Edited version of your written advice

Authorisation Number: 1013103927829

Date of advice: 10 October 2016

Ruling

Subject: GST and swimming lessons

Question

Are your supplies of learn to swim (LTS) classes GST-free and as such no GST is payable on your supplies?

Answer

Based on the information provided and is described in this ruling, it is accepted that the LTS classes from Babies, adult classes and those classes for people with disabilities, are considered as courses of study or instruction that principally train individuals in personal aquatic survival skills.

As the requirements of the definition of GST-free *first aid or lifesaving course is satisfied, then the courses will be GST-free supplies of personal aquatic survival skills courses.

Relevant facts and circumstances

You are registered for GST. You own and operate an indoor multi-purpose fitness and sports facility.

You have a swim school at the facility.

The swim school operates all year round with swimming lessons held in the 25 metre indoor pool. You supply learn to swim (LTS) classes for a fee payable to you.

You stated that your supply of LTS classes mainly provide instruction in personal aquatic survival skills.

The LTS classes are conducted during school terms and they are catered for babies, children, adults and those with a disability. The classes are available for babies through to adults of all levels and abilities.

The LTS classes are taught by instructors with Swim Australia qualifications.

Assessment and progression to levels

New students to the LTS classes are given a free assessment so you can guide the students and put them in the right LTS class level. Babies and pre-schoolers do not require assessments.

Children's classes

The children's classes are X minute classes which teach children various techniques, strokes and survival skills. Class sizes are kept small to ensure the child receives the most benefit from their swimming lessons.

You assessed each age group and level using the assessment criteria as per the table below. The assessment table outlines the content and purpose of the LTS classes and the relevant skills each student needs to demonstrate as they progress through the levels.

You provide us a copy of your assessment table and the relevant skills taught at each level.

Programs for People with a disability

You supply LTS classes to people with a disability. These classes offer structured learn to swim and squad training for all swimming level abilities and ages.

The LTS classes for people with a disability are integrated into the mainstream lessons, however, if the person is not able to participate in group lessons, he or she is given the opportunity for private lessons. The private lessons are structured according to the person's capability and tailored to their needs and their rate of development. The LTS classes follow the same assessment criteria as per the table above under Children's classes.

The squad training for people with a disability is similar to squad training as provided under the mainstream lessons.

Adult LTS classes

These classes cater for all swimming abilities, from learn to swim and stroke correction to more advanced training.

You provide us the adult LTS classes course contents.

Once an adult can swim X meters freestyle and backstroke, they usually move into either adult stroke correction or adult squad training. Adult stroke correction and adult squad training are separate programs from the aquatic survival skills program. You stated that the adult stroke correction and adult squad training programs are not included in this ruling request because you are aware that these programs or classes are subject to GST.

You stated in your ruling application that in regards to adults LTS classes, the skills listed above demonstrate that similarly to children's LTS classes and that the emphasis is on developing aquatic survival skills.

Certificates

After a student successfully completes a level, you give him/her a certificate for the completion of that particular level. At the back of each certificate is a list of the skills the student needs to achieve, whether the student is developing or has achieved those skills, a blank field for the instructor's comments and whether the student will progress to the next level or not. Certificates are given for the levels in baby, levels 1 to 6 and adult programs.

It is noted that the skills listed at the back of each certificate does not correspond to all those skills listed under the table above.

You provided copies of these certificates.

Fees

The payments of fees paid by your customers are calculated on a per lesson basis and always on even numbers, for example, group lessons are for $XXX,XX for a X week session with X lesson per week.

The fees are typically paid over the counter or by phone and receipts are automatically generated by an automated receipting machine.

Contentions

You stated that due to an administrative and accounting error, you have been incorrectly accounting for these LTS classes as taxable supplies. You believe that these classes are GST-free classes of personal aquatic survival skills.

Reasons for decision

An *education course is GST-free under section 38-85 of the GST Act. An *education course includes, amongst other things, a *first aid or lifesaving course as defined in section 195-1 of the GST Act.

(Asterisked terms are defined in section 195-1 of the GST Act).

To be GST-free as a *first aid or lifesaving course, a course must satisfy two requirements:

1) First requirement

A first aid or lifesaving course is a course of study or instruction that principally trains individuals in one or more of the following:

(i) First aid, resuscitation or other similar lifesaving skills including personal aquatic survival skills but not including swimming lessons

(ii) Surf lifesaving or

(iii) Aero medical rescue.

