Edited version of your written advice

Authorisation Number: 1012820048788

Ruling

Subject: GST and educational services provided to students with learning disabilities

Are the educational services provided by you to students with learning disability subject to goods and services tax (GST) where you receive payments from the following?

1) A Government entity pays direct to you for services provided to their clients.

2) The Government entity pays to the individuals and the individuals pay direct to you.

3) Individuals pay you directly from their own resources.

Answer

The educational services you provide that are specifically designed for students with learning disabilities are GST-free irrespective of who pay for the services.

However, programs that are specifically designed to meet the needs of students who do not have disabilities are subject to GST.

Please refer to the reasons for decision for more details.

This ruling applies for the following periods:

Not applicable

The scheme commences on:

Not applicable

Relevant facts and circumstances

• You are carrying on an enterprise of providing educational services to students with disabilities and other students.

• You are not for profit organisation and you are registered for goods and services tax (GST)

• You provide the following services to people with learning disabilities:

1) Four different day programs on visual arts, performing arts, music, film and new media. Participants attend between 1-5 days a week.

2) A children's weekly music program

3) A weekly music program for adults with a disability

• All the above services are specifically designed for people with learning disabilities and not available for the ordinary students.

• The type of services provided by you to people with disability is not listed in the services under the X scheme.

• You have a written agreement with the Government entity and the Government entity requests you to provide the services to their clients under the agreement.

• The Government entity will make the payment direct to you and you have been charging GST for the services provided to the clients of the Government entity.

• You also have written agreements with the individual clients and provide services to them under the written agreement. Some of these services are funded by the Government entity and the individual clients make the payment direct to you from the funds received from the Government entity.

• You are charging GST on these services provided by you and funded by the Government entity. However, the Government entity has advised you that these services provided by you under the written agreement with the individual clients should be GST-free services.

• You also have written agreements with individual clients where they are not funded by the Government entity. And you charge GST for the services provided to them under the written agreement.

Relevant legislative provisions

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

The supply of an education course is GST-free under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). An education course is defined in section 195-1 of the GST Act to include, amongst other things, a special education course.

A course meets the requirements of a special education as defined in section 195-1 of the GST Act if:

• it is a course of education

• it provides special programs, and

• the special programs are designed specifically for children with disabilities or students with disabilities (or both).

Goods and Services Tax Ruling GSTR 2002/1 provides further guidance on these requirements.

Course of education

Paragraphs 15 and 16 of GSTR 2002/1 provide that a course of education is a course or program of study that involves systematic instruction, training or schooling in areas of scholastic and academic pursuits, vocational skills or person development, that is delivered to a group of children or students or to an individual child or student in the form of a series of lessons or classes, or a unit or module that forms part of a larger course.

Paragraph 14 of GSTR 2002/1 further provides that the systematic instruction, training or schooling needs to have elements of interactive teaching, for example, delivery by an instructor or teacher, ongoing support and guidance, assessment of child's or student's progress, monitoring or supervision and provision of feedback.

From the information provided by you, we consider that the programs you supply meet the requirements of an education course.

However, the courses or programs of study you provide should meet the requirements of one of the courses listed in the definition under section 195-1 of the GST Act.

Special programs

Paragraph 19 of GSTR 2002/1 provides that a program is a special program if it is:

• designed specifically to meet the special needs of children or students with disabilities,

• designed specifically to reduce or prevent the impact of disabilities for children or students with disabilities, or

• not made available to people generally.

Paragraph 20 of GSTR 2002/1 explains that the program as a whole must be recognised as a special program, though it is not necessary that every part of the course is 'special'. For example, the course's content may mirror that of a curriculum-based school course, but it may be delivered in a way that makes it suitable for children or students with disabilities.

You advised us that all the programs stated in your application for the ruling are specifically designed to address the needs of each student. These programs are mainly designed for those students who have disabilities. You also have programs designed for the other students who do not have disabilities and for the general public.

As such, not all of your programs will satisfy the requirements of a special program. Only those programs that are specifically designed for students with disabilities will be special programs.

Designed specifically for children or students with disabilities

Paragraph 6 of GSTR 2002/1 states that a GST-free special education course must be designed specifically for:

• children with disabilities, regardless of whether they are students; or

• students with disabilities, regardless of their age.

Paragraph 30 of GSTR 2002/1 further explains that for the purposes of this ruling a child is someone who has not yet attained the age of eighteen. A student can be someone of any age and may be enrolled on a full or part-time basis.

Paragraphs 33 and 34 of GSTR 2002/1 provide that a disability exists where an individual has difficulty in executing activities or has problems being involved in life situation because some body function or structure is impaired. This would include conditions such as a learning disability/specific learning difficulty (including dyslexia), autism spectrum disorder, physical disability, an emotional disorder, a language disorder, a hearing impairment, a visual impairment or an intellectual disability that causes the individual difficulty in executing activities or problems in being involved in life situations.

However, those programs that are specifically designed for students who have no disabilities but attend because they have trouble keeping up with their school work or want to achieve a higher level of excellence in their work, or are home schooled and require additional tuition will not satisfy the requirement that the program is 'designed specifically for children or students with disabilities'.

Paragraph 40 to 43 of GSTR 2002/1 explains who can provide a special education course. As explained above, the supply of special education course is GST-free provided all of the requirements of the section 195-1 definition of a special education course are satisfied, regardless of who provides the course.

In your case, when you provide the special education course irrespective of who make the consideration, the supply of the special education course will be GST-free.

Please note that children or students with disabilities may participate in programs that are not designed specifically for people with disabilities. They may participate in activities that are designed to help students improve their grades by way of private tutoring; coaching; or extension learning programs.

If these courses are not designed specifically for children or students with disabilities they are not special education courses, regardless of whether children or students with disabilities are the recipients. Therefore, the courses you are providing to the general public or not specifically designed for the people with disabilities will be subject to GST.

In summary, only those programs that you specifically design for students with disabilities satisfy the definition of special education courses, the supply of which will be GST-free. You advised us that you receive payments directly from the Government entity, from your clients who receive funding from the Government entity and from your clients who pay you directly from their own resources.

As explained above, the programs that are specifically designed for students with disabilities will be GST-free irrespective of who make the payments for the supply.

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