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Ruling

Subject: GST and education course

Question 1

Is the short course to be offered by you a GST-free course under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act) as a 'preparatory course' per the Student Assistance (Education Institution & Courses) Determination 2009 (No 2) made by the Minister of Education?

Answer

Yes

Relevant facts and circumstances

· You are a tertiary education institution in Australia, established by a State Act.

· You are registered for goods and services tax (GST).

· You will be conducting a short course (the course). This course has the express aim of 'smoothing the transition to University studies for student about to commencea particular undergraduate program.

· This short course is a four-day bridging or preparatory course designed to help all incoming Science students. However, there is a particular focus on those incoming students with little or no background in the course content. The course provides 'foundation' knowledge to assist in understanding the course material the student will be studying as part of their university degree.

· You have provided that:

· The persons who most likely to benefit most are:

· school leavers who have not studied science subjects in year 12

· mature age students

· persons anxious about studying science subjects.

· Topic covered include:

· study skills

· body organisation/homeostasis

· medical terminology

· essential biology/chemistry/physics

· essential physiological concepts

· body system, how they work and interact with each other.

· Practical sessions: students will have two afternoons in the laboratory doing practicals including clinical measurement.

· The course is not accredited and assessment is informal only.

· Lunches will be provided for each of the four-day workshop.

You have further provided that:

· The food to be provided will be Subway Sandwiches (or similar) for first 3 days and Dominos Pizza for the last day. Drinks: water and soft drinks.

· Morning tea will not be provided - this is simply a break in the teaching schedule.  Students will be able to pay to obtain refreshments from nearby on-campus vendors (not included in price of workshop).

· Reasons for providing food:

· Having a group lunch helps facilitate networking amongst students in their own discipline as well as cross-disciplinary networking. It also enables students to meet and get to know their academics who will be involved in their course (program directors/course coordinators), and ask any questions that they may have on their upcoming course, in a relaxed, social environment. The lunch is provided on-campus in the foyer of the lecture theatre.

· The food is pre-ordered with vegetarian and non-vegetarian selections. There is no menu for food selection.

· A student cannot receive a refund/discount if they do not want the food and have the meal somewhere else. The lunch is included in the price of the course. 

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999

Section 9-5

Section 9-80

Division 38

Subdivision 38-C

Section 38-85

Division 40

Reasons for decision

In return for a monetary payment, you make a supply of two distinct things to a student: the course and the food provided at lunches during the breaks of the four-day course.

We will consider the GST status of the supply of the two things.

Whether the supply is a mixed supply or composite supply.

A mixed supply is a single transaction that contains separately identifiable taxable and non-taxable parts. We need to consider whether each of the supplies is sufficient enough in its own right to be regarded as separately identifiable parts and not as integral, ancillary or incidental to each other.

· For a mixed supply each separate part of the supply must be treated, for GST purposes, as an independent supply and the single consideration apportioned between the various supplies (if they have different GST-status). If a supply is partly taxable and partly GST-free, or partly taxable and partly input taxed, the value of the taxable supply is worked out on a proportional value basis. Section 9-80 of the GST Act provides that "the value of the part of the actual supply that is a taxable supply is the proportion of the value of the actual supply that the taxable supply represents".

· If an entity makes a supply that contains a dominant part and the supply includes something that is integral, ancillary or incidental to that part, then the supply is a composite supply. A composite supply is treated as a supply of a single thing. A composite supply is either taxable or non-taxable, determined by the tax treatment of the dominant part.

Goods and Services Tax ruling GSTR 2001/8 provides the Commissioner's views for differentiating between mixed and composite supplies it describes the characteristics of a supply that contains taxable and non-taxable parts. It refers to such a supply as a 'mixed supply'. This Ruling also describes the characteristics of a supply that appears to have more than one part but is essentially a supply of one thing. This type of supply is referred to as a 'composite supply'.

Paragraph 19 of GSTR 2001/8 provides that where a transaction comprises a bundle of features and acts, all the transaction's circumstances must be considered to ascertain its essential character. A mixed supply has separately identifiable parts that the GST Act treats as taxable and non-taxable, and these parts are not just integral, ancillary or incidental in relation to the whole supply. Whether a particular part is integral, ancillary or incidental in relation to the whole supply is a question of fact and degree.

With a mixed supply, each separate part of the supply must be treated, for GST purposes, as an independent supply and the single consideration apportioned between the various supplies. If a supply is partly taxable and partly GST-free, or partly taxable and partly input taxed, the value of the taxable supply is worked out on a proportional value basis. Section 9-80 of the GST Act provides that "the value of the part of the actual supply that is a taxable supply is the proportion of the value of the actual supply that the taxable supply represents".

In your circumstances, you provide a supply of a short course to assist students with course foundation knowledge for their award course and also provide food at the lunch breaks of the course.

