ATO Interpretative Decision

ATO ID 2002/518 (Withdrawn)

Goods and Services Tax

• This ATO ID is withdrawn and is replaced by ATO ID 2004/977.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Is the entity, a boarding school with more than 50% of its boarders being students from rural or remote locations, making a GST-free supply under section 38-105 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it provides accommodation to a student undertaking a primary course at a separate institution?

Decision

Yes, the entity is making a GST-free supply under section 38-105 of the GST Act when it provides accommodation to a student undertaking a primary course at a separate institution.

Facts

The entity is a boarding school. The entity supplies GST-free primary courses. The entity supplies accommodation (board and lodging) in its supervised boarding house to students undertaking its primary courses.

The entity also supplies accommodation to a student who is undertaking a GST-free primary course supplied by another entity at a separate institution.

More than 50% of the students in receipt of the entity's supply of accommodation are from rural or remote locations.

The entity is registered for goods and services tax (GST).

Reasons for Decision

Section 38-105 of the GST Act sets out when a supply of student accommodation is GST-free.

A supply is GST-free under subsection 38-105(1) of the GST Act if:

•

it is a supply of student accommodation to students undertaking a primary course, a secondary course or a special education course; and

•

the supplier of the accommodation also supplies the course.

Although the entity is supplying student accommodation to a student that is undertaking a primary course, the student is undertaking that primary course at a separate institution. The entity is not the supplier of that primary course. Therefore, the entity's supply of accommodation is not GST-free under subsection 38-105(1) of the GST Act.

A supply of accommodation is GST-free under subsection 38-105(2) of the GST Act if:

•

it is a supply of student accommodation to students who are undertaking a primary, secondary or special education course; and

•

the accommodation is provided in a hostel whose primary purpose is to provide accommodation for students from rural or remote locations who are undertaking such courses.

Therefore, in order for the entity (a boarding school) to provide GST-free student accommodation under subsection 38-105(2) of the GST Act, these criteria must be satisfied:

1.

the supply of accommodation must be to students undertaking a primary, secondary or special education course;

2.

the entity's boarding house must be a hostel; and

3.

the primary purpose of the entity's boarding house must be to provide accommodation to students from rural or remote locations who are undertaking a primary, secondary or special education course.

The entity is supplying accommodation in its boarding house to a student that is undertaking a primary course. It does not matter that the entity is not the supplier of the primary course, as long as the student is undertaking a primary course. Therefore, the first criterion is satisfied.

In relation to the second criterion, it must be determined whether the entity's boarding house is a 'hostel'. The word 'hostel' is defined in The Macquarie Dictionary (1997) as

'1. a supervised place of accommodation, usually supplying board and lodging, provided at a comparatively low cost, as one for students, nurses or the like.'

The entity supplies board and lodging from its supervised boarding house. In terms of the accommodation provided, the characteristics of the entity's boarding house and a 'hostel' are similar. Therefore, the entity's boarding house is a hostel for the purposes of paragraph 38-105(2)(b) of the GST Act, and satisfies the second criterion.

Under the third criterion, the primary purpose of the entity's boarding house must be to provide accommodation to students from rural or remote locations who are undertaking a primary, secondary or special education course.

The primary purpose of a boarding school's accommodation facilities is determined by the actual or expected proportion of students from rural or remote locations being accommodated during each calendar year. Therefore, if the number of boarding students from rural or remote locations is expected to or actually does exceed the number of boarding students not from rural or remote locations, the primary purpose test is satisfied. It does not matter whether the individual student receiving the supply is from a rural or remote location as long as the primary purpose test is met.

As more than 50% of the students in receipt of the supply of accommodation by the entity are from rural or remote locations and are undertaking primary courses, the third criterion is satisfied.

As all three criteria are satisfied, the entity is making a GST-free supply under subsection 38-105(2) of the GST Act when it provides accommodation to a student undertaking a primary course at a separate institution. The supply is GST-free under subsection 38-105(2) of the GST Act regardless of who is supplying the primary course and regardless of whether the individual student is from a remote or rural location.

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 38-105
   subsection 38-105(1)
   subsection 38-105(2)
   paragraph 38-105(2)(b)

Related Public Rulings (including Determinations)
Goods and Services Tax Ruling GSTR 2000/30

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

Keywords
Goods & services tax
GST free
GST education
Student accommodation
Student accommodation - non-tertiary

Business Line:  GST

Date of publication:  31 May 2002

ISSN: 1445-2782