Edited version of private advice

Authorisation Number: 1012676962059

Ruling

Subject: GST and education course

Question 1

Is the entity making a GST-free supply under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when it supplies a number of specified courses?

Answer

The supplies of some of the specified courses are GST-free supplies.

The supplies of some of the specified courses are taxable supplies.

Question 2

Is the entity making a GST-free supply under any other provision of the GST Act when it supplies any of the specified courses?

Answer

No.

Relevant facts and circumstances

The entity has been registered for GST since a specified date. The entity is an income tax exempt charitable entity and a gift deductable recipient. The entity is also registered with the Australian Charities and Not-for-profits Commission.

The entity has been approved by the Education Minister as a higher education provider under section 16-1 of the Higher Education Support Act 2003.

The entity is actively involved in the development and conduct of courses which are compliant with the requirements of the Australian Qualifications Framework (AQF). The Tertiary Education Quality and Standards Agency (TEQSA), has registered the entity as a higher education provider.

Most courses conducted by the entity have the requisite accreditations however the specified courses which are closely relevant to the coursework offered by the entity under its study program do not currently have accreditation at the Ministerial level.

Some of the specified courses are designed to assist people to gain entry to higher education level courses, to be used as bridging courses in the entity's higher education courses.

Some of the specified courses that are not preparatory/bridging courses are not any other type of education course as defined in section 195-1 of the GST Act.

The specified courses are not provided by or at the request of an employer to the employees of that employer and are not provided by or at the request of an organisation to the members of that organisation. Further the courses are not provided by way of private tuition to an individual. People who take the specified courses could eventually be employed in certain specified occupations.

Some of the specified courses do not have any entry criteria and are available to adults in the general community. However, there are prerequisites such as a particular qualification, or a particular amount of experience required for entry into some of the other specified courses.

The entity is not recognised or funded by a State or Territory authority on the basis that it is a provider of ACE courses.

The entity is a body corporate that operates on a not-for-profit basis. The entity has not been refused recognition, or disqualified, by a State or Territory authority as a provider of ACE courses on the basis of failing to meet or maintain the standards required by that authority.

The entity is not supplying the specified courses for consideration that is less than:

• 50% of the GST inclusive market value of the supply, or

• 75% of the consideration that the College provides, or is liable to provide for acquisitions that it makes in relation to the supply of the four 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 9-40.

A New Tax System (Goods and Services Tax) Act 1999 Section 38-85.

A New Tax System (Goods and Services Tax) Act 1999 Section 38-220.

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

Student Assistance Act 1973, namely the Student Assistance (Education Institutions and Courses) Determination 2009 (No. 2)

A New Tax System (Goods and Services Tax) (Adult and Community Education Courses) Determination 2000

Reasons for decision

Question 1

Summary

The supplies of some of the specified courses are GST-free supplies.

The supplies of some of the specified courses are taxable supplies.

Detailed reasoning

Section 9-40 of the GST Act provides that you must pay the GST payable on any taxable supply that you make.

A supply is a taxable supply if it meets all the requirements of section 9-5 of the GST Act. Section 9-5 of the GST Act states:

You make a taxable supply if:

(a) you make a 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

*GST-free or *input taxed.

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

The supplies of the specified courses satisfy the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. This is because:

• the courses are supplied for consideration

• the supplies are made in the course of the entity's enterprise

• the supplies are connected with Australia as the supplies are done in Australia, and

• the entity is registered for GST.

The supplies of the specified courses are not input taxed under Division 40 of the GST Act or under a provision of another Act. Therefore what remains to be considered is whether the supplies are GST-free.

The supply of an 'education course' is GST-free under section 38-85 of the GST Act. 'Education course' is defined in section 195-1 of the GST Act and includes, among other things, a secondary course and an adult and community education course.

Secondary course

Section 195-1 of the GST Act provides that secondary course means:

(a) a course of study or instruction that is a secondary course determined by the *Education Minister under subsection 5D(1) of the Student Assistance Act 1973 for the purposes of that Act; …

The Education Minister's determination under subsection 5D(1) of the Student Assistance Act 1973, namely the Student Assistance (Education Institutions and Courses) Determination 2009 (No. 2) (Determination 2009), states that for the purposes of paragraph 5D(1)(a) of the Student Assistance Act 1973, a secondary course is a course:

(a) specified in Column 1 of the table in Schedule 1 to this instrument that is provided by an education institution specified for that course in Column 2 of that table; …

'Preparatory course' is specified in Column 1 of the table in Schedule 1 to Determination 2009 as a secondary course when provided by a higher education institution.

Preparatory course is defined in Determination 2009 as:

(a) …

(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).

Based on the information provided, some of the specified courses are preparatory and enabling courses used as bridging courses in the entity's higher education courses. Further, the entity is a higher education institution.

Accordingly, these specified courses are secondary courses pursuant to Determination 2009 and therefore meet the definition of a secondary course in section 195-1 of the GST Act. The supplies of these courses are GST-free under section 38-85 of the GST Act.

