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Ruling

Subject: GST and supply of a right to receive a supply of GST-free education

Questions

Is the supply made by you (the licensee) to a client to attend a GST-free education course a GST-free supply under paragraph 9-30(1)(b) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Is the supply of services by the licensee to the Registered Training Organisation (RTO) a taxable supply where there is no separately identifiable consideration provided by the RTO for these services?

Advice

Yes, the supply made by the licensee to a client to attend a GST-free education course is a GST-free supply under paragraph 9-30(1)(b) of the GST Act.

No, the supply of services by the licensee to the RTO is not a taxable supply where there is no separately identifiable consideration provided by the RTO for these services.

Relevant facts

You are an Australian company and registered for the goods and services tax (GST).

You have entered into a licensee agreement (Agreement) with a Registered Training Organisation (RTO). When you as a licensee is signed up by the RTO, the agreement grants you the right and authority to market, promote, sell, deliver, facilitate and service the GST-free courses which are accredited to the RTO.

You market the RTO's courses to various entities who will enrol through you to attend various courses.

The enrolment process is conducted on-line, usually by you, but sometimes by the client. It involves logging onto the RTO's website and inputting the details of each participant into the RTO's database.

When a course is confirmed, participants are advised of the course dates, location, and so on, and an invoice is issued to the client under your name. The invoice is for the supply of a right to receive the course which is supplied by the RTO.

Depending on how and where the courses are being run, you or the RTO may contract with facilitators, coaches, and so on, for the provision of services relating to the supply of the courses. Invoices for these services will be inclusive of GST where the supplier is registered for GST.

For each course conducted, the RTO charges you a set percentage of the amount invoiced by you. This percentage is GST-inclusive and represents the supply by the RTO of the rights under the license.

There may be additional charges for further supplies made by the RTO to you in relation to the supply of the course, for example handouts, venues and facilitators.

The balance of the moneys paid by the clients to you represents the profit on your supply.

Regardless of the level of marketing undertaken by you to sign up clients, there is no consideration received from the RTO for this activity. It is considered to be part of your business activities. Whilst there are other supplies made by you to the RTO, there is no separately identifiable consideration for such supplies.

If you participate actively in the provision of the courses to the clients (for example. facilitation, coaching and so on), there is no consideration received from the RTO for this activity.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 9-5;

A New Tax System (Goods and Services Tax) Act 1999 Paragraph 9-30(1)(b);

A New Tax System (Goods and Services Tax) Act 1999 Section 38-45.

Reasons for decisions

Question 1

Paragraph 9-30(1)(b) of the GST Act provides that a supply of a right to receive a supply that is a GST-free under Subdivision 38-C of the GST Act is also a GST-free supply. There is no requirement that the right and the actual supply are made by the same entity.

From the facts given, when you, the Licensee, acts within the Agreement, the supply you make to the students (participants/clients) is a supply of a right to participate in an accredited GST-free education course to be provided by the RTO.

Accordingly, when you, the licensee, supply a client with the right to receive an accredited GST-free education course from the RTO, your supply to the client is GST-free under paragraph 9-30(1)(b) of the GST Act.

Question 2

Section 9-5 of the GST Act provides that an entity is making a taxable supply when all of the following requirements are met:

As the RTO does not provide you, the Licensee, with any consideration for the services, one of the above requirements is not met and therefore you, the Licensee, do not make taxable supplies to the RTO in relation to the services.

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