Edited version of your private ruling

Authorisation Number: 1012533530984

Ruling

Subject: GST and supplies of training courses

Question you have asked:

Are your supplies of the following information technology and business analysis training courses GST-free:

· A courses,

· B courses,

· C courses,

· D courses,

· E courses and

· F courses?

Answer

No. Your supplies of the following information technology and business analysis training courses are not GST-free education courses under section 38-85 the A New Tax System (Goods and Service Tax) Act 1999 (GST Act):

· A courses,

· B courses,

· C courses,

· D courses,

· E courses and

· F courses.

Your supplies of these courses are taxable supplies under section 9-5 of the GST Act.

Relevant facts and circumstances

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

You provide a range of information technology (X) training courses in Australia. You also provide a business analysis training course (all the courses will be referred together as 'X training courses' in this ruling). You offer a range of interactive classroom based, instructor led, hands-on computer and X training courses.

The X training courses are always delivered through an instructor and you provide ongoing support and guidance throughout the course. The training is held in sessions and before commencement the instructor asks the participants/individuals if they have any questions. The questions are answered before beginning to the next session. The instructor keeps track of the individual's progress and you also offer mock tests which allow monitoring of the participants/individuals throughout the course. The instructor provides feedback on the individual's progress.

You provide course completion certificates and on passing the vendor's assessment exam the individual achieves the certification which signifies he/she has satisfactory completed the certification. The vendors (e.g. A, B, C etc) are responsible for issuing the assessments and qualifications. The training is conducted by your qualified instructors as per the guidelines of the certifying vendors.

You are not a Registered Training Organisation (RTO).

You provide the following IT training courses:

· A courses,

· B courses,

· C courses,

· D courses,

· E courses and

· F courses.

A courses: The Foundation level is the entry level qualification which offers candidates a general awareness of the key elements, concepts and terminology used in the X service lifecycle, the processes used and their contribution to service management practices. Upon successful completion of the education and examination components related to this qualification, candidates can expect to gain a general overview, and basic knowledge and understanding of X.

B courses: The Associate level begins directly for network installation, operations and troubleshooting or network design. The Associate level is the foundation level of networking certification. The Professional level is an advanced level of certification that shows more expertise with networking skills. Each certification covers a different technology to meet the needs of varying job roles. The certification is accepted worldwide as the most prestigious networking certification in the industry.

C courses: This product certification provides career readiness in the X industry by developing essential skills that open up numerous opportunities. It provides computer certification for certain products, courses, and exams.

D courses: This product certification is the starting point for a career in X. They include certifications for computer technicians, network technicians, and security technicians.

E courses: The Foundation level qualification is aimed at professionals who need to demonstrate practical knowledge of the fundamental concepts of software testing. This includes people in roles such as test designers, test analysts, test engineers, test consultants, test managers, user acceptance testers and X Professionals. The Foundation level qualification is also appropriate for anyone who needs a basic understanding of software testing, such as project managers, quality managers, software development managers, business analysts, X directors and management consultants.

F courses: Business analysts provide unique, investigative insights to business needs and problems. It is intended for people planning a career in business analysis or management by developing analytical skills that are consistently in high demand.

The courses are provided to general public with or without prior X experience. Anyone with any previous background can do these courses and start an X career.

The certifications are accepted by the Australian Computer Society (ACS). The courses are accepted by the ACS as comparable to graduate outcomes of an ICT major at the AQF Diploma level. These certifications are listed on the Skilled Occupation List (SOL).

You submit that if the individual wants to change his profession to X, he/she is normally expected to do the vendor's certifications in order to get a job in various fields in X.

You state that X is very critical for any organisation and hence it will be difficult for someone to find a job in X without these certifications or any other X courses. X is a vast field and people can always come back to do other courses to improve their skills. However, you are not aware of any penalties or sanctions imposed on the person/entity without these certifications, under any legislation or by a professional or trade association.

You advise that sometimes the courses can be done by people who are already in a trade or profession in order to perform additional duties in the X profession. Sometimes the courses can be done by people already in a trade or profession in order to continue working in that trade or profession.

There are more than one body that may impose membership requirements for entry into their association or for the commencement of, or the practice of, the trade or profession.

You state that sometimes the courses can be provided to an employee at the request of his/her employer or to a member of an organisation at the request of that organisation.

The courses are likely to add to the employment related skills of people undertaking the courses. Further, the courses are available to adults in the general community.

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

Reasons for decision

GST is payable on a taxable supply. Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states:

You make a taxable supply if:

(a) you make the supply for *consideration; and

(b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and

(c) the supply is *connected with Australia; and

(d) you are *registered or *required to be registered.

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

(*denotes a defined term in section 195-1 of the GST Act)

Your supplies of X training courses to the participants/individuals in Australia will be taxable if all the requirements in section 9-5 of the GST Act are satisfied.

