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Ruling

Subject: GST and enterprise

Question 1

Is the supply of the accredited education course that is an essential prerequisite for membership entry into the specific profession, a GST-free supply under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes. The supply of the accredited education course that is an essential prerequisite for membership entry into the specific profession, is a GST-free supply under section 38-85 of the GST Act.

Question 2

Is the supply of the non-accredited education course that is an essential prerequisite for membership entry into the specific profession, a GST-free supply under section 38-85 of the GST Act?

Answer

No. The supply of the non-accredited education course that is an essential prerequisite for membership entry into the specific profession, is not a GST-free supply under section 38-85 of the GST Act. GST will be payable on your supplies of the non-accredited education courses where all of the requirements of section 9-5 of the GST Act are satisfied.

Question 3

Is the supply of an ongoing non-accredited training course for Continuing Personal Development (CPD), a GST-free supply under section 38-85 of the GST Act?

Answer

No. The supply of an ongoing non-accredited training course for CPD, is not a GST-free supply under section 38-85 of the GST Act. GST will be payable on your supplies of CPD courses where all of the requirements of section 9-5 of the GST Act are satisfied.

This ruling applies for the following periods:

1 January 2012 to 31 December 2012

Relevant facts and circumstances

You are registered for GST.

You are a Non-Profit Organisation (NPO).

You are a Registered Trade Organisation (RTO).

You provide prerequisite non-government accredited qualification courses that are an essential requirement for entry to the association.

From late 2013 onwards, you will provide prerequisite accredited Diploma qualification entry course to new members to replace the previous non accredited qualification.

All independent registered valuers are required to be members of the association.

All members of the association are provided with a membership certificate.

There are no penalties or sanctions if a person enters into or commences the specific profession without being a member of the association.

You provide ongoing educational CPD courses for your existing members.

The CPD courses will not result in the issue of qualifications.

You charge fees for your courses.

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 section 38-85

A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Student Assistance (Education Institutions and Courses) Determination 2009 (No.2) Schedule 2

Reasons for decision

Question 1

Summary

The supply of the accredited education course that is an essential prerequisite for membership entry the specific profession, is a GST-free supply under section 38-85 of the GST Act.

Detailed reasoning

The term 'education course' is defined in section 195 of the GST Act. That definition includes a number of different courses, and includes, amongst other things, a tertiary course.

One definition of tertiary course in section 195-1 of the GST Act is a course of study or instruction that is a tertiary course determined by the Education Minister under subsection 5D(1) of the Student Assistance Act 1973.

Schedule 2 of the Student Assistance (Education Institutions and Courses) Determination 2009 (No.2) (Determination 2009/2) provides that an accredited vocational and educational training program (VET) conducted by a registered training organisation (RTO) is a tertiary course. The Determination also provides that an entity is only considered to be an RTO when it provides courses, competencies and qualifications within its scope of registration.

Paragraph 4 of Determination 2009/2 gives the definition of a registered training organisation as follows:

An organisation that is registered by the relevant State or Territory training recognition authority in accordance with the Australian Quality Training Framework to provide one or more vocational education and training programmes.

A vocational and education training program is defined in paragraph 4 of the Determination 2009/2 as:

A Course that leads to an award of an AQF qualification or a Statement of Attainment, and the course must be:

· an accredited vocational education and training course; or

· a sequence of training consisting of one or more subjects or modules where each subject or module is from an accredited vocational education and training course; or

· a structured approach to the development and attainment of competencies for a particular AQF qualification specified in an endorsed training package.

Consequently, for the purposes of the GST Act, a VET program delivered by an RTO would be a tertiary course.

In your case, you are an RTO and will be delivering an accredited education course. Therefore, the courses you deliver are within the scope of your registration as an RTO. We are satisfied that the accredited education courses you provide are tertiary courses which satisfy the requirements of Schedule 2 of the Determination No 2009/2.