2) Second requirement

To be GST-free as an education course a first aid or lifesaving course must be provided by an entity that is:

(i) registered (or otherwise approved) by a State or Territory authority that has responsibility for registering (or otherwise approving) entities that provide such courses or

(ii) that is approved to provide such courses by a State or Territory body that has responsibility for approving the provision of such course or

(iii) that uses, as the instructor for the course, a person who holds a training qualification for that course that was issued by Austswim Limited (ACN 097 784 122) or

(iv) that uses, as the instructor for the course, a person who holds a training qualification for that course that was issued by Surf Life Saving Australia Limited (ACN 003 147 180) or

(v) who holds a training qualification for that course that was issued by the Royal Life Saving Society-Australia (ACN 008 597 616, or

(vi) that uses as an instructor for the course, a person who holds a training qualification for that course that is a qualification (in life saving) specified in, or of a kind specified in the regulations.

You provided information that the instructors have training qualifications from either Austswim or Swim Australia.

It is accepted that in this case, the second requirement is met. We are therefore discussing below whether your supplies of LTS classes meet the first requirement.

The following principles under the first requirement are discussed as follows:

a) Course of study

GSTR 2003/1 outlines 'what is a course' and in the context of the definition of a GST-free 'professional or trade course' under section 195-1, paragraph 22 states "… a course is a program of systematic and interactive instruction or training, for the acquisition of particular skills or knowledge…"

Paragraph 22 of GSTR 2003/1 further lists the indicators of a course to include, but are not limited to:

• delivery of educational instruction through an instructor or teacher;

• ongoing support and guidance, for example, being available to answer questions;

• assessment of the individual's progress;

• monitoring or supervision;

• provision of feedback concerning the individual; and

• assessment of competency or satisfactory completion at the end of the program of instruction.

Paragraph 25 of GSTR 2003/1 provides that the systematic instruction or interactive training may be supplied in a variety of formats. It can be as one indivisible course, a one course comprising a program of subjects or components or a program of subjects that are formally and separately provided as courses in their own right.

Paragraph 31 of GSTR 2003/1 provides that where the instruction or training is formally divided into subjects that are taught or given separately, and where assessments of competency are made for each, each subject may be a course for the purposes of the definition of a 'professional or trade course' in section 195-1. Where this is the case, it will be a supply of a number of courses. Indicators of such courses include:

• a separate consideration being made for each subject;

• the ability to study some subjects separately or repeat only those subjects for which competency has not been achieved; and

• the assessment of competency for some or all of the subjects.

The above indicators are used in the context of the definition of a 'professional or trade course' as defined in section 195-1, which is an included example of a GST-free *education course under the same provision. In the absence of further guidelines in relation to what is a course for the purposes of the definition of a *first aid or life saving course, it is accepted that the above indicators can apply to this case.

Applying the principles to this case

Apart from babies and pre-schoolers age group, you assess each of your students upon enrolment and you determine the appropriate swim skill level they should be in. You follow your assessment criteria table to determine the skills level of each student and when they will move up to the next level. There is no requirement for a student to start from the very first level, that is, if a student is assessed as having all the skills already in Level 2, then that particular student can start the lessons at Level 3. A student can enter into any of the swim levels without going through all the prior levels, for example, a student who has been assessed as having the skills required to be in Level 4 can enter into the LTS classes at that level rather than going through to Level 1, Level 2 and Level 3 first.

After successfully completing a particular level, you provide the student with a certificate and the certificate shows whether the student achieved the skills required for that particular level and whether the student can progress to the next level.

Any of the levels of your LTS classes can be taught or given to your students after each assessment of their swimming capabilities, that is, a student can start at any particular level depending on their capabilities.

As per paragraph 31 of GSTR 2003/1, as your supplies of LTS classes are formally divided into separate levels and any level can be taught or given separately and an assessment of competency is made for each level, then it is considered that each of the level is a course for the purposes of this ruling.

b) Principally involves

The definition states that a first aid or life saving course must 'principally involves training individuals in one or more of the following'. This suggests that the course can be composed of a number of elements but that they must 'principally include' those listed elements. The definition implies a quantitative measurement of those elements. Both the Macquarie Dictionary and Australian Oxford Dictionary record the primary meaning of principally as chiefly or mainly.

In the context of this definition, we accept that the term mainly, as is also been used in the current fact sheet and is generally accepted in taxation law to mean more than 50%, is the more appropriate approach in this instance.

It can therefore be concluded that a course that mainly involves training individuals in personal aquatic survival skills but not including swimming lessons, will meet the definition of first aid or life saving course.

