Edited version of private ruling

Authorisation Number: 1011723199632

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Ruling

Subject: GST and English as a second language course provided to overseas students

Questions:

1. Is the English as a second language course (Course) that you provide to overseas students a GST-free education course?

Answer: No.

2. Is the Course that you provide to overseas students who are not in Australia, a GST-free supply to a non-resident outside Australia?

Answer: Yes.

3. Is the Course that you provide to overseas students who reside in Australia a GST-free supply that is used or enjoyed outside Australia?

Answer: No.

4. If you successfully gain accreditation by a State or Territory authority responsible for the accreditation, would the course you provide be a GST-free education course?

Answer: Yes.

Relevant facts and circumstances

You provide on-line English language education to help international health professionals prepare for the Occupational English Test (OET).

The OET measures the language competency of health practitioners who are seeking registration to practise in Australia.

Approximately X% of the overseas students to whom you supply the Course reside overseas.

Approximately Y% of the overseas students to whom you supply the Course reside in Australia.

You are not aware of the X% who reside in Australia whether they are Australian residents or not. Some of the X% of students may have visas and some may be in the process of obtaining visas.

All of the students undertaking the Course do so to meet the qualifications necessary for various medical boards.

All students undertaking the Course come from various medical fields, such as doctors, nurses, physios, etc.

You do not provide a certificate or any qualification at the completion of your Course.

The Course is purely to prepare the student for the exam they have to sit to gain a certificate to enable them to work in Australia within the health industry.

You are not an accredited provider as currently accreditation is not available to on-line education providers.

Australian Health Practitioners Regulation Agency (AHPRA) is the board which provides the guidelines for medical professionals.

Reasons for decision

Question 1

Is the Course that you provide to overseas students a GST-free education course?

Summary

The Course that you provide to overseas students is not a GST-free education course.

Detailed reasoning

Under the GST Act, you make a taxable supply if:

· you make a supply for consideration

· the supply is made in the course or furtherance of an enterprise that you carry on

· the supply is connected with Australia, and

· you are registered or required to be registered for GST.

The supply will therefore be taxable to the extent that the supply is not GST-free or input taxed.

A supply of an English language course for overseas students is not input taxed under any provision of the GST Act or any other Act.

However, the supply of an education course is GST-free under section 38-85 of the GST Act. The definition of an education course includes, amongst other things, 'an English language course for overseas students'.

An English language course for overseas students is defined in the GST Act as a course of study or education supplied to overseas students that:

· includes study or instruction in the English language; and

· is supplied by an entity that is accredited to provide such courses by a State or Territory authority responsible for the accreditation.

To satisfy the definition of an English language course for overseas students, both the above requirements must be satisfied.

From the information you have advised, the program provided by you may satisfy the first requirement of study or instruction in the English language. However, you fail to satisfy the second requirement because you have not been accredited by a State or Territory authority responsible for such accreditation, to provide an English language course for overseas students.

Therefore as both requirements of the definition of an English language course for overseas students are not satisfied, the supply of the Course provided by you is not a supply of a GST-free education course under section 38-85 of the GST Act.

Question 2

Is the Course that you provide to overseas students who are not in Australia, a GST-free supply to a non-resident outside Australia?

Summary

The Course that you provide to overseas students who are not in Australia, is a GST-free supply.

Detailed reasoning

As advised above, under the GST Act, you make a taxable supply if:

· you make a supply for consideration

· the supply is made in the course or furtherance of an enterprise that you carry on

· the supply is connected with Australia, and

· you are registered or required to be registered for GST.

The supply will therefore be taxable to the extent that the supply is not GST-free or input taxed.

Section 38-190 of the GST Act provides certain supplies, other than goods or real property, when consumed outside Australia are GST-free. As your supply is not a supply of goods or real property it may be considered under section 38-190 of the GST Act.

