Edited version of your written advice

Authorisation Number: 1012780908923

Ruling

Subject: Education courses

Question 1

Are the courses that you provide to individuals free of goods and services tax (GST) as professional or trade courses?

Answer

Yes.

The scheme commences on:

1 July 2014

Relevant facts and circumstances

You are registered for GST.

You own and operate a small training business which specialises in providing the relevant training to individuals who wish to pursue a career selling goods in the State.

Under State law people who involve themselves in buying or selling goods must hold either a certificate or licence. This licence is issued by an office.

It is illegal to trade in goods in the State without the appropriate licence.

Your organisation provides the training required for individuals to obtain the required qualification in order for the individual to make their application to the office.

You provide the following training courses:

1. Course 1

2. Course 2

Instruction is provided on a one on one basis in specific units of competency. Ongoing support is provided without a time limit.

A third party assesses the student's work.

On successful completion of the required modules the student is issued with a paper from a third party which is a registered training organisation.

This paper must be submitted to the office with a licence application.

The papers form part of a certificate.

The office will not process an application without proof of competency in the form of the papers.

Relevant legislative provisions

All references are to the A New Tax System (Goods and Services Tax) Act 1999:

Section 38-85

Section 195-1

Reasons for decision

Summary

Both courses satisfy the requirements of professional or trade courses covered by the GST Act and are therefore GST-free under section 38-85 of the GST Act.

Detailed reasoning

Section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that a supply of an education course is GST-free. An education course is defined by section 195-1 of the GST Act and includes a professional or trade course.

A professional or trade course is further defined in section 195-1 of the GST Act as:

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.

Note that the asterisk indicates a defined term in the GST Act.

Goods and Services Tax Ruling GSTR 2003/1 Goods and services tax: supplies that are GST-free as professional or trade courses (GSTR 2003/1) discusses supplies that are GST-free as professional or trade courses. Paragraph 14 of GSTR 2003/1 provides that your course will be a professional or trade course if it:

a) is a course leading to a qualification, and

b) is an essential prerequisite for entry to, or to commence the practise of, a particular professional or trade.

First Requirement

Paragraph 22 of GSTR 2003/1 provides a general definition of what is a 'course'. It provides that a 'course' is the delivery of educational instruction through an instructor or teacher. It also provides for the assessment of competency during or at the end of the program of instruction. Therefore we accept you are providing courses.

Having established that you supply courses, we now need to decide whether the courses lead to qualifications. Paragraphs 42 to 45 of GSTR 2003/1 explain the meaning of the term 'qualification' and state:

42. 'Qualification' is not defined in the GST Act. The term therefore takes its ordinary meaning. The Macquarie Dictionary defines 'qualification' as 'a quality, accomplishment, etc., which fits for some function, office, etc.'

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.

This means that a course will lead to a qualification when a participant acquires an attribute or quality as evidenced by a document, such as a license or certificate that indicates successful completion of the course.

It is accepted that both courses lead to a qualification, being papers that form part of a certificate. Therefore both courses meet the first requirement.

Second Requirement

Your courses will only be professional or trade courses if they lead to a qualification that is an essential prerequisite for entry to, or to commence the practice of, a particular trade. Paragraph 9 of GSTR 2003/1 explains the meaning of essential prerequisite:

For the purposes of the definition of a 'professional or trade course' the term 'essential prerequisite' is defined in section 195-1 in the following terms:

'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) nor (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.'

An industrial instrument has the meaning given in by section 995-1 of the Income Tax Assessment Act 1997 (ITAA97), which is an Australian law or an award, order, determination or industrial agreement in force under the Australian law. Therefore, a qualification will be an essential prerequisite if the qualification is a legal requirement, for example a law, regulation or industrial agreement, or is a requirement imposed by a professional or trade association, either at the national or state level.

Regarding both of your training courses, the relevant statements of attainment must be submitted to an office along with an application for a particular license in order to legally enter the goods retailing industry. We accept that the qualifications received by completing your courses are essential prerequisites to legally enter the goods retailing industry. Both courses meet the second requirement.

Therefore, your supply of Course 1 and Course 2 are trade or professional courses, and as such both courses will be GST-free supplies of education courses.

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