011, graduate students were charged only course tuition fees that included all required materials. Effective September 1, 2011, a separate learning resource component was introduced.

[19]        Mr. Liddell explained that the LRF was not tied to the Books. As an institution, there were constraints and a tuition cap. Since the LRF was separate from the cap, it allowed Athabasca to work within the environment and the funding envelope.

[Footnote omitted]

In an odd twist the case boiled down to a conflict between the language of the statute (which said nothing about requiring institutions to hold onto the printed material purchased unless they were “supplied by way of sale”) and the Technical Notes which claimed that the printed material must be retained and not disposed of:

[70]        Athabasca incorrectly stated in its submissions that the Technical Notes [July 1997] did not contain the phrase “or to give away permanently.” However, the reproduction of the Notes in its written submissions and at Tab 1 of the respondent’s Book of Authorities includes that phrase as follows:

New subsection 259.1(2) provides authority for the Minister of National Revenue to pay to specified persons rebates equal to the GST payable in respect of their acquisitions or importations of printed books (and their updates), audio recordings of spoken readings of such books and printed versions of religious scriptures, except where the specified persons have acquired or imported these items for the purpose of resale or to give away permanently.

Justice Lyons, quite appropriately in my view, resolved the doubt in favour of the statute:


[75]        Subsection 259.1(2) clearly contemplates if a specified person was to supply Books by way of sale, it would become disentitled to the rebate. To the extent that there is a mismatch between Parliamentary intent and the words of the statute and the words of the statute cannot be interpreted to give effect to Parliamentary intent, then the words of the statute should prevail.

[76]        In Elim Housing Society v Canada, 2015 TCC 282, [2015] TCJ No 214 (QL), Justice Woods noted that the words actually used in the provision were broad and did not include any reference to services provided by hospitals. To read in this requirement would be to “cross the line from judicial interpretation to impermissible legislative drafting.”

[77]        Even if Parliament intended the Rebates to be available only where the books are not transferred permanently, the provision uses the phrase “supply by way of sale”. Supplying something, a legal concept, is crucial to the Act and Parliament must be presumed to have understood this at the time of drafting. I find that Athabasca’s purpose for acquiring the Books was to use them in providing the single supply of instructional services to its students. Since the Books were inputs, I find that Athabasca does not make a supply of Books by sale. It is of some import that the Test existed at the time of enactment of the rebate provision. I conclude that in acquiring the Books, it was for the ultimate purpose to use them as inputs in its single supply of exempt instructional services and since there is no separate supply of Books, there can be no supply of Books by way of sale.


[78]        Based on the foregoing, I conclude that Athabasca made only a single supply of exempt instructional services, that the Books are inputs/integral to the instructional services, and Athabasca did not make a supply of selling the Books because it acquired the Books for the purpose of its supply of instructional services. Consequently, Athabasca did not acquire the Books for the purpose of supply by way of sale and is entitled to the Rebates pursuant to subsection 259.1(2) of the Act.

[Footnote omitted]

As a result Athabasca’s appeal was allowed with costs.