ATO Interpretative Decision

ATO ID 2003/980

Goods and Services Tax

GST and scholarships for tuition and accommodation
FOI status: may be released

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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 non-government secondary education institution, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it provides a scholarship that covers secondary tuition, boarding school accommodation and music tuition to a student?

Decision

No, the entity is not making a taxable supply under section 9-5 of the GST Act when it provides a scholarship that covers secondary tuition, boarding school accommodation and music tuition to a student. The entity is not making a supply for consideration.

Facts

The entity is a non-government secondary education institution. The entity provides a scholarship to a student.

This scholarship entitles the student to:

•
tuition, for which the school normally charges a fee to students
•
accommodation in the school's boarding facilities, and
•
tuition for music (not a part of the school's curriculum).

The student does not provide any consideration for the tuition or accommodation.

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

Reasons for Decision

Section 9-5 of the GST Act sets out the requirements that must be met for an entity to make a taxable supply. Under paragraph 9-5(a) of the GST Act, the supply made by an entity must be for consideration. 'Consideration' is defined in section 9-15 of the GST Act to include any payment, act or forbearance, in connection with, in response to or for the inducement of a supply of anything.

The entity is providing a scholarship to the student and the student does not provide any consideration in return for the scholarship. Therefore, the entity is not making a supply for consideration and the requirement in paragraph 9-5(a) of the GST Act is not met.

Accordingly, the entity is not making a taxable supply under section 9-5 of the GST Act when it provides a scholarship that covers secondary tuition, boarding school accommodation and music tuition to a student.

Date of decision:  23 August 2002

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   paragraph 9-5(a)
   section 9-15

Keywords
Goods and services tax
GST education
Education courses
Secondary course
Student accommodation
GST consideration
Taxable supply

Siebel/TDMS Reference Number:  3551010

Business Line:  Indirect Tax

Date of publication:  7 November 2003

ISSN: 1445-2782

history
  Date: Version:
You are here 23 August 2002 Original statement
  11 September 2020 Archived

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