Edited version of your written advice

Authorisation Number: 1051469115198

Date of advice: 20 December 2018

Ruling

Subject: GST status of your first aid training courses

Question

Are the supplies of training courses GST-free under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No, the supplies of training courses are not GST-free under section 38-85 of the GST Act. The supplies are taxable and therefore subject to GST.

Relevant facts and circumstances

You are an entity.

You registered for GST.

You are not a higher education institution, a non-government higher education institution or a Registered Training Organisation (RTO) listed on the National Register maintained by the National Vocational Education and Training Regulator, the Australian Quality Skills Authority (AQSA).

You are not independently registered by any State or Territory authority that has responsibility for registering (or otherwise approving) bodies which provide such courses.

You are not independently approved to provide such courses by a State or Territory body that has responsibility for approving the provision of such courses.

You operate as an affiliate of an RTO and under its RTO Number. You have full permission to use its approved scope of training.

Both you and the RTO are individually owned and operated.

The RTO is registered for GST.

All the courses you deliver as an affiliate of the RTO are accredited vocational education and training (VET) courses under the Student Assistance (Education Institutions and Courses) Determination 2009 (No. 2) (as amended) under subsection 5D(1) of the Student Assistance Act 1973.

You provided evidence of your qualifications.

The courses are delivered in your name.

With all advertising and documentation you must display the RTO number to meet the obligations of state and territory authorities.

You market the courses.

On successful completion of a training course, the student is issued with the Statement of Attainment by the RTO.

You provide these courses to businesses and to the general public, and deal directly with them.

You enrol the student.

You set the fees that students pay. The student’s fees are paid direct to you in full and you issue the receipts. You include 100% of the student fees on your Business Activity Statement (BAS). No portion of the student fee is paid to the RTO.

You handle all the administrative aspects of the training courses.

You do not receive any commission, fees or other payment from the RTO for anything in relation to these courses.

You have never paid the RTO in relation to the use of their scope of registration.

There is no formal written agreement between you and the RTO.

You must provide evidence to the RTO of your ongoing professional development. The RTO conducts an annual visit to observe delivery of the courses to ensure compliance with its scope of qualifications.

You are responsible for your professional development costs.

You do not enter into legal relationships with the students on behalf of the RTO.

You bear the commercial risk for the training you conduct and hold independent insurance policies.

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 38-85

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

A New Tax System (Goods and Services Tax) Regulations 1999 regulation 195-1.02

A New Tax System (Goods and Services Tax) Regulations 1999 schedule 12

Reasons for decision

Unless otherwise stated, all references are to the GST Act.

Detailed reasoning

Section 9-5 provides that you make a taxable supply if:

(a) you make the supply for consideration

(b) the supply is made in the course or furtherance of an enterprise that you carry on

(c) the supply is connected with the indirect tax zone, and

(d) you are registered or required to be registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

Your supplies of training courses to the participants in the indirect tax zone (which includes Australia) will be taxable if all the requirements of section 9-5 are met.

In your case you meet paragraphs 9-5(a) to 9-5(d). That is, you supply training courses for consideration in the course of your enterprise in the indirect tax zone and you are registered for GST.

There are no provisions in the GST Act under which your supplies of the courses are input taxed. However the relevant GST-free provisions must be considered.

A supply of an ‘education course’ is GST-free under section 38-85. The term ‘education course’ is defined in section 195-1 to include, among other things, relevantly:

● a first aid or life saving course, and

● a tertiary course.

Tertiary Course

Section 195-1 provides that a ‘tertiary course’ is:

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

● a course of study or instruction accredited at Masters or Doctoral level and supplied by a higher education institution or a non-governmental higher education institution, or

● any other course of study or instruction that the Education Minister has determined is a tertiary course for the purposes of the GST Act.

None of the courses are accredited at Masters or Doctoral level nor are any of the courses separately determined by the Education Minister to be a tertiary course.

Under subsection 5D(1) of the Student Assistance Act 1973, the Education Minister has issued the Student Assistance (Education Institutions and Courses) Determination 2009 (No.2) (Determination 2009/2) which specifies the relevant courses that are tertiary courses. Determination 2009/2 lists the type of course and types of educational institutions that can deliver the course.

Determination 2009/2 provides that a VET accredited course which is delivered by a higher education institution or by and within the scope of the registration of an RTO is a ‘tertiary course’.

Based on the facts provided, you are supplying accredited VET courses that are specified in Determination 2009/2. However, you are not a higher education institution or an RTO; you are an affiliate of an RTO.

For the purpose of Determination 2009/2, it is not sufficient that the supply is made by an affiliate of an RTO, the course supplier itself must be the RTO.

Where the entity is acting as agent for the RTO, then the RTO would be making the supply of the course to the student, and the requirement in Determination 2009/2 would be met. The nature of any supply(ies) between the principal and agent and their GST treatment would also need to be determined.

As you are not an RTO, we need to determine whether you are acting as an agent for an RTO.

Agency relationship

Goods and Services Tax Ruling GSTR 2000/37 provides guidance on principal/agent relationships (agency relationships). Paragraph 28 of GSTR 2000/37 provides the factors that indicate that an agency relationship exists. These are:

● any description of you as an agent, having authority to act for another party, in agreement (expressed or implied) between you and the other party

● any exercise of the authority that you are given to enter into legal relations with a third party

● whether you bear any significant commercial risk

● whether you act in your own name

● whether you are remunerated for your services by way of commissions and whether you are entitled to keep any part of that remuneration secret from another party, and

● whether you decide the price of things that you might sell to third parties.

