Memberships in a public service body, for example, a non-profit organization (NPO), are exempt if each member receives only the following benefits:
- an indirect benefit available 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 at or participate in meetings
- the right to receive or acquire property or services for a fee equal to their fair market value (FMV) and the cost is in addition to the membership fee
- the right to take advantage of a discount for property or services sold by the organization if the value of the discount is insignificant (less than 30%) in relation to the membership fee
- the right to receive periodic newsletters, reports or other publications
- that have a value that is insignificant in relation to the membership fee
- that provide information solely on the organization's activities or financial status, except if their value is significant in relation to the membership fee and the public service body ordinarily charges a fee 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. For example, membership in a golf club is taxable.
Even if your membership fees are exempt, you may elect to have them treated as taxable. This election allows you to claim input tax credits (ITCs) and input tax refunds (ITRs) for any expenses related to the memberships. If your members are registered for the GST and the QST and are using their memberships for their commercial activities, they too may claim ITCs and ITRs for the taxes they pay on their membership fees.
To elect to have your memberships treated as taxable, you must complete form FP-623-V, Election by a Public Sector Body to Have Its Exempt Memberships Treated as Taxable Suppliesor Revocation of Such an Election.
Memberships in a professional association are exempt provided the members are required by law to be members in order to maintain their professional status. However, you may elect to have memberships treated as taxable. For this purpose, you must complete form FP-2018-V, Election or Revocation of the Election to Have the Memberships in a Professional Organization Treated as Taxable Supplies.