From the facts given, the supplies of X training courses by you to the participants/individuals in Australia satisfy paragraphs 9-5(a) to 9-5(d) of the GST Act, as follows:

(a) you make the supplies of X training courses in return for consideration by way of payments;

(b) you make the supply in the course of your business;

(c) the services (courses) are performed/provided in Australia or made through an enterprise that you carry on in Australia (and therefore the supply is connected with Australia); and

(d) you are registered for GST in Australia.

However, section 9-5 of the GST Act also provides that the supply is not taxable to the extent that it is GST-free or input taxed.

Your supplies of X training courses to the participants/individuals in Australia do not satisfy the input taxed provisions under the GST Act. The GST-free provisions are taken into consideration.

GST-free

A supply of an education course is GST-free under section 38-85 of the GST Act. An education course is defined in section 195-1 of the GST Act to include among other things;

· a tertiary course;

· an adult and community education (ACE) course; and

· a professional or trade course.

Each of the above courses is further defined under section 195-1 of the GST Act.

Tertiary course

Goods and Services Tax Ruling GSTR 2001/1 discusses supplies that are GST-free tertiary courses.

A tertiary course is defined in the GST Act to be a course that is determined by the Education Minister to be a tertiary course for the purposes of the Student Assistance Act 1973. A tertiary course can also be GST-free if the course is determined by the Education Minister to be a tertiary course for the purposes of the GST Act.

Schedule 2 of the Student Assistance Act 1973 Determination No. 2002/1 (Determination No. 2002/1) specifies a range of courses that are tertiary courses and the type of education institution that can provide those courses. The relevant institutions are an RTO, Secondary School or a Higher Education Institution.

As you are not an RTO or one of the other institutions, your courses do not satisfy the definition of a tertiary course as set out in Determination No. 2002/1. Accordingly, your X training courses are not GST-free tertiary education courses.

Adult and Community Education (ACE) courses

To be GST-free as an ACE course for the purposes of section 38-85 of the GST Act and section 195-1 of the definition of an ACE course, a course must be:

(a) likely to add to the employment related skills of people undertaking the course; and

(b) of a kind determined by the Education Minister to be an adult and community education course; and

(c) provided by, or on behalf of, a body that is a higher education institution, recognised or funded by the State or Territory authority as a provider of ACE courses or a body corporate operating on a not-for-profit basis (that has not been refused registration, or disqualified as a provider of ACE courses).

First requirement

Goods and Services Tax Ruling GSTR 2000/27, discusses the meaning of 'likely to add to employment related skills'. The test as to whether an adult and community education course is likely to add to the employment related skills of people undertaking the course is an objective test and not dependent on the subjective intention of the providers of the course or the recipients.

We believe that the courses provided by you are likely to add to the employment related skills of the people undertaking them.

Second requirement

To satisfy the definition of an ACE course the course must also meet the requirements of the Education Minister's Determination A New Tax System (Goods and Services Tax)(Adult and Community Education Courses) Determination 2000 (ACE Determination). At paragraph 5(2) of this Determination, the Education Minister states that an adult and community education course must:

(a) not be any other education course defined in section 195-1 of the Act; and

(b) be available to adults in the general community; and

(c) not be provided by or at the request of an employer to employees of that employer; and

(d) not be provided by or at the request of an organisation to members of that organisation, except an organisation for which membership is open to adults in the general community; and

(e) not be a course that is provided by way of private tuition to an individual.

Based on the information given, with the exception of any courses that you will supply to an employee at the request of an employer or supplied by way of private tuition to an individual, your courses satisfy the criteria outlined above.

Third requirement

Finally, the course must be provided by, or on behalf of, a body that is a higher education institution, or recognised or funded as a provider of ACE courses, or a body corporate operating on a not-for-profit basis that has not been refused recognition or disqualified by a State or Territory authority as provider of ACE courses for failing to meet or maintain the standards required by that authority.

The facts provided indicates that you are not a higher education institution, and are not recognised or funded as a provider of ACE courses, nor are you a body corporate operating on a not-for-profit basis. Therefore, you do not satisfy the third requirement and as such the courses fail to satisfy the definition of an ACE course.

Professional or Trade Course

To be GST-free as a professional or trade course under section 38-85 of the GST Act, a course must:

· leads to a qualification, and

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

Goods and Services Tax Ruling GSTR 2003/1 discusses what supplies are GST-free as a professional or trade course.

First requirement: leading to a qualification

Paragraph 45 of GSTR 2003/1 identifies documents that are qualifications or that provide evidence of a qualification. These include a statement of satisfactory completion, a certificate (including a degree or diploma), a licence or an accreditation. This requirement will be satisfied where such a document is awarded to the participants undertaking your course upon successful completion of all of the units or modules that make up your course.

You advise that the people undertaking all your courses are issued with the relevant certificate of completion or documentation that certifies that they have undertaken and successfully completed the courses. It is therefore accepted that all your courses lead to a qualification and have satisfied the first requirement.

Second requirement: qualification to be an essential prerequisite

We need to determine whether the X training courses provided by you satisfy the second requirement which is the qualification must be an 'essential prerequisite'.