You advise that the reasons for providing food are:

· Having a group lunch helps facilitate networking amongst students in their own discipline as well as cross-disciplinary networking. It also enables students to meet and get to know their academics who will be involved in their course (program directors/course coordinators), and ask any questions that they may have on their upcoming course, in a relaxed, social environment. The lunch is provided on-campus in the foyer of the lecture theatre.

· The food to be provided will be sandwiches for first 3 days and Pizza for the last day. Drinks: water and soft drinks.

· The food is pre-ordered with vegetarian and non-vegetarian selections. There is no menu for food selection.

· Morning tea will not be provided - this is simply a break in the teaching schedule.  Students will be able to pay to obtain refreshments from nearby on-campus vendors (not included in price of workshop).

· A student cannot receive a refund/discount if they do not want the food and have the meal somewhere else. The lunch is included in the price of the course. 

The provision of food at lunch break is not focused or emphasised as a part of the supply and is not significant. The focus is to create a networking where the students and teaching staff can interact. It is also noted that no refund will be provided if a student does not want the food.

It is considered that the provision of the course is dominant part of the supply and is the reason of the supply. The provision of food is a subordinate part that compliments the dominant part of the supply.

Therefore, the supply of short course is treated as a composite supply, one supply that includes the provision of food during lunch breaks.

We will consider next whether the supply of the short course is subject to GST.

The supply of the short course

Under section 9-5 of the GST Act the supply of the course is subject to GST if all of the requirements of the section are met. This section sets out the requirements:

· the supply is made for consideration,

· the supply is made in the course or furtherance of an enterprise that you carries on,

· the supply is connected with Australia,

· you are registered or required to be registered for GST, and

· the supply is not GST-free or input taxed

In your circumstances:

· the course is provided for monetary consideration, a fee

· the supply of the course is made in the course or furtherance of your enterprise of providing education courses

· the supply is connected with Australia because it is provided in Australia

· You are registered for GST

· the course is not input taxed under division 40 of the GST Act or any other Act.

Hence, the supply of course will not be a taxable supply to the extent that the supply is GST-free under Division 38 of the GST Act.

Subdivision 38-C of the GST Act deals with education. Section 38-85 relates specifically to education courses and states the following:

38-85 Education courses

A supply is GST-free if it is a supply of:

(a) an *education course; or

(b) administrative services directly related to the supply of such a course, but only if they are supplied by the supplier of the course.

Note the * denotes a defined term within the GST Act.

Division 195-1 of the GST Act defines education course which includes a secondary course.

The Minister for Education has made the Student Assistance (Education Institutions and courses) Determination No. 2009 (No 2) ('Determination 2009/2) under subsections 3(1) and 5D(1) of the Student Assistance Act 1973) that commenced on 20 November 2009. The determination states, at section 9 that a course specified in Column 1 of Schedule 1 and conducted by an education institution specified for that course in Column 2 of Schedule 1 is a secondary course and therefore the supply is GST-free under subsection 38-35(a) of the GST Act.

The following definitions are included in the Determination No. 2009/2:

4. Definitions

In this Determination

preparatory course means:

(a) an accredited vocational education and training course that provides remedial education or involves preparatory activities to enable participation in subsequent education or social settings, and is of a type that aims to achieve basic skills and standards or to prepare students for further education; or

(b) a course offered by a higher education institution that is designed to assist people to gain entry to higher education level courses (including enabling and bridging courses).

5. Higher education institutions

(a) an institution that is established by a law of the Commonwealth, a State or a Territory as a higher education institution;

(b) an institution registered by the relevant State or Territory higher education recognition authority as a higher education institution.

Determination No. 2009/2 provides that a preparatory course, conducted by a secondary school, a registered training organisation, a higher education institution or a special school will be GST-free.

Of relevance to your circumstances is paragraph (b) of the definition of the term 'Preparatory course' in the Determination 2009/2.

· a course offered by a higher education institution

The 'Preparing for Science Workshop' is a short course offered by you. You are an institution established by a State Act and therefore is a higher education institution as defined by the Determination 2009/2.

a course designed to assist people to gain entry to higher education level courses (including enabling and bridging courses).

The term 'Enabling course' is defined in Glossary of the Department of Education's Higher Education Management Information System (HEIMS) as follows:

A course of instruction that enables a person to undertake a course leading to a higher education award. Enabling courses do not include a course leading to a higher education award or any course that the Minister determines is not an enabling course under the Act HESA Schedule 1.

You have provided that the aim of the course is designed to help all incoming course students. However, there is a particular focus on those incoming students with little or no background in the content of the course studies. The course provides 'foundation' knowledge to assist in understanding the course material the student will be studying as part of their university degree.

The course meets the criteria to be an Enabling course as the course of instruction is to assist students undertake a course, a higher education course award and the course itself is not leading to a higher education award.

In conclusion, the provision of the short course is a supply of a preparatory course and is GST-free under section 38-85 of the GST Act.

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