Accordingly, the supply of your accredited education courses is GST-free in accordance with section 38-85 of the GST Act. Any fees that are charged for tuition, facilities and other curriculum related activities associated with these courses are not subject to GST as paragraph 38-85(b) of the GST Act allows for the GST free supply of administrative services directly related to the supply of an education course, supplied by the supplier of the course.

Question 2

Summary

The supply of the non-accredited education course that is an essential prerequisite for membership entry into the specific profession, is not a GST-free supply under section 38-85 of the GST Act. GST will be payable on your supplies of the non-accredited education courses where all of the requirements of section 9-5 of the GST Act are satisfied.

Detailed reasoning

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 and consists of a number of different courses.

Tertiary Course

The non-accredited education course will not be considered a tertiary course under section 195-1 of the GST Act as it is not a course that leads to an award of a qualification or a Statement of Attainment.

Professional or Trade Course

The prerequisite membership entry qualification education courses you supply have been considered under the category of a professional or trade course.

To be GST-free as a professional or trade course, a course must:

· lead to a qualification; and

· that qualification must be an essential prerequisite for entry to, or to commence the practice of a profession or trade in Australia

First requirement

The courses supplied by you must lead to a qualification, for example a certificate, diploma, membership or fellowship. For the course to lead to a qualification, there must be a direct nexus between the course and the qualification.

In your case, the non-accredited education course leads to a qualification for membership entry into the specific association. Members of the association are provided with a membership certificate.

Therefore the first requirement is satisfied as the course leads to a qualification.

Second requirement

Paragraph 9 of the GSTR 2003/1 explains that a qualification is an essential prerequisite if it is mandatory for a person to have the qualification before he or she 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 qualifications. 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.

In your case, all independent registered valuers are required to be members of the specific association. However, under the current Australian consumer law, anyone can produce a valuation. As there are no penalties or sanctions for a person who produces a valuation without being a member of the specific association, the second requirement is not satisfied.

The non-accredited entry course supplied by you does not lead to a qualification that is an essential prerequisite for entry to, or to commence the practice of a particular profession or trade. The non-accredited entry courses supplied by you are not GST-free as a professional or trade education course.

These courses would not be GST-free under any other provision of the law. GST will be payable on your supplies of the non-accredited education courses where all of the requirements of section 9-5 of the GST Act are satisfied.

Question 3

Summary

The supply of an ongoing non-accredited training course for Continuing Personal Development (CPD), is not a GST-free supply under section 38-85 of the GST Act. GST will be payable on your supplies of the CPD courses where all of the requirements of section 9-5 of the GST Act are satisfied.

Detailed reasoning

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 and consists of a number of different courses.

Tertiary courses

Your CPD courses will not be within the scope of your RTO registration. These courses are not tertiary courses as it is not a course that leads to an award of a qualification or a Statement of Attainment. Therefore, your CPD courses are not tertiary courses.

Professional or trade courses

Professional or trade course is defined in section 195-1 of the GST Act to mean a course leading to a qualification that is an essential prerequisite:

· for entry to a 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.

Paragraph 98 and 99 of the Goods and Services Tax Ruling GSTR 2003/1 (GSTR 2003/1) states:

"The exclusion in paragraph (b) of the definition of a professional or trade course in section 195-1 ensures that a course which leads to a qualification that is an essential prerequisite to maintaining the practice of a profession or trade, is not a professional or trade course.

Maintaining the practice of a profession or trade includes such things as:

· undertaking continuing professional development,

· re-licensing,

· re-accreditation,

· renewal of annual practising certificates, and

· refresher courses."

Your CPD courses will not lead to qualifications that are essential prerequisites for entry to a particular profession or trade in Australia or to commence the practice of a profession or trade in Australia. Therefore, your CPD courses will not be professional or trade courses as defined in the GST Act.

Your CPD courses will not be any other type of education course as defined in the GST Act.

Therefore, your supplies of the CPD courses will not be GST-free under section 38-85 of the GST Act. GST will be payable on your supplies of the CPD courses where all of the requirements of section 9-5 of the GST Act are satisfied.

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