In particular, item 2 in the table in subsection 38-190(1) of the GST Act (item 2) provides that a supply that is made to a non-resident who is not in Australia when the thing supplied is done, is GST-free where:

(a) the supply is neither a supply of work physically performed on goods situated in Australia when the work is done nor a supply directly connected with *real property situated in Australia; or

(b) the *non-resident acquires the thing in *carrying on the non-resident's *enterprise, but is not *registered or *required to be registered.

(* Denotes a defined term in the GST Act)

In your case, for item 2 to apply, an overseas student must be a non-resident physically not in Australia at the time of supply.

Based on the information you have provided, your supply of the Course is made to overseas students of whom approximately Y% are non-residents who are not physically present in Australia at the time of the supply. In addition, your supply is neither a supply of work physically performed on goods nor directly connected with real property situated in Australia.

Therefore, we consider the supply meets the requirements of item 2(a). However, the scope of item 2 is limited by subsection 38-190(3) of the GST Act. This subsection states:

(3) Without limiting subsection (2), a supply covered by item 2 in that table is not GST-free if:

(a) it is a supply under an agreement entered into, whether directly or indirectly, with a *non-resident; and

(b) the supply is provided, or the agreement requires it to be provided, to another entity in Australia.

In your case, this subsection does not apply as your supply of the Course to your overseas students who are not physically present in Australia, is not being provided to another entity in Australia.

Consequently, when you supply your Course to those overseas students who are not in Australia when you supply the Course, the supply will be GST-free.

Question 3

Is the Course that you provide to overseas students who reside in Australia a GST-free supply that is used or enjoyed outside Australia?

Summary

The Course that you provide to overseas students who reside in Australia is not a GST-free supply.

Detailed Reasoning

Further to the information provided above, item 3 in the table in subsection 38-190(1) of the GST Act (item 3) provides for supplies used or enjoyed outside Australia. Item 3 states:

A supply:

(a) that is made to a *recipient who is not in Australia when the thing supplied is done; and

(b) the effective use or enjoyment of which takes place outside Australia; other than a supply of work physically performed on goods situated in Australia when the thing supplied in done, or a supply directly connected with *real property situated in Australia.

In your case, for item 3 to apply, the overseas students who reside in Australia must not be physically in Australia at the time of the supply.

Based on the information you have provided, your supply of the Course in approximately X% of cases is made to overseas students who may be non-residents or residents but are physically present in Australia at the time of the supply.

Therefore, those overseas students residing in Australia at the time of the supply of the Course cannot be further considered as the supply does not meet the first requirement of item 3(a) as it is not made to a recipient who is not in Australia when the thing supplied is done.

Consequently, when you supply your Course to those overseas students (whether they are non-residents or residents) who are physically present in Australia when you supply the Course, the supply will not be GST-free and will be a taxable supply.

Question 4

If you successfully gain accreditation by a State or Territory authority responsible for the accreditation would the Course you provide be a GST-free education course?

Summary

Provided that the Course you provide to overseas students will satisfy both requirements of the definition provided in the GST Act of an English language course for overseas students, then the supply of the Course would be a supply of a GST-free education course.

Detailed Reasoning

As previously discussed, the supply of an education course is GST-free under section 38-85 of the GST Act. The definition of an education course includes, amongst other things, 'an English language course for overseas students'.

An English language course for overseas students is defined in the GST Act as a course of study or education supplied to overseas students that:

· includes study or instruction in the English language; and

· is supplied by an entity that is accredited to provide such courses by a State or Territory authority responsible for the accreditation.

To satisfy the definition of an English language course for overseas students, both the above requirements must be satisfied.

From the information you have advised, the program provided by you may satisfy the first requirement of study or instruction in the English language. However, you fail to satisfy the second requirement because you have not been accredited by a State or Territory authority responsible for such accreditation, to provide an English language course for overseas students.

However if, as you state, you gain accreditation to provide such courses by a State or Territory authority responsible for the accreditation, thereby satisfying the second requirement of the definition of an 'English language course for overseas students' then both requirements of the definition of an English language course for overseas students would be satisfied.

Consequently, the supply of the English language course for overseas students provided by you would be a supply of a GST-free education course under section 38-85 of the GST Act.

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