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ATO Interpretative Decision

ATO ID 2004/217

Goods and Services Tax

GST and supply of bus service to transport students to and from school
FOI status: may be released

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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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, an accredited secondary school, 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 supplies a bus service to transport students to and from school and does not charge an additional fee to the students for the provision of the service?

Decision

Yes, the entity is making a GST-free supply under section 38-85 of the GST Act when it supplies a bus service to transport students to and from school and does not charge an additional fee to the students for the provision of the service.

Facts

The entity is a secondary school. The entity provides an accredited secondary course that is GST-free under section 38-85 of the GST Act.

The school uses a global budget to determine an identical fee for each student. The fee paid includes access to a bus service, regardless of whether a student makes use of the service.

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

Reasons for Decision

An education course is GST-free under section 38-85 of the GST Act. The entity provides an accredited secondary course that is GST-free under section 38-85 of the GST Act. Some supplies that relate to an education course are also GST-free. The entity's supply of the bus service is a supply that may relate to its supply of a GST-free education course.

Goods and Services Tax Ruling, GSTR 2000/30, sets out those supplies that relate to a GST-free education course. Paragraph 30 of GSTR 2000/30 provides that a fee for the supply of an education course that consists of tuition, facilities and other curriculum related activities, associated with a GST-free course, is GST-free.

Paragraphs 34 and 35 of GSTR 2000/30 provide that the supply of facilities is part of the supply of an education course and includes such items as the provision and maintenance of buildings, grounds, sporting and musical equipment and other curriculum related items. The supply of facilities will extend to the provision of a bus service, where the service is made available to all students who have paid the same fee for the supply of the education course, regardless of whether they use the bus service or not.

The entity uses a global budget and charges each student the same amount for their school fees. The entity does not charge a separate fee for the supply of the bus service. The cost of providing this bus service is one of the outlays that the entity factors into the calculation of the school fees. As such, the entity's supply of the bus service is the supply of a facility that is included in the entity's fee for the supply of an education course. Therefore, the entity is making a GST-free supply under section 38-85 of the GST Act when it supplies a bus service to transport students to and from school.

Note: The supply of a bus service will not be GST-free in circumstances where school fees or a portion of school fees, charged by an entity, relate specifically to a taxable supply under section 9-5 of the GST Act or to supplies that are being made to particular students. The actual supply of transport to and from school is not GST-free if a designated group of students (for example, only those students who use a bus service), pay a higher fee than the rest of the student population or where the bus service is not made available to all students.

Date of decision:  22 October 2002

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

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

Keywords
Goods and services tax
GST free
GST education
Education courses
Secondary course

Siebel/TDMS Reference Number:  3166698

Business Line:  Indirect Tax

Date of publication:  5 March 2004

ISSN: 1445-2782


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