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Edited version of your written advice

Authorisation Number: 1051267165141

Date of advice: 10 August 2017

Ruling

Subject: GST and Education course

Question 1

Is the supply of a licence to use the education/training products and services under the Training Courses Program’ (Program) a taxable supply?

Answer 1

Yes, your supply of a licence to use the education/training products and services under the Program is a taxable supply because it does not meet the definition of a GST-free 'education course’.

Question 2

Does GST need to be charged on the licence fee?

Answer 2

Yes, GST needs to be charged on the licence fee as it is consideration for a taxable supply.

Relevant facts and circumstances

You) launched a new training program.

You advise the Program is a cost recovery measure.

Any Registered Training Organisation (RTO) approved to deliver training under the Program must pay a licence fee to allow access to the training materials, assessment platform and supporting training products.

You created the course units, student learning materials and country-based vocational education profiles under the Program. Only approved program licence holders can access the products. You advise that part of the licence fee goes towards recovering the cost.

You also contract a supplier to provide an online assessment platform. You provided that part of the licence fee goes towards this cost.

RTOs apply for a licence to be IST Program participants and use the products. The approved RTOs are issued an invoice requesting for payment of the licence fee.

The payment of the licence fee is counted as consolidated revenue for the Commonwealth.

The Training Product Agreement contains an intellectual property licence which permits approved RTOs to the courses using the Products for the sole purpose of delivering what is stipulated in the Product Agreement. The Product Agreement also permits approved RTOs to award the Course Certificates to learners who have undergone all mandatory standardised the Course Assessments and have successfully completed the course.

The licence fee to enter into Product Agreements contributes towards the costs of ongoing management of the Program, development of management of the Products, including course materials, the assessment and granting of licences and the monitoring and evaluation of the Program delivery.

The licence fee is payable by approved RTOS that enter into Product Agreements with you.

The licence fee is set by you and you may review the fee. Any new fee as set by you, will be the basis for any new and/or Product Agreements entered into by approved RTOs.

The licence fee covers:

    a) access to resources developed to support approved RTOs in the delivery and assessment of the IST courses,

    b) use of the standardised assessment materials and access to the associated online platform,

    c) approved RTOs’ right to issue Course Certificates to learners who successfully completed an IST course pursuant to the Product Agreement, and

    d) use and delivery of the courses in any country, as per the requirements in section 8.3.

The courses have been developed by Australian Industry, facilitated by you, to help support the demand for quality training and assessment skills.

The courses have been tailored for flexible delivery by RTOs. Training can be delivered in partnership with local training providers, governments at all levels, and/or private employers.

The adaptable and flexible design of these courses lends itself to delivery across a range of skills training sectors and industries.

Learners who successfully complete a course will be awarded a completion certificate..

Legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 9-5.

A New Tax System (Goods and Services Tax) Act 1999 section 9-10

A New Tax System (Goods and Services Tax) Act 1999 section 38-85

Reasons for decision

All legislative references in this Ruling, unless otherwise stated are to A New Tax System (Goods and Services Tax) Act 1999 (GST Act). The relevant legislative provisions are discussed below.

The supply of an 'education course’ is GST- free under section 38-85(a). The term 'education course’ is defined under section 195-1 to include (amongst other things) a tertiary course or a professional and trade course.

Goods and Services Tax Ruling (GSTR) 2001/1 Goods and services tax: supplies that are GST-free for tertiary education courses provides the ATO view and states:

Definition of a tertiary course

A tertiary course means:

    (a) a course of study or instruction that is a tertiary course determined by the Education Minister under subsection 5D(1) of the Student Assistance Act 1973 for the purposes of that Act;

    (aa) a course of study or instruction accredited at Masters or Doctoral level and supplied by a higher education institution or a non-government higher education institution; or

    (b) any other course of study or instruction that the Education Minister has determined is a tertiary course for the purposes of this Act.

The Education Minister determined under subsection 5D(1) of the Student Assistance Act 1973 that tertiary courses include vocational education and training programmes.

The Student Assistance Act 1973 provides that a vocational education and training program means a course that leads to an award of an Australian Qualification Framework (AQF) qualification or a Statement of Attainment, and the course must be:

    (a) an accredited vocational education and training course; or

    (b) a sequence of training consisting of one or more subjects or modules where each subject or module is from an accredited vocational education and training course; or

    (c) a structured approach to the development and attainment of competencies for a particular AQF qualification specified in an endorsed training package.

The IST Program does not meet the requirements of a tertiary course or a vocational education and training program as it is not accredited. As such the IST Program is not an 'education course’ that is GST-free.

Section 9-5 defines a taxable supply as:

      9-5 You make a taxable supply if:

        (a). you make the supply for *consideration; and

        (b). the supply is made in the course or furtherance of an *enterprise you *carry on; and

        (c). the supply is *connected with the indirect tax zone; and

        (d). you are *registered or *required to be registered.

      However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed.

      (* denotes a defined term under section 195-1)

Your supply of the licence to use the IST Program to the approved RTOs is for consideration (licence fee). The supply is made in the course or furtherance of an enterprise that you carry on and the supply is connected with the indirect tax zone.

You are registered for GST.

As discussed above, the supply of the licence to use the IST Program is not a GST-free supply of 'education course’. It is also not an input taxed supply.

As your supply of the licence to use the IST Program meets all the requirements under section 9-5 and it is not a GST-free or input taxed supply, then you are making a taxable supply. Therefore the licence fee is subject to GST.