Adult and community education course (ACE course)

Section 195-1 of the GST Act and the Education Minister's Determination, the A New Tax System (Goods and Services Tax) (Adult and Community Education Courses) Determination 2000 (ACE Determination), provides that an ACE course is a course of study or instruction that is:

(i) likely to add to the employment related skills of people undertaking the course

(ii) of a kind determined by the Education Minister to be an ACE course, and

(iii) provided by, or on behalf of, a body that is:

• a higher education institution

• recognised or funded by the relevant 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 recognition, or disqualified, by a State or Territory authority as a provider of ACE courses.

All three requirements must be met for a course to be a GST-free ACE course.

• First requirement - likely to add to the employment related skills of people under taking the course

Goods and Services Tax Ruling GSTR 2000/27 discusses the meaning of 'likely to add to employment related skills'. Paragraphs 15 to 17 of GSTR 2000/7 state:

15. 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 . However we consider a course satisfies the test if the course meets the following requirements:

(a) It is directed at people who want to add to their employment related skills; and

(i) The objectives of the course specify the employment related skills that participants will acquire in undertaking the course; and

(ii) The means of imparting the skills to the participants are clearly identified prior to the commencement of the course; and

(iii) There is a reasonable expectation that the skills being developed will be used in the course of being an employee, or working in a business, occupation, profession or trade, rather than for recreational, hobby, artistic or cultural endeavours.

16. In addition to the criteria outlined in paragraph 15, you should also consider the following:

(a) How the course is marketed.

A course that markets the employment related skills that will be acquired by undertaking the course will support your conclusion that the course will, on the balance of probabilities, add to the employment related skills of the participants.

(b) Whether the course is similar to an accredited vocational education and training (VET) program.

If you can clearly demonstrate that a majority of the course content is the same as part or all of a recognised VET program, this factor will support your contention that the course is likely to add to employment related skills of people undertaking the course.

(c) The outcomes of the course.

If you can present evidence that the majority of people undertaking your course are gaining employment relevant to the skills they have acquired in the course, this would also demonstrate that the course is likely to add to the employment related skills of people undertaking the course. There must be a reasonable expectation that the course is going to "add to the employment related skills of people undertaking the course".

17. A course will 'add' to the employment related skills if the intended outcome of the course is to develop, increase, advance or improve the employment related skills of the people undertaking the course. This includes gaining basic skills such as literacy and numeracy, building upon existing skills and developing skills in new areas.

With regard to whether the specified courses are likely to add to the employment related skills, it was submitted that people who take the courses could eventually be employed in certain specified occupations.

We accept that the specified courses are likely to add to the employment related skills of the participants and therefore meet the first requirement of an ACE course.

• Second requirement - of a kind determined by the Education Minister to be an ACE course

The ACE Determination sets out the kind of courses determined by the Education Minister to be adult and community education courses.

Subsection 5(2) of the ACE Determination provides that for the purposes of paragraph (a) of the definition of ACE course in section 195-1 of the GST Act, the course of study or instruction must meet the following requirements:

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

(b) be a course that is available to adults in the general community

(c) not be a course that is provided by, or at the request of an employer to the employees of that employer

(d) not be a course that is provided by, or at the request of an organisation to the 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 provided, we consider the requirements of paragraphs (a), (c), (d) and (e) of subsection 5(2) of the ACE Determination are met. This is because the specified courses are not any other type of education course as defined in section 195-1 of the GST Act. The courses are not provided by or at the request of an employer to the employees of that employer and are not provided by or at the request of an organisation to the members of that organisation. Further the courses are not provided by way of private tuition to an individual.

Paragraph 5(2)(b) of the ACE Determination requires the course to be available to adults in the general community. For a course to be available to adults in the general community there must be no prerequisite for a particular qualification, or a particular amount of experience required, before a person can undertake the course.

Based on the information provided, some of the specified courses are available to adults in the general community. These courses therefore meet the second requirement of an ACE course.

However, some of the specified courses are not available to adults in the general community as there are prerequisites for entry into these courses. As such, these courses are not of a kind specified in the ACE Determination. The supply of these courses is not a GST-free supply of an ACE course.

• Third requirement - provided by, or on behalf of, a specified body

The specified courses in question satisfy the third requirement of an ACE course as the entity is a higher education institution.

Accordingly, the supplies of the specified courses that meet all the requirements of the ACE Determination are GST-free under section 38-85 of the GST Act.

Supplies of specified courses that do not meet all the requirements of the ACE Determination

As stated above some of the specified courses are not ACE courses as they do not meet all the requirements of an ACE course. Further, it was submitted that these courses are not any other type of education course listed in the definition of education course in section 195-1 of the GST Act. Accordingly, the supplies of these courses are taxable supplies as they meet all the requirements of section 9-5 of the GST Act.

It should be noted that if these courses comprise a combination of accredited and non-accredited units, the supplies will be subject to GST on an apportionment basis. That is the supply of a unit that forms part of a tertiary course that is covered by the Education Minister's determination is GST-free and the supply of a non-accredited unit that is not from an accredited tertiary course is a taxable supply. In this situation the entity will be required to use a reasonable basis to determine the portion of the course that is non-accredited (the taxable portion). For more information please refer to Goods and Services Tax Ruling GSTR 2001/1.

Question 2

Reasoning

The entity is not making a GST-free supply under any other provision of the GST Act or a provision of another Act, when it supplies any one of the specified courses in question.

The rulings in the register have been edited and may not contain all the factual details relevant to each decision. Do not use the register to predict ATO policy or decisions.

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