For this case, it is accepted that if 50% or more of a course is the training of participants in skills which are personal aquatic survival skills and not swimming lessons, then the course will be a first aid or life saving course that principally involves training individuals in personal aquatic survival skills.

c) Personal aquatic survival skills

The current ATO Fact Sheet - ' GST and personal aquatic survival skills' provides guidance when determining if a course falls within 'personal aquatic survival skills' course.

The factsheet also mentioned the National Swimming and Water Safety Framework (the Framework), which provides guidance as to what are basic swimming skills necessary for personal aquatic survival skills.

From the current factsheet, generally the ATO takes the view that a personal aquatic survival skill is a skill (which includes knowing what to do) that allows a person to survive and/or be safe in the water. It is accepted that all the skills listed must be present and included in a course for that course to be a first aid or life saving course that principally involves training individuals in personal aquatic survival skills. These skills are:

A course that teaches personal aquatic survival skills is a course that is designed to produce an outcome whereby at the completion of the course the student is able to survive in the water or has improved their ability to survive in the water. Generally personal aquatic survival skills courses are aimed at students who do not possess the necessary skills to survive in the water.

Any course that principally involves training individuals to acquire personal aquatic survival skills as listed above is a personal aquatic survival skills course. This includes those courses that principally or exclusively provide instruction in sculling, treading water, floating, safe entry and exit from water, techniques for clothed swimming survival, use of devices to assist rescue, and basic swimming skills. Basic swimming skills are those skills necessary for an individual to prevent drowning and to move away from any dangerous aquatic situation (for example swim away from a sinking vessel, or swim with a rip and then to shore).

There is no uniform acceptance within the industry of the level of swimming skills at which a swimmer is treated as having basic swimming skills. However the National Water Safety Council recommended the acceptance of the Framework developed by the Royal Life Saving Society of Australia as a guide for the levels that individuals should attain to be safe in aquatic environments. Subsequently some of the States and Territories are developing their own recommended standards for water safety and the Framework is not necessarily the only construct accepted as being suitable to provide water safety and survival skills.

A feature of the Framework was the ability for individuals to swim a reasonable distance using a variety of strokes (usually no more than X metres in any one of the strokes). The reason for the variety of strokes taught was to provide the individual with the different swimming skills necessary to cope with or survive in different aquatic environments. The ATO accepts that an individual has acquired basic swimming skills if they have the swimming skills that are necessary for the completion of a swimming and survival program that is consistent with the Framework.

Based on the above, it can therefore be considered that swimming skills using a variety of strokes in X meters or less, are basic swimming skills. It follows that basic swimming skills in a variety of strokes in X meters or less are included as personal aquatic survival skills. Therefore if the course principally or exclusively provides instruction in safe entry and exit from water, and various techniques for swimming survival, use of devices to assist rescue, and basic swimming skills then therefore the course is for personal aquatic survival skills.

d) 'but not including swimming lessons'.

The definition of first aid or life saving course specifically excludes swimming lessons from the GST-free treatment. As stated above, a basic swimming skill is an aquatic survival skill and therefore some courses that teach a person to swim (regardless of any other skill taught during the course) could satisfy both terms. That is they are a personal aquatic survival skills course and a swimming lesson.

The ATO has adopted the view that the term "swimming lessons" applies to courses that principally provide swimming instruction to proficient swimmers so that these individuals can improve their swimming skills for example improve their technique, speed or endurance.

Characteristics of such training identified by the industry would include:

• Providing training for aerobic endurance and physical conditioning for one or more of the competitive strokes of swimming

• Refinement of racing turns and race starting

• Undertaking interval/cycle training

• Combinations of wet and dry land training

• Race strategies and psychological training

• The length of the lessons exceeding forty five minutes.

In addition to the above characteristics, it is considered that basic swimming skills using a variety of strokes in over X meters are not personal aquatic survival skills and are to be included as swimming lessons skills.

Based on the above analysis, it is therefore considered that skills of basic swimming skills using a variety of strokes in over X meters are not personal aquatic survival skills but are swimming lessons.

Conclusion

Based on the information provided and is described in this ruling, it is accepted that the LTS classes from Babies, Levels 1 to 6, the adult classes and those classes for people with disabilities, are considered as courses of study or instruction that principally train individuals in personal aquatic survival skills.

As the first requirement of the definition of GST-free *first aid or lifesaving course is also satisfied, then the courses will be GST-free supplies of personal aquatic survival skills courses.

However, where the facts are different from the information provided, that is, the skills taught in a level are mainly swimming lessons, then that particular level or course is not a GST-free supply of personal aquatic survival skills.

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