Edited version of private ruling

Authorisation Number: 1011536892360

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Ruling

Subject: GST and the supply of educational courses

Question

Are various short courses which will be supplied by an Australian institution GST-free supplies of Adult and Community Education courses under section 38-85 of the A New Tax system (goods and Services Tax) Act 1999 (GST Act)?

Advice/Answers:

No, the short courses which will be supplied by the Australian institution are not GST-free supplies of Adult and Community Education courses under section 38-85 of the GST Act.

These short courses will be taxable supplies under section 9-5 of the GST Act and the Australian institution will be liable for GST on these supplies.

Relevant facts:

You are a non profit Australian institution and are registered for the goods and services tax (GST).

You will develop, own and operate various short courses (details of these courses have been provided to the Australian Taxation Office):

These courses can be broadly categorised as providing management skills. Individuals enrolling in any of these courses will enrol with you.

The courses are not tertiary courses or single units from a tertiary course. They have been separately developed as short courses for any member of the public to enrol and participate in. No formal qualification or education recognition will be awarded to the individual undertaking these courses as these courses are not accredited.

The objectives of the courses are to provide and improve skills which would be expected to be used during an individual's employment, business or profession. The courses are not recreational in nature.

The courses are opened to public enrolment. Though the short courses from the open enrolment program will be available to individuals as well as employees of organisations, the courses will be mainly directed at people in the workplace.

Your expectation is that most enrolments (but not all) for these public enrolment courses will be from individuals who will be reimbursed their enrolments fee by the employer as it will be adding to their employment related skills.

The courses are not customised for clients or delivered as in-house training or being delivered to specific organisations. However, in some situations an employer may request that a short course be developed, tailored for their specific business and presented to their employees. You are aware that in these circumstances GST applies to this supply.

No private tuition is being provided as part of the courses; the only tuition is the group tuition that is provided on the relevant day/days of the course.

The courses are going to be marketed primarily on your website with personal advertising distribution (fliers) to CEO's, HR & training managers in both private and government sector organisations. There will also be general advertising distributed through open events, press releases to general media. There will be limited advertising in the relevant press, and also individual letters will be distributed through your student centre targeting both current and past students.

Reasons for decision

Question 1

GST is payable on taxable supplies under the GST Act. Section 9-5 of the GST Act provides that you make a taxable supply if:

(a) you make the supply for consideration,

(b) the supply is made in the course or furtherance of any enterprise that you carry on,

(c) the supply is connected with Australia, and

(d) you are registered or required to be registered for GST.

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

From the facts given, you have satisfied the requirements of paragraph 9-5(a) to 9-5(d) of the GST Act as you supply the courses for consideration and in the course of an enterprise that you carry on; the supply is connected with Australia as the courses are provided in Australia and you are registered for GST.

However, the supply of the courses is not a taxable supply to the extent that the supply is input taxed or GST-free. There is no provision in the GST Act that will make the supply of these courses input taxed.

What needs to be determined is whether these courses are GST-free under the GST Act.

GST-free

A supply of an education course is GST-free under section 38-85 of the GST Act.

An education course is defined in section 195-1 of the GST Act to include an adult and community education course (ACE course).

Under section 195-1 of the GST Act, to be GST-free as an ACE course, a course must be:

(i) likely to add to the employment related skills of people undertaking the course; and

(ii) of a kind determined by the Education Minister to be an adult and community education course; and

(iii) provided by, or on behalf of, a body that is recognised or funded as a provider of ACE courses or a body corporate operating on a not-for-profit basis.

First requirement

Goods and Services Tax Ruling GSTR 2000/27 discusses the meaning of 'likely to add to employment related skills'. The test as to whether an adult and community education course is likely to add to the employment related skills of people undertaking the course is an objective test and is not dependent on the subjective intention of the providers of the course or the recipients.

From the information received, the courses will develop, increase, advance or improve the participants' employment related skills. Thus, it is accepted that these courses will satisfy the first requirement of an ACE course because they will add to the employment related skills of the persons undertaking these courses.

Second requirement

To satisfy the definition of an ACE course the course must also meet the requirements of the Education Minister's Determination A New Tax System (Goods and Services Tax)(Adult and Community Education Courses) Determination 2000 (the ACE Determination). At paragraph 5(2) of his Determination, the Education Minister states that an adult and community education course must:

(a) not be any other education course defined in section 195-1 of the Act; and

(b) be a course that is available to adults in the general community; and

(c) not be a course provided by or at the request of an employer to employees of that employer; and

(d) not be a course provided by or at the request of an organisation to members of that organisation, except an organisation for which membership is open to adults in the general community; and

(e) not be a course that is provided by way of private tuition to an individual.

It is unlikely that the courses conducted by you will satisfy the test under (b) because:

· the courses are targeted at managers and professionals and not 'adults in the general community since the courses are promoted much more like Continuing Professional Development courses than Adult and Community Education.

Though there is no stated prerequisite that a person considering the course needs to have a certain amount of managerial experience before undertaking the course, the course description makes it clear that the courses are intended for people who are already in middle management, probably with aspirations to develop their skills for promotion to upper management or executive level.

· To be considered genuinely available to adults in the general community, a course needs to be advertised more widely in the general press or other publications that are widely distributed to households in the general community.

In your case the courses are advertised on your website and personal advertising distribution will be made to private and government sector organisations. There will be limited advertising through the relevant press, and also individual letters will be distributed through your student centre targeting both current and past students.

It is unlikely that adults in the general community will browse your website with a view to locating such a course. It is much more likely that post graduate students (that is alumni) when browsing your website will locate these additional educational opportunities.

Further, you advised that in some situations an employer may request that a short course be developed, tailored for their specific business and/or presented to their employees. In this situation, the test under (c) will also not be satisfied.

Accordingly, after considering all the information provided on the courses, it is not accepted that the courses satisfy the criteria outlined in respect of an ACE course. The courses are not for adults in the general community as they are promoted in the manner of Continuing Professional Development courses, not as ACE courses, and are intended for managers and professionals who are already in middle management, probably with aspirations to develop skills for promotion to upper management or executive level.

Third requirement

Finally, the course must be provided by, or on behalf of, a body that is a higher education institution, or recognised or funded as a provider of ACE courses, or a body corporate operating on a not-for-profit basis that has not been refused recognition or disqualified by a state or territory authority as a provider of ACE courses for failing to meet or maintain the standards required by that authority.

In your case the third requirement will be satisfied as you are a non profit Australian institution and will be providing these courses.

Summary of ACE course

The courses which you will supply will not meet the definition of an education course for the purposes of section 38-85 of the GST Act as the second requirement of the definition of an ACE course is not satisfied. Accordingly the courses you will supply are not GST-free supplies of ACE courses.

Conclusion

The courses you will supply do not meet the definition of an education course for the purposes of section 38-85 of the GST Act. Accordingly the courses you will supply are not GST-free and will be taxable supplies under section 9-5 of the GST Act.

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