Edited version of your written advice

Authorisation Number: 1012734342380

Ruling

Subject: Provision of Supervision Services

Issue: GST treatment of supervision services under various conditions

Scenario 1

Question 1(a)

Is the provision of supervision services to provisional psychologists a GST-free supply?

Answer

Yes. The provision of supervision services to provisional psychologists is a GST-free supply.

Question 1(b)

Will the answer to Question 1(a) be different if the supervising psychologist's annual income is over $75,000?

Answer

No. The GST-free status of the supply of supervision services to provisional psychologists is not determined by the level of annual income.

Scenario 2

Question 2(a)

Is the provision of supervision services to fully registered psychologists attending supervision as part of their continuing professional development a GST-free supply?

Answer

No. The provision of supervision services to fully registered psychologists attending supervision as part of their continuing professional development is not a GST-free supply.

Question 2(b)

Will the answer to Question 2(a) be different if the supervising psychologist's annual income is over $75,000?

Answer

No. The outcome in Question 2(a) is not determined by the level of annual income.

Scenario 3

Question 3(a)

Is the provision of supervision services to fully registered psychologists enrolled in an endorsement program a GST-free supply?

Answer

No. The provision of supervision services to fully registered psychologists enrolled in an endorsement program is not a GST-free supply.

Question 3(b)

Will the answer to Question 3(a) be different if the supervising psychologist's annual income is over $75,000?

Answer

No. The outcome in Question 3(a) is not determined by the level of annual income.

Relevant facts and circumstances

You are a psychologist.

You have an Australian Business Number (ABN) but are not currently registered for Goods and Services Tax (GST).

You would like to know the GST implications in the following three scenarios.

Scenario1

The supervising psychologist (the supervisor) provides supervision services to provisional psychologists training to become fully registered psychologists. The provisional psychologist develops skills relating to eight core competencies. As part of this process, the supervisor is required to verify log books, review case studies and complete progress reports. These are submitted to the Psychology Board of Australia (the Board). The Board requires completion of a six year sequence of study including either one or two years of a Board-approved internship. Supervision is compulsory for both the one and two year internship. Completion of the six year program leads to a qualification and general registration as a psychologist.

Scenario 2

The supervisor provides supervision services to fully registered psychologists who are attending supervision as part of their continuing professional development. These psychologists are both general and endorsed psychologists. No formal documentation needs to be completed or submitted to the Board; however supervision records are maintained in case of an audit by the Board.

Scenario 3

The supervisor provides supervision services to fully registered psychologists undertaking a Registrar Program to become endorsed psychologists. As part of this process the supervisor is required to verify log books and complete progress reports. These are submitted to the Board. Only psychologists with an approved area of endorsement may use a title which indicates they hold an endorsement e.g. Clinical Psychologist. While the endorsement is considered an extra qualification, it is not an essential prerequisite for the commencement of practice as a psychologist. The endorsement function allows the Board to grant endorsement of registration to a psychologist with additional qualifications and advanced supervised practice in an approved area of practice.

In each of the above situations you have asked if you need to charge GST.

In each of the above situations you have asked if the above response will be different where your annual income exceeds $75,000.

You have provided to us documentation including information from the Psychology Board of Australia website and general information regarding the practice of psychology in Australia.

Relevant legislative provisions

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

Section 9-5 GST Act

Section 38-85 GST Act

Section 23-5 GST Act

Section 195-1 GST Act

Reasons for decision

Scenario 1 Question 1(a)

We need to consider whether the supply of supervision services as a professional psychologist to provisional psychologists will be a taxable supply, and therefore subject to GST. Section 9-5 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act) gives the meaning of a taxable supply. It 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.

(terms marked with * are defined under section 195-1 of the GST Act).

Supervision services are not an input taxed supply under Division 40 of the GST Act. However the provision of supervision services may be GST-free under Division 38 of the GST Act.

Section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) deals with education courses. It states:

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.

Education Course

We need to consider whether the supply of supervision services as a professional psychologist to provisional psychologists is the supply of an education course.

Section 195-1 of the GST Act defines an education course as:

a) a *pre-school course; or

b) a *primary course; or

c) a *secondary course; or

d) a *tertiary course; or

e) (Repealed by No 143 of 2007)

f) a *special education course; or

g) and *adult and community education course; or

h) an *English language course for overseas students; or

i) a *first aid or lifesaving course; or

j) a *professional or trade course; or

k) a *tertiary residential college course

Professional or Trade Course

Based on the facts provided, the supervision course provided by a professional psychologist may be included under the definition of a professional or trade course. Section 195-1 of the GST Act gives the meaning of a professional or trade course. It states:

professional or trade course means a course leading to a qualification that is an *essential prerequisite:

(a) for entry to a particular profession or trade in Australia; or

(b) to commence the practice of (but not to maintain the practice of) a profession or trade in Australia.

