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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of your private ruling

Authorisation Number: 1012477316615

Ruling

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

Question 1

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

Answer

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

Question 2

Is the supply of marketing and teaching services by the licensee to the licensor a taxable supply where there is no separately identifiable consideration provided by the licensor for these services?

Answer

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

This ruling applies for the following periods:

Not applicable

The scheme commences on:

Not applicable

Relevant facts and circumstances

The licensee is registered for goods and services tax (GST)

Licensee entered into a licensee agreement (Agreement) with the licensor, a Registered Training Organisation.

The Agreement authorises the licensee to market, promote, sell, deliver, facilitate and service the products developed by the licensor.

The licensee markets the licensor's courses to various entities or clients (usually bodies corporate or government entities) who will enrol, through the licensee, any number of their staff as appropriate to attend various courses.

The licensee makes an upfront payment which covers the initial supply of various training materials and services which enables the licensee to commence operation. GST is charged on all components of this supply except for the GST-free supply of training provided by the licensor to the licensee.

Where GST is charged, the licensee is entitled to input tax credits.

The licensee has given written authority to the licensor to seek a GST private ruling on their behalf in regard to the supplies to be made under the Agreement. Consequently, the licensor's tax agent has applied for a GST private ruling for the licensee.

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 paragraph 9-30(1)(b).

Reasons for decision

Question 1

Paragraphs 9.30(1)(b) of the GST Act provides that a supply of a right to receive a supply that is GST-free under Division 38 of the GST Act is also a GST-free supply. There is no requirement that the supply of right and the actual supply are made by the same entity.

From the facts given, when the licensee, acts within the Agreement, the supply they 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 licensor.

Accordingly, when the licensee supplies a client with the right to receive an accredited GST-free education course from the licensor, the licensee's 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 makes a taxable supply if all of the following requirements are met:

In this case, the licensor does not provide the licensee with any consideration for the supply of marketing and teaching services provided by the licensee under the agreement. The supply does not satisfy one of the requirements of a taxable supply under section 9-5 of the GST Act.

Therefore, the licensee does not make taxable supplies to the licensor in relation to the supply of marketing and teaching services.


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