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Edited version of your private ruling
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Ruling
Subject: GST and courses delivered by Registered Training Organisation
Question 1
Will the courses delivered by a Registered Training Organisation (RTO) directly to its students, be GST-free supplies?
Answer
Yes, the courses delivered by the RTO directly to its students, will be GST-free supplies
Question 2
Will the courses supplied by a RTO to another RTO under an agreement, be GST-free supplies?
Answer
No, the courses supplied by the RTO to another RTO under an agreement will not be GST-free supplies of an education course to the other RTO. We are of the view that what the RTO supplies to the other ROT is merely teaching services under the agreement.
Where the courses that are within the scope of the registration of the RTO are included in a course delivered by another RTO to their students such courses may be GST-free (please read our reasons for decision below).
Relevant facts and circumstances
The entity (you) is registered for Goods and Services Tax (GST).
You are a RTO.
You deliver both accredited and non-accredited courses.
These courses are delivered separately for the most part but occasionally delivered as combined courses.
You also have agreements with the other RTOs to deliver unit/s of competence to the trainees of those RTOs.
When you provide the courses to the other RTO, you invoice the other RTO for the cost and not their trainees.
You will issue a Statement of Attainment for the unit/s delivered to the trainees of the other RTOs but you will not issue the full qualification.
The courses are mainly delivered to organisations to provide their employees with their necessary skills. Individuals are entitled to enrol but the clientele is predominantly through organisations.
You do not provide any Adult and Community Education Courses.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 Section 9-5 and
A New Tax System (Goods and Services Tax) Act 1999 Section 38-85.
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). To be GST-free as a tertiary course, a course must satisfy the Education Minister's Determination under subsection 5D(1) of the Student Assistance Act 1973.
The Education Minister's Determination No. 2002/1 provides that an accredited course, conducted by a RTO, is a tertiary course. Therefore, the accredited courses delivered by you as a RTO are GST-free tertiary education courses.
Courses that are not accredited or are not within the scope of the RTO registration status do not satisfy the definition of a GST-free tertiary course.
Goods and Services Tax Ruling GSTR 2001/1 provides guidance on the GST consequences of delivering accredited and non-accredited units. Paragraph 37 of GSTR 2001/1 states:
Single units that are not form an approved tertiary course are referred to as 'non-accredited units'. These units do not satisfy the requirements of the Education Minister's Determination under the Student Assistance Act 1973 because the Determination only covers accredited courses. Non-accredited units delivered by you will be subject to GST.
Paragraph 38 of GSTR 2001/1 explains that non-accredited units, that form part of any courses developed by an entity that comprise a combination of accredited and non-accredited units, will be subject to GST on an apportionment basis. This means if you deliver a course that comprises both accredited and non-accredited units, you are required to use a reasonable basis to determine the portion of the course that is non-accredited and levy GST on that component.
What is 'reasonable' will depend on the facts in each case. However, the Commissioner would consider that the calculation of the taxable portion based on the time taken for each unit would be
Question 2
Paragraph 46 of Goods and Services Tax Ruling GSTR 2000/30 (GSTR 2000/30) states:
If the supply of the activity or instruction to you is made by an entity that is registered or required to be registered, the supply to you is a taxable supply and the amount you pay for the activities or instruction includes GST. You are entitled to input tax credits in respect of the GST paid on the acquisitions by you of activities or instruction. The subsequent supply that you make to students is GST-free.
Where a RTO makes a supply of teaching or instructing services under a contract with another education course provider to the course provider's students, it is not making a GST-free supply under section 38-85 of the GST Act. The supplier is making a taxable supply under section 9-5 of the GST Act. This is because, when you deliver the courses to another RTO under a contract or arrangement, it is considered that what you are supplying to the other RTO is your teaching services. The recipient of these services is the other RTO. You may be teaching courses that you are accredited under your registration to the students of the other RTO. But you are not considered to be supplying these courses directly to the course provider's students. You do not have any contractual relationship with these students. Accordingly, these teaching services that you provide to the other RTO are not GST-free under section 38-85 of the GST Act.
The teaching services are not GST-free under any other GST provision of the GST Act nor are input taxed. Accordingly, they are taxable supplies under section 9-5 of the GST Act.
Where the courses that the other RTO provides (including your accredited courses) satisfy the requirements of section 38-85 of the GST Act, that RTO will be the entity supplying the GST-free education course under section 38-85 of the GST Act to their own students and not you. You are making a separate supply directly to the course provider (which is teaching services). Therefore, you are making a taxable supply under section 9-5 of the GST Act when you deliver the courses to another RTO under an agreement.
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