Goods and Services Taxation Ruling GSTR 2003/1 Goods and services tax: supplies that are GST-free as professional or trade courses (GSTR 2003/1) explains the meaning of 'professional or trade course' in section 195-1 of the GST Act. Paragraph 16 of GSTR 2003/1 provides that if a person cannot enter, or commence practising in, a profession or trade without a particular qualification, a course that leads to that qualification is a professional or trade course.

Qualification

The next step is to consider whether or not the supervision provided by the supervising psychologist leads to a qualification

Paragraph 40 of GSTR 2003/1 states:

In some circumstances, you may supply a course and on its successful completion, another party may supply a qualification that is an essential prerequisite. It does not matter that you are not responsible for the assessment and the issue of the qualification. The course leads to a qualification.

'Qualification' is not defined in the GST Act and the term therefore takes its ordinary meaning. The Macquarie Dictionary defines 'qualification' as 'a quality, accomplishment, etc., which fits for some function, office, etc. (paragraph 42 of GSTR 2003/1).

Paragraphs 43 to 45 of GSTR 2003/1 explain the meaning of qualification:

43. A qualification is normally acquired through study or experience and equips a person to perform a particular task or function. In the context of the definition of a professional or trade course in section 195-1, a qualification is an attribute or quality that is acquired after undertaking a course. It is evidenced by some document that indicates successful completion of the course. The document would normally be accepted by a Commonwealth, State or Territory authority, or a professional or trade association, or an employer as suitable evidence that a person has successfully completed the relevant course.

44. A relevant authority or professional or trade association may issue a licence or a certificate that qualifies a person to do certain things. For example, a licence to drive a particular class of heavy road vehicle, or a practising certificate. Where this is the case, the certificate or licence is a qualification for the purposes of the section 195-1 definition of a professional or trade course.

45. Documents that are qualifications or that provide evidence of a qualification include:

• a statement of satisfactory completion;

• a certificate (including a degree or diploma);

• a licence; or

• an accreditation.

Essential Prerequisite

Finally, section 195-1 of the GST Act provides the following:

essential prerequisite: a qualification is an essential prerequisite in relation to the entry to, or the commencement of the practice of, a particular profession or trade if the qualification is imposed:

a) by or under an *industrial instrument; or

b) if there is no industrial instrument for that profession or trade but there is a professional or trade association that has uniform national requirements relating to the entry to, or the commencement of the practice of, the profession or trade concerned - by that association; or

c) if neither paragraph (a) or (b) applies but there is a professional or trade association in a State or Territory that has requirements relating to the entry to, or the commencement of the practice of, the profession or trade concerned - by that association.

Paragraph 48 of GSTR 2003/1 provides 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 qualification.

In Scenario 1, the supervision service provided by the supervisor is a professional or trade course leading to a qualification provided by a professional association, in this case the Psychology Board of Australia. This qualification is an essential prerequisite for provisional psychologists to commence practice as a fully registered general psychologist. Therefore the provision of supervision services to provisional psychologists is a supply of an education course that is GST-free. Accordingly, the supervisor is not required to charge GST on the supply of supervision services to provisional psychologists.

Scenario 1 Question 1(b)

As discussed in Question 1(a) above, the provision of supervision services to provisional psychologists is GST-free in accordance with section 38-85 of the GST Act. Even if the supervisor's annual income is above $75,000, the supply of supervision services to provisional psychologists remains GST-free for the purpose of the GST Act.

Additional information

As discussed above, the provision of supervision services to provisional psychologists is GST-free irrespective of whether annual income or GST turnover is above $75,000. However the requirement to be registered for GST is based on section 23-5 of the GST Act which states:

You are required to be registered under this Act if:

a) you are *carrying on an *enterprise; and

b) your *GST turnover meets the *registration turnover threshold.

For the purposes of section 23-5(b) GST turnover includes income from taxable supplies and GST-free supplies. The registration turnover threshold is $75,000.

You will need to determine whether you meet the above requirements such that you are required to be registered. In calculating your GST turnover, you will have to include all the income from your supply of supervision services to provisional psychologists. Where your GST turnover exceeds $75,000, you will be required to register for GST in accordance with section 23-5 of the GST Act.

Scenario 2 Question 2(a)

Paragraphs 98 and 99 of GSTR 2003/1 provide an explanation in regard to maintaining the practice of a profession or trade:

98. The exclusion in paragraph (b) of the definition of a professional or trade course in section 195-1of the GST Act 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.

