ATO Interpretative Decision

ATO ID 2004/145

Good and Services Tax

GST and assessment of prior learning carried out by a contracted entity
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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 trade association, making a GST-free supply under section 38-110 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it makes a supply of assessing a person's qualifications, for the purpose of that person gaining membership to the entity, where the assessment is actually carried out by a contracted education institution?

Decision

Yes, the entity is making a GST-free supply under section 38-110 of GST Act when it makes a supply of assessing a person's qualifications, for the purpose of that person gaining membership to the entity, where the assessment is actually carried out by a contracted education institution.

Facts

The entity is a trade association. The entity makes a supply of assessing a person's qualifications. The purpose of the assessment is for the person to gain membership to the entity.

The entity engages an education institution to carry out the assessment. The education institution carries out the assessment under authority granted by the entity.

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

Reasons for Decision

A supply is GST-free under subsection 38-110(1) of the GST Act when the supply is the assessment or issue of qualifications for the purpose of:

•
access to education
•
membership of a professional or trade association
•
registration or licensing for a particular occupation, or
•
employment.

The entity supplies a service of assessing a person's qualifications. The entity's assessment is for the purpose of the person gaining membership to the entity, which is a trade association. As such, the supply satisfies the requirements in subsection 38-110(1) of the GST Act.

However, subsection 38-110(2) of the GST Act provides that a supply is not GST-free under subsection 38-110(1) of the GST Act unless the supply is carried out by:

•
a professional or trade association
•
an education institution
•
an entity that is registered by a training recognition authority of a State or Territory in accordance with the Australian Recognition Framework to provide skill recognition (assessment only) services
•
an authority of the Commonwealth or of a State or Territory, or
•
a local government body.

'Carried out by' means that the assessment must be conducted by a body that is specified in subsection 38-110(2) of the GST Act. Where the assessment is conducted by some other entity acting under a licence, franchise or authority granted by the body, and that other entity is not one of the kinds of bodies specified in subsection 38-110(2) of the GST Act, then the supply will be excluded from being GST-free.

The education institution carries out the assessment under authority granted by the entity. An education institution is one of the kinds of bodies specified in subsection 38-110(2) of the GST Act. As such the supply is not excluded from being GST-free by subsection 38-110(2) of the GST Act.

There are 2 supplies being made in these circumstances: (1) the education institution supplies assessment services to the trade association; and (2) the trade association supplies assessment services to the potential member. As the education institution and the trade association are both kinds of bodies specified in subsection 38-110(2) of the GST Act, each supply is GST-free as both supplies are not excluded from being GST-free by subsection 38-110(2) of the GST Act.

Accordingly, the entity is making a GST-free supply under section 38-110 of the GST Act when it makes a supply of assessing a person's qualifications, for the purpose of that person gaining membership to the entity, where the assessment is actually carried out by a contracted education institution.

[HISTORY: This ATO ID was amended on 2 July 2007 to clarify relationship between parties.

Date of decision:  11 November 2002

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 38-110
   subsection 38-110(1)
   subsection 38-110(2)

Keywords
Goods and services tax
GST free
GST education
Recognition of prior learning

Siebel/TDMS Reference Number:  3934002; 1-CR7OSCI

Business Line:  Indirect Tax

Date of publication:  13 February 2004
Date reviewed:  17 January 2018

ISSN: 1445-2782

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