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ATO Interpretative Decision

ATO ID 2002/1075

Goods and Services Tax

GST and general research services supplied by an education institution
FOI status: may be released
Status of this decision: Decision Current
CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is the entity, a supplier of GST-free education courses, making a GST-free supply under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it makes a separate supply of general research services to a student undertaking a GST-free course?

Decision

No, the entity is not making a GST-free supply under section 38-85 of the GST Act when it makes a separate supply of general research services to a student undertaking a GST-free course. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts

The entity is a supplier of GST-free education courses. The courses are GST-free under paragraph 38-85(a) of the GST Act. The entity makes a separate supply of general research services to a student undertaking a GST-free course.

The general research service involves undertaking research on behalf of the student, retrieving relevant information and providing it to the student. This service is a general research facility and the information retrieved is not in relation to the student's enrolment.

The entity is registered for goods and services tax (GST) and the supply satisfies the other positive limbs of section 9-5 of the GST Act.

Reasons for Decision

Section 38-85 provides that a supply is GST-free if it is a supply of:

(a)
an education course; or
(b)
administrative services directly related to the supply of such a course, but only if they are supplied by the supplier of the course.

Although the supply of the entity's education courses is GST-free under paragraph 38-85(a) of the GST Act, the supply of the general research services is separate from the supply of the GST-free course. Therefore, the general research services are not GST-free under paragraph 38-85(a) of the GST Act as part of the education course.

Paragraph 38-85(b) of the GST Act provides that the supply of administrative services directly related to the supply of a GST-free education course is GST-free, if supplied by the supplier of the course.

The term 'administrative service' is not defined in the GST Act and therefore, takes on its ordinary meaning. The Macquarie Dictionary (1997) defines 'administrative' as 'relating to administration' and 'administration' as 'the management or direction of any office or employment'. Therefore, for a service to be an administrative service for the purposes of paragraph 38-85(b) of the GST Act, the service must pertain to the management or direction of an education course.

The entity is supplying a general research service. This service is general in nature and does not pertain to the management or direction of the entity's education courses. Therefore, the entity's general research service is not an administrative service and the supply of the service is not GST-free under paragraph 38-85(b) of the GST Act.

The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is not GST-free under any other provision in Division 38 of the GST Act, nor is it input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it makes a separate supply of general research services to students undertaking the GST-free education courses.

[Note 1: Where the information retrieved relates to the students' enrolment, the service does pertain to the management and direction of the course and is an administrative service. Therefore, where that service is directly related to the supply of a GST-free education course and is supplied by the supplier of the GST-free education course, the service is GST-free under paragraph 38-85(b) of the GST Act.
Note 2: Goods and Services Tax Rulings GSTR 2000/30 and GSTR 2001/1 provide guidance on what is an administrative service directly related to the supply of a GST-free education course. In particular, paragraph 65 of GSTR 2000/30 and paragraph 75 of GSTR 2001/1 provide a non-exhaustive list of services that are considered to be administrative services for tertiary courses.]

Date of decision:  17 July 2002

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   Division 38
   section 38-85
   paragraph 38-85(a)
   paragraph 38-85(b)
   Division 40

Related Public Rulings (including Determinations)
GSTR 2000/30
GSTR 2001/1

Other References:
The Macquarie Dictionary, 1997, 3rd edn, The Macquarie Library Pty Ltd, New South Wales

Keywords
Goods and services tax
GST free
GST education
Education course administrative services
GST supplies and acquisitions
Taxable supply

Siebel/TDMS Reference Number:  3351169

Business Line:  Indirect Tax

Date of publication:  30 November 2002

ISSN: 1445-2782


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