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

• undertaking continuing professional development,

• re-licencing,

• re-accreditation,

• renewal of annual practicing certificates, and

• refresher courses

Further, paragraph 101 of GSTR 2003/1 provides an example of maintaining a practice or trade:

101. Quickpack Ltd supplies two courses. The first is of 22 hours duration and enables a person to become a baggage handler in the aviation industry. The course content is prescribed by the relevant statutory authority and satisfies the Civil Aviation Regulations 1988 requirement that baggage handlers hold a dangerous goods licence. This course is a professional or trade course. Handlers must complete another course, of eight hours duration, every two years to maintain their licence. Although the eight hour course includes material from the 22 hour course, it is for maintaining employment as a baggage handler. The eight hour course is not a professional or trade course.

In Scenario 2 the supervisor is providing supervision services to fully registered psychologists as part of their continuing professional development. The provision of these supervision services will fall within the exclusion contained in paragraph (b) of the definition of a professional or trade course in section 195-1of the GST Act. Therefore the provision of supervision services to fully registered psychologists as part of their continuing professional development is not an education course which is GST-free under section 38-85 of the GST Act.

The supervision services provided to fully registered psychologists as part of their continuing professional development will be subject to GST provided the requirements of section 9-5 of the GST Act are met.

Scenario 2 Question 2(b)

As discussed in Question 2(a) above, the provision of supervision services to fully registered psychologists as part of their continuing professional development is not a GST-free supply. This outcome is not affected by the level of annual income.

The requirements for a taxable supply are set out in section 9-5 of the GST Act (see Question 1(a) above). In this case, as the provision of supervision services to fully registered psychologists as part of their continuing professional development does not fall within the scope of being GST-free, you will make a taxable supply where:

(a) you make the supply for consideration; and

(b) the supply is made in the course of 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.

As discussed in 1(b) your requirement to be registered is determined by your GST turnover. Where you are required to be registered for GST, the provision of supervision services to fully registered psychologists as part of their continuing professional development will be a taxable supply and therefore subject to GST.

Scenario 3 Question 3(a)

GSTR 2003/1 explains the following in relation to 'professional or trade courses' and the commencement of practice:

46. Your course will 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.

79. In the context of the section 195-1 definition of a professional or trade course, to enter or commence is to begin. This means that a person would not be able to work in and earn a livelihood in a particular profession or trade, either as an employee or on a self-employed basis without the relevant qualification. The qualification entitles the holder, or is one necessary step for the holder, to enter into, or commence the practice of, the relevant profession or trade.

92. For the purposes of the definition of a 'professional or trade course' in section 195-1, a distinction must be drawn between a course that provides a qualification to enter into a profession or trade and one that is undertaken to acquire specialist or additional skills within that profession or trade.

93. A course leading to a qualification that merely enhances a recipient's proficiency to undertake a wider range of activities in his or her profession or trade, is not a professional or trade course.

Further, paragraph 95 of GSTR 2003/1 provides an example of a course that provides additional skills, but is not a professional or trade course:

95. Graeme is employed as a heavy vehicle driver and holds the appropriate licence. He decides that he would increase his opportunities for advancement by possessing a flammable goods/dangerous goods licence. A dangerous goods vehicle driver is not in a different trade to a heavy vehicle driver. While a course for heavy vehicle drivers that provides this qualification may enhance his skills and employment prospects, he has already entered the trade of heavy vehicle driver. The 'dangerous goods licence' course is not a professional or trade course, as it does not lead to a qualification that is an essential prerequisite.

In Scenario 3, the supervision services provided lead to an endorsement. Although the endorsement is considered an extra qualification, it is not an essential prerequisite for the commencement of practice as a psychologist. Therefore the supervisor is not supplying a professional or trade course as part of a GST-free education course under section 38-85 of the GST Act. The supervision services provided to fully registered psychologists as part of an endorsement program will be subject to GST provided the requirements of section 9-5 are met.

Scenario 3 Question 3(b)

As discussed in Question 3(a) above, the provision of supervision services to fully registered psychologists as part of an endorsement program is not a GST-free supply. This outcome is not affected by the level of annual income.

However, where your GST turnover exceeds $75,000 you will be required to be registered for GST in accordance with section 23-5 of the GST Act. In addition, where the supplies in Scenario 3 are made for consideration, in the course of furtherance of an enterprise that you carry on and are connected with Australia, these supplies are taxable supplies in accordance with section 9-5 of the GST Act and therefore will be subject to GST.

ATO view documents

Goods and Services Taxation Ruling GSTR 2003/1Goods and services tax: supplies that are GST-free as professional or trade courses

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