Edited version of your private ruling

Authorisation Number: 1012317477080

This edited version of your ruling will be published in the public register of private binding rulings after 28 days from the issue date of the ruling. The attached private rulings fact sheet has more information.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.

Ruling

Subject: GST and supply of training courses.

Question

Are the training courses delivered by an entity (you) a GST-free supply for the purposes of section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes, based on the facts received the training courses delivered by you are GST-free supplies of education courses under section 38-85 of the GST Act.

Further, where you are contracted by employers to supply any of these courses to their employees, the supply of the course is GST-free under section 38-85 of the GST Act as long as the course retains its accredited status.

Relevant facts and circumstances

You are a registered training organisation (RTO) which provides training, assessment and credentials in vocational education and training. You are registered for GST.

You are registered with a State's training authority and have approval to deliver training and/or assessment for high risk work.

In respect of the high risk work licensing requirements you advised the following:

you are a licensed assessor with a State's relevant authority and issue to the successful trainees a Statement of Attainment and a Worksafe 'Notice of Assessment'.

The successful trainees forward the ' Worksafe Notice of Assessment' together with an application form for a 'High Risk Work Licence' to the relevant Authority.

The relevant Authority then issues the trainees with a 'Licence to Perform High Risk Work'.

The purpose of your training courses is to obtain a licence, not to renew a current licence. The licences obtained after attending these training courses are statutory requirements for performing the prescribed occupations in the State.

The training courses are delivered to both individual students and business clients. Some large employers will arrange with you to have the training course conducted at their premises rather than having the employees (trainees) attending your premises. In this instance, the training courses you deliver to the employees are not customised for the employer's purposes and are similar to the accredited courses that you provide to students at your premises.

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

GST is payable where you make a taxable supply.

Under section 9-5 of the GST Act you make a taxable supply if:

· you make the 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.

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

From the information received, you satisfy the conditions at paragraphs 9-5(a) to 9-5(d) of the GST Act when you provide the training courses as:

· you supply the training courses for consideration;

· the supply is made in the course of an enterprise (business) that you carry on;

· the supply is connected with Australia as the supply is done in Australia and through a business that you carry on in Australia; and

· you are registered for GST.

However, the supplies of these training courses are not taxable supplies to the extent that they are GST-free or input taxed.

There is no provision under the GST Act that makes the supply of these training courses input taxed. Therefore, what remains to be determined is whether these training courses are GST-free under the GST Act.

GST-free

Under section 38-85 of the GST Act, a supply of an education course as defined in the GST Act is GST-free.

'Education course' is defined in section 195-1 of the GST Act and includes amongst other things a professional or trade course.

Goods and Services Tax Ruling GSTR 2003/1 (available at www.ato.gov.au) explains the meaning of 'professional or trade course' in section 195-1 of the GST Act.

To be a professional or trade course, the course must:

(i) lead to a qualification; and

(ii) that qualification must be an essential prerequisite for entry to particular profession or trade in Australia, or to commence the practice of (but not to maintain the practice of) a profession or trade in Australia.

First requirement

GSTR 2003/1 explains that documents that are qualifications or that provide evidence of a qualification include a statement of satisfactory completion, a certificate (including a degree or diploma), a licence or an accreditation. The first requirement will be satisfied where such documentation is awarded to students undertaking your course upon successful completion of all of the units or modules that make up your course. Your course must provide the requisite skills and knowledge for an individual to attain the qualification at the conclusion of the course.

As you issue to the students undertaking your course a Statement of Attainment together with a Worksafe Notice of Assessment that certifies that they have undertaken and successfully completed your course, it is accepted that your course leads to a qualification. Therefore the first requirement is satisfied.

Second requirement

GSTR 2003/1 advises that a qualification is an essential prerequisite if it is mandatory for a person to have the qualification before they can enter into, or commence the practice of, a particular profession or trade. This necessarily requires the imposition of penalties or sanctions if a person enters into, or commences the practice of, the profession or trade without the relevant qualification. The qualification must be a legal requirement, for example a law, regulation or industrial agreement or be one imposed by a professional or trade organisation, either nationally or on a State basis.

A qualification required by an employer or group of employers, but which is not imposed by an industrial instrument, or a professional or trade association at either the national level, or State or Territory level will not be an essential prerequisite.

From the facts given, the licences obtained after attending these training courses are statutory requirements for performing the prescribed occupations in the State. Therefore, the Statement of Attainment together with a Worksafe Notice of Assessment issued as a result of undertaking the training courses you supply is an essential prerequisite, and the second requirement is satisfied

Summary

Your training courses are professional for trade courses for GST purposes as the two requirements outlined above are satisfied. Your supply of training courses are therefore a GST-free supply of education courses under section 38-85 of the GST Act. Hence, GST is not payable on the supply.

Education courses made to employers and provided to their employees

In regard to education courses purchased by employers, paragraphs 175 to 178 of Goods and Services Tax Ruling GSTR 2001/1 state the following:

Education courses purchased by employers

175. The test as to whether GST applies when an employer engages a course provider to deliver an education course to employees is an objective test and would depend on the following criteria:

(a) Terms of engagement

The provider of the course should look at the terms of their engagement and decide whether the engagement is a contract to develop and deliver a customised course or is it a contract to deliver a GST-free course;

(b) The education course

As long as the course retains its accredited status, the supply of the course to the employees at the request of the employer is GST-free.

176. Where the provider modifies the unit or course to suit the needs of the entity, to the point that the course loses its accredited status, the supply of the course will be subject to GST.

Example - Employer-purchased course

177. A government department engages ABC Business Writing Consultants to deliver a course titled 'Business Writing for the New Millennium' to their staff. ABC Business Writing Consultants is a registered training organisation and they are registered to deliver a number of vocational education and training programmes that focus on business writing skills.

178. The course delivered by ABC Business Writing Consultants is an accredited course that is covered by the Education Minister's determination. The course is slightly modified to suit the needs of the government agency, but the course retains its accredited status and is not subject to GST.

Accordingly, where you are contracted by employers to provide any of these courses to their employees, the supply of the course is GST-free as long as the course retains its accredited status.

Summary

Your supply of training courses is a GST-free supply of education courses under section 38-85 of the GST Act. Hence, GST is not payable on the supply.

Further, where you are contracted by employers to supply any of these courses to their employees, the supply of the course is GST-free under section 38-85 of the GST Act as long as the course retains its accredited status.

Copyright notice

© Australian Taxation Office for the Commonwealth of Australia

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).