There is no formal written agreement between you and the RTO. None of the documentation or information provided indicates that you have authority to act as agent for the RTO.

While you operate as an affiliate of the RTO and use its RTO Number, you act in your own name for business purposes. You decide the course fees, source and enrol participants, collect the student fees and issue receipts for the courses using your own name and ABN. No portion of the fees is paid to the RTO.

The courses are delivered in your name. You display the RTO number in advertising and documents to meet the obligations of state and territory authorities and you market the course under your name. While you meet with the RTO annually and provide evidence of your ongoing professional development, this is to assure the RTO of compliance requirements for the purpose of using its RTO number and scope of training packages.

You bear any significant commercial risk for the training you conduct, and therefore maintain independent insurance policies.

You are not remunerated for your services by the RTO by way of commissions or any other fees.

Accordingly, the relationship between you and the RTO does not amount to an agency agreement. Therefore, as you are the supplier of the courses and are not an RTO nor acting as an agent for an RTO, the courses do not meet the definition of a tertiary course in section 195-1.

First Aid or Life Saving Course

For the supply of a first aid or life saving course to be GST-free under section 38-85, the course must satisfy both requirements under paragraphs (a) and (b) of the definition of a ‘first aid or life saving course’ in section 195-1.

The first requirement, under paragraph (a), is that a first aid or life saving course must be one that principally trains individuals in one or more of the following:

● first aid, resuscitation or other similar life saving skills including personal aquatic survival skills but not including swimming lessons

● surf life saving, or

● aero-medical rescue.

The second requirement, under paragraph (b) of the definition, is that the first aid or life saving course must be provided by an entity that relevantly:

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

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

(iii) 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),

(iv) 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)

(v) uses, as the instructor for the course, a person who holds a training qualification for that course that was issued by The Royal Life Saving Society – Australia (ACN 008 594 616), or

(vi) uses, as the 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 A New Tax System (Goods and Services Tax) Regulations 1999 (GST Regulations).

In relation to (b)(vi) above, GST Regulation 195-1.02 provides that the qualification specified is a qualification that is provided by an RTO under the National Training Framework; and certifies the attainment of all the competencies mentioned in column 2 of the table in Schedule 12 to the GST Regulations, with the unit codes mentioned in column 3 of Schedule 12. In other words, the instructor for the course is required to have these training qualifications.

Schedule 12 to the GST Regulations lists six first aid or life saving competencies the instructor for the course is required to have from an RTO under the National Training Framework. These competencies relate to water safety and none match the training courses you provide.

In respect to (b)(i) and (ii) above, you are not an RTO, nor are your registered as a course provider or approved to provide such courses by the relevant State or Territory authority or body. Also, you are not acting as agent for the RTO.

The Explanatory Memorandum to the Taxation Laws Amendment Bill (No. 9) 2003 (EM) outlines that the purpose of paragraphs b(iii) to (v) of the definition of ‘first aid or life saving courses’ was to provide an alternative to requiring bodies to be registered or approved:

1.9 A supply of an eligible life saving course will be a GST-free supply if the supplier uses an instructor that holds a training qualification that was issued by either of Austswim Limited, Surf life Saving Australia Limited or The Royal Life Saving Society - Australia.

1.10 The issue of a training qualification by one of the three life saving organisations to the course instructor represents an acceptable alternative to the need for the supplier of the relevant life saving course to be registered or approved by a State or Territory body or authority to conduct the relevant course.

1.11 What constitutes a 'training qualification' is not specified in the GST Act. The three life saving organisations conduct a number of training courses that enable persons to obtain a qualification suitable to the conduct of life saving courses. An example of a relevant qualification is the Austswim Teacher of Swimming and Water Safety award issued by Austswim Limited.

1.12 The training qualification held by the instructor must directly relate to a life saving course to which paragraph (a) of the definition of first aid or life saving course in section 195-1 of the GST Act applies. For example, the supplier of an aquatic survival skill course would need to use an instructor that holds a training qualification relevant to that course in order to treat the supply of the course as a GST-free supply.

The definition of a ‘first aid or life saving course’ provides that ‘a course’ that is provided by an entity ‘that uses, as the instructor for the course, a person who holds a training qualification for that course’ will be a first aid or life saving course.

You, as the course supplier, use your instructor for your training courses. Your instructor holds qualifications. However, (b)(iii) to (v) each specify that the entity uses as an instructor for that course, a person that holds a training qualification for that course that was issued by Austswim Limited (ACN 097 784 122), Surf Life Saving Australia Limited (ACN 003 147 180) or The Royal Life Saving Society – Australia (ACN 008 594 616) respectively. That is, the legislation specifies the training qualification for the course must be issued by one of those entities. As none of the qualifications were issued by any of these entities, (b)(iii) to (v) are not met.

Consequently the courses do not meet the second requirement of the definition and therefore are not a first aid or life saving course as defined in section 195-1.

Conclusion

You are not making supplies of tertiary courses, first aid or life saving courses or any other type of education course as defined in section 195-1. Consequently, you are not making GST-free supplies of education courses under section 38-85 when you supply the training courses.

The supplies of your training courses do not meet any other GST-free provisions, nor are they input taxed.

Your supplies of training courses to participants in Australia meet the taxable supply requirements under section 9-5 and are therefore subject to GST.

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