Edited version of private ruling

Authorisation Number: 1011803249884

Ruling

Subject: Goods and services tax and the supply of education courses

Question:

Should accredited training courses supplied by your business have GST applied to them?

Advice/Answers:

The supply of accredited training courses through your business by the registered training organisations (RTOs) to the end users is GST-free.

In addition, the supply of a right to receive a GST-free supply of tertiary course is also GST-free. Hence when you supply a right to receive a GST-free supply of a tertiary course from an RTO to an end user, the supply of that right also is GST-free.

Your supplies of marketing services are taxable supplies by you to the RTOs. There is a GST liability on your supplies of marketing services by you to the RTOs.

Relevant facts:

· You are registered for GST

· You operate on a for profit basis.

· You are not a registered training organisation (RTO), and do not provide training and education courses yourself.

· You are approached by clients to acquire accredited training courses from RTOs on their behalf.

· The clients will be the recipients of the supplies of training (end users), and as such you act as a liaison with RTOs on the end users' behalf.

· The end users who approach you for training do not have their own internal training capability.

· You have contracts with a number of RTOs.

· You have supplied a generic copy of the type of contract which you have with RTOs for the provision of their training courses for examination.

· The agreements with the RTOs cover issues such as pricing, refunds and complaint resolution.

· The entities which receive training do not engage you as an agent, but rather acquire their training through you.

· The RTOs providing the courses acquired by the end users through you actually provide training, delivery of the training, course content, and trainers, and also provide the qualification or certificate for the training provided.

· The end users receiving the training do not pay any fee to you for the provision of your services.

· You acquire courses from the RTOs at a 'wholesale' or discounted price, and sells the courses at the full 'retail' price, which is the price which the RTO would usually sell the course, to the entities which receive training.

· You receive payment from the recipient of the supply for the delivery of the courses by the RTOs.

· You receive the full retail price for a course from the recipient of the training, forward the funds for the 'wholesale' or discounted price to the RTO, and retain the difference between the two amounts as your own funds.

· Some RTOs will allow a broad range of their courses to be provided through you, while other RTOs will only allow a limited number of their courses to be provided through you.

· You do not charge GST on the supply of these courses, and so the funds received as consideration do not include any amount which the company treats as a GST liability.

· Most of your clients are businesses, with a small proportion of your clients being employees.

· Those of your clients who are employees are undertaking courses individually which are necessary or mandatory for their employment, and are completing the relevant courses as their employers are not providing the relevant courses.

Reasons for decision

Under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) you make a taxable supply when:

· 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 for GST.

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

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

The term 'education course' is defined in section 195-1 of the GST Act so as to include courses which are 'tertiary courses'. The term 'tertiary course' includes a course of study or instruction that is determined to be a tertiary course by the Education Minister under subsection 5D(1) of the Student Assistance Act 1973.

The current determination by the federal Minister of Education is Student Assistance (Education Institutions and Courses) Determination 2009 (No. 2) (the determination).

Courses provided by RTOs are accepted as tertiary courses under this determination and so are regarded as education courses for purposes of GST legislation. Such courses include:

(i) pre-vocational courses

(ii) ESL courses

(iii) post-secondary vocational education and training programs

(iv) courses of combined studies

(v) open learning, and

(vi) undergraduate or postgraduate higher education courses.

Thus supplies of such courses by RTOs are GST-free under section 38-85 of the GST Act.

On the basis of the facts provided, you facilitate the provision of tertiary courses provided by a number of registered training organisation to the staff of other organisations and also to individuals (the end users), and also to some individuals who wish to undertake these courses for employment-related purposes.

You do so under written contractual arrangement entered into with the RTOs from which you acquire the tertiary courses. In 'acquiring' courses from RTOs, you principally acquire the right to market the courses to end users on behalf of the RTOs with which you deal. In doing so, you suppy the right to receive education courses to the end users.

The courses so provided are actually supplied to the end users directly by the RTOs under a contractual arrangement between you with each RTO. Further, you use the RTOs' brands, trademarks, business names and logos for the purpose of marketing the courses. In addition, under the agreement the RTO authorises you to disclose the RTO's identification number of the course to the end user prior to the course being delivered to the end user. Also under the agreements with the RTOs, you cannot put out that you have any right other than the right to market courses. Thus it is actually the RTOs which supply the courses to end users. When the RTOs for which you act provide tertiary courses, then the supplies of those tertiary courses to the end users are a GST-free supply.

In addition, the supply of a right to receive a GST-free supply of tertiary course is also GST-free. Therefore when you supply a right to receive a GST-free supply of a tertiary course from an RTO to an end user, the supply of that right is GST-free.

However, in facilitating the provision of education courses by RTOs to end users, you also supply a service to the RTOs of marketing their tertiary courses. The supplies of these marketing services are distinct from the supply of the courses or the right to receive the courses, and so must be treated separately.

In supplying its marketing services to RTOs, you do so in the course or furtherance of an enterprise that you carry on. Your supplies of these marketing services occur within Australia, and so are connected with Australia. You are also registered for GST. Thus three of the four requirements of a taxable supply are met.

The facts show that you:

· 'acquire' tertiary courses and the right to market them from RTOs at a discounted wholesale price

· charge the full 'retail price to the end users who are the recipients of the training

· forward the funds for the 'wholesale' or discounted price to the RTO, and then

· retain the difference between the two amounts as its own funds for the supply of its services.

The monetary difference between the retail price paid to you and the wholesale price forwarded to the RTOs for their supplies of their tertiary course retained by you represents the consideration for the supply of your marketing services to the RTOs. Hence the fourth requirement of a taxable supply is met in this situation.

As a consequence your supplies of marketing services to RTOs are taxable supplies.

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