Paragraph 46 of GSTR 2003/1 states that your course will be only be a professional or trade course if it leads to a qualification that is an essential prerequisite for entry to, or to commence the practice of, a particular profession or trade.

Under the section 195-1 of the GST Act definition of 'essential prerequisite', the qualification must be imposed:

(i) by or under an industrial instrument;

(ii) if there is no industrial instrument, by a professional or trade association that operates on a national level; or

(iii) if neither (i) nor (ii) applies, by a professional or trade association that operates at a State or Territory level.

An 'industrial instrument' means:

(a) an Australian law; or

(b) an award, order, determination or industrial agreement in force under an Australian law.'

An 'Australian law' means 'a Commonwealth law, a State law or a Territory law'.

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 or Territory basis.

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.

A qualification that is imposed for reasons other than for entry to, or to commence the practice of, a profession or trade, is not an essential prerequisite for the purposes of a professional or trade course. Similarly, 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.

A qualification that is an essential can be imposed by only one profession or trade association at the national level or State or Territory (as applicable).

In relation to the 'ability of a professional or trade association to impose a qualification', paragraphs 59 to 61 of GSTR 2003/1 state:

59. A professional or trade association's ability to impose membership requirements is not conclusive evidence of that association's ability to impose a qualification that is an essential prerequisite.

60. If more than one professional or trade association, either at the national level or for a particular State or Territory, has requirements relating to the entry to, or the commencement of the practice of, the profession or trade concerned, no qualification, set by any of the associations as a requirement for entry or commencement, would be an 'essential prerequisite'. None of the associations can prevent someone entering that profession or trade through one of the other associations.

61. The capacity of a professional or trade association to impose a qualification would require some threat of legal sanction or penalty.

In relation to a 'particular' profession or trade' paragraphs 65 to 67 of GSTR 2003/1 state:

65. The reference in paragraph (a) of the definition of a 'professional or trade course' and in the definition of 'essential prerequisite', in section 195-1, to a 'particular profession or trade' establishes a requirement that the qualification be specific to the profession or trade in question.

66. Qualifications that are general in nature and that relate to the entry to, or the commencement of the practice of, a number of professions or trades, are not essential prerequisites for entry to, or to commence the practice of, a particular profession or trade.

67. Courses that you supply for general knowledge, or for personal development, would not ordinarily be professional or trade courses. This is because they lack a sufficiently direct link between the qualification they lead to and the requirement that the qualification be for entry to, or to commence the practice of, a particular profession or trade.

Further paragraphs 96 and 98 of GSTR 2003/1 cover the ATO's views in relation to a 'course that provides additional skills' and 'maintaining the practice of a profession or trade':

96. There are numerous industrial instruments that require a person to obtain approval or certification before a particular task or duty in an occupation can be undertaken. The fact that there is such a requirement does not necessarily mean that the particular task or duty is a separate profession or trade. If the qualification merely relates to the undertaking of a duty or task in a profession or trade, a course leading to that qualification is not a professional or trade course. The qualification is not an essential prerequisite.

98. 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.

In accordance with GSTR 2003/1 outlined above and the facts provided, we do not consider that your supply of the X courses are qualifications which are essential prerequisite for entry to, or to commence the practice of, the X profession or trade for the purposes of section 38-85 of the GST Act for the following reasons:

· There is no legal requirement, for example a law, regulation or industrial agreement, either nationally or at a State or Territory level to complete your X training courses in order to enter, or commence the practice of, the X profession.

· You are not aware of any penalties or sanctions imposed under any legislation or by a professional or trade association on a person/entity without the certifications from your X courses from entering or commencing the X profession or trade;

· There may be more than one body (professional or trade association) which may impose membership requirements for entry into their association. None of the associations can prevent someone entering that profession or trade through one of the other associations.

· Your X training courses do not lead to a qualification which relates to a particular profession or trade. Further any courses which are for general knowledge or for personal development would not be professional or trade courses. Whilst beneficial to a participant's employment, it is not required by an industrial instrument or profession or trade association to gain entry or commence the practice of a particular profession or trade. The fact is a person might be employed in the X industry without having completed these courses.

· Your X training courses can be done by people who are already in a trade or profession (or a different trade or profession) in order to perform additional duties. If a qualification merely relates to the undertaking of a duty or task in a profession or trade, the courses/qualifications are not essential prerequisites.

Accordingly, as your X training courses do not satisfy the second requirement of a professional or trade course, the supply of your X training courses are not GST-free.

Conclusion

The supplies of your X training courses to participants/individuals in Australia do not satisfy the requirements of GST-free education courses under section 38-85 of the GST Act and are not
GST-free. Furthermore, the supplies of your X training courses to participants/individuals in Australia do not satisfy any other GST-free provisions.

Therefore, your supplies of the X training courses (as listed) to participants/individuals in Australia are taxable supplies under section 9-5 of the GST Act and are subject to GST.

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