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Edited version of private ruling

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Ruling

Subject: GST-free and education course

Question 1

Are your supplies of motorcycle riding courses, whereby you provide motorcycle training and testing to those without a motorcycle licence, GST-free supplies of an education course?

Answer

No, your supplies of motorcycle riding courses, whereby you provide motorcycle training and testing to those without a motorcycle licence, are not GST-free. The supplies are taxable supplies.

Question 2

Are you liable for GST in relation to the Government Agency motorcycle learner permit, testing and licence fees you collect on their behalf from your clients?

Answer

No, you are not liable for GST in relation to the Government Agency charged motorcycle learner permit, testing and licence fees you collect from your clients.

Relevant facts and circumstances

You are accredited by a Government Agency as a motorcycle instructor and tester. You provide motorcycle rider training and testing courses to the general public. You are registered for GST.

Your website advises that you are fully accredited by the Government Agency to issue motorcycle learner permits and licences in your state.

The Government Agency charge certain fees (learner permit fees, driver licence fees, licence testing fees) in relation to learner permits, motorcycle riding tests and motorcycle licences.

You are a recognised registered training organisation (RTO).

Your registration details on the website of training service indicate that as an RTO you have a particular unit of training recorded under the scope of your registration.

A training package listed on the NTIS that the unit is a part of a qualification. Among the entry requirements for this course is that candidates already have a motorcycle licence.

You have advised that you have only recently obtained authorisation to teach the unit, and have not commenced delivering the unit to any of your clients.

The A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2010 (No. 2) issued by the Treasurer lists, amongst others, the following fees as not being subject to GST because they are not provision for consideration of a supply:

Reasons for decision

Question 1

An education course is GST-free under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). The term 'education course' is defined in section 195-1 of the GST Act to include specific types of courses. The type of course relevant in your case is a 'tertiary course'.

For GST purposes, 'tertiary course' means:

The Education Minister has issued a Determination, cited as Determination No. 2002/1 - Determination of education institutions and courses under subsection 3(1) and 5D(1) of the Student Assistance Act 1973 (Education Minister's Determination).

Among other things, the Education Minister's Determination provides that a vocational education and training programme conducted by a higher education institution or a registered training organisation (RTO) is a tertiary course. The Education Minister's Determination defines the meaning of 'registered training organisation' and 'vocational education and training programme':

You advised that you are a registered RTO. Your registration details indicate that as an RTO you have a particular unit of training recorded under the scope of your registration.

As you are a registered RTO we have taken that the unit is a vocational education and training (VET) programme offered within the scope of your registration.

Paragraph 24 of Goods and Services Tax Ruling GSTR 2001/1 explains where you supply one unit of a tertiary course that is covered by the Education Minister's determination and the recipient is enrolled in that unit, the supply of that unit is GST-free.

Accordingly, this unit will satisfy the definition of a tertiary course that is covered by the Education Minister's Determination. Your supply of the unit will be the GST-free supply of an educational course, provided that the recipient (your clients) of your training is enrolled in that unit and you supply to your clients the whole of the unit.

However, you have advised that the courses you provide are for people who are looking to obtain their motorcycle licence, some who may have no prior riding experience.

You have confirmed that the general motorcycle rider training and testing you supply are not provided within the scope of your registration as an RTO. Accordingly, the general motorcycle instructions you provide is not a 'tertiary course', and hence, you are not making a GST-free supply of an education course. 

As you are registered for GST, the supply of your courses are in made in Australia in the course of the enterprise that you conduct in Australia and the supplies are made for consideration (payment), your supply will be taxable. Consequently, you will be liable for GST when you supply the motorcycle riding courses in question.

Question 2

Division 81 of the GST Act operates to exclude from GST, payments of taxes, fees and charges that are specified by the Treasurer. The A New Tax System (Goods and Services Tax) (Exempt Taxes, Fees and Charges) Determination 2010 (No. 2) (Treasurer's determination) lists the taxes, fees and charges that are not subject to GST. The relevant items below are listed as being not subject to GST:

In your case, in determining whether the fees charged to your clients for learner permits, motorcycle rider testing and motorcycle licences fall under the items of the Treasurer's determination (above), we need to examine the definitions of those items.

From the information obtained from the Government Agency website we are of the understanding that the motorcycle licences, licence tests and learner permits would be covered by items 5.25, 5.28 and 5.30 respectively. Therefore, under Part 3 of the Treasurer's determination relating to your state, the fees charged for motorcycle learner permits, motorcycle rider testing and licence fees are not subject to GST.

It is the Government Agency who levies the motorcycle learner permit, motorcycle rider testing and licence fees. A list of these fees are found on their website (in regards to the cost of testing fees the Government Agency advises consumers that they need to refer to their accredited providers for this information).

In your case, you collect those fees from your clients on behalf of the Government Agency, and remit these to the Government Agency. As the fees from the Government Agency are charged to, and paid by, your clients and do not form part of the consideration (or payment) for the services you provide, you will not be liable for GST in relation to these fees.

As an accredited training provider, you are acting on behalf of the Government Agency when you collect the fees for the Government Agency from your clients. As these fees are not subject to GST, they retain their 'exempt' status when these fees are charged to your clients. Therefore this component of the fees you invoice your client will not be subject to GST.

However, as explained earlier in this ruling (Question 1), the services that you supply to your clients are taxable.

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