As a sports association or federation, have you checked to see if you’re required to register for GST/HST and QST? You should!
Did you know the fundamental difference in consumption taxes between a non-profit organization (NPO) and a registered charity (RCO)?
Generally speaking, all NPO activities are taxable, unless a tax exemption applies. Conversely, all the activities of an NPO are exempt from GST/HST and QST, with a few exceptions that make certain revenues taxable.
Pay particular attention to the services offered
The vast majority of sports associations, or the regional, provincial or Canadian federations that support them, are generally NPOs. They should therefore pay particular attention to the sales tax qualification of the goods and services they provide.
For example, if your NPO offers a training program primarily for people aged 14 and under, it’s highly likely that the program will be exempt. On the other hand, if your organization offers programs to both young people and teenagers or adults, a more precise qualification of your programs for consumption tax purposes would be required.
In addition, rates charged by NPOs to athletes for the right to participate in sports competitions or tournaments should be considered in the calculation of whether or not said organizations have “small supplier” status for sales tax purposes. It should not be forgotten that an organization whose taxable revenues exceed the small supplier threshold is required to register for GST/HST and QST, in order to collect and remit the applicable taxes to the tax authorities.
Other sources of income
In addition, many other sources of income generated by sports associations and federations are not without their complexities. Determining whether or not they are taxable is no simple matter. Among others, the following revenues should be given your full attention:
- Membership fees for clubs or federations, especially if they include insurance coverage for members;
- Sales of meals and beverages during activities;
- Sales of equipment and promotional items: direct-cost sales or not?
- Sponsorships ;
- Fees charged to spectators attending sporting events.
If you need assistance in validating your activities’ compliance with complex tax rules, don’t hesitate to contact our commodity tax team.
An article from our consumption tax team
