Edited version of your written advice

Authorisation Number: 1051493294511

Date of advice: 14 March 2019

Ruling

Subject: Goods and services tax (GST) and a supply of training and assessment services

Question

Is a supply of training and assessment services by an Australian entity (you) to a registered training organisation (RTO) subject to GST?

Answer

Yes. Your supply of training and assessment services to RTO is a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and therefore subject to GST.

Relevant facts and circumstances

You are an Australian entity which is registered for GST.

RTO is an Australian company which is registered for GST.

You are planning to enter into a “Supply Agreement” (Agreement) with RTO to provide training and assessment services to RTO’s clients on its behalf.

All training courses are to be delivered and assessed in accordance with RTO’s Training material that will be made available to you and trainers.

Under the Agreement, RTO and you are independent entities. The Agreement does not create any employment, agency, franchise, joint venture, partnership or similar legal relationship between you and RTO. Neither party will have any right or authority to act on behalf of the other party.

RTO is responsible for all the administration aspects of the training courses. The effective control of the course is with RTO.

RTO decides fees and charges for the training courses.

Students enrol the training courses with RTO and pay the course fees directly to RTO.

You provide your training services at the locations and facilities provided by RTO.

Training materials, learning and assessment guides used for the delivery of services will be provided by RTO. You will notify RTO if you believe that there are errors, or other issues, with the Training Materials. You do not to provide the training materials yourselves.

You will print sufficient copies of training materials and associated documentation required to provide your training and assessment services.

You deliver the course and determine if the students are in a competent position to sit in from of a Safe work assessor for licencing.

A statement of attainment is issued by RTO to the students after successfully completing the training courses.

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

Reasons for decision

GST is payable on a taxable supply. Section 9-5 of the GST Act 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 the indirect tax zone (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.

(*denotes a defined term in section 195-1 of the GST Act)

Your supply of training and assessment services to RTO will be taxable if all the requirements in section 9-5 of the GST Act are satisfied.

From the facts given, the supply of training and assessment services by you to RTO satisfy paragraphs 9-5(a) to 9-5(d) of the GST Act, as follows:

(a) you make the supply of training and assessment services in return for consideration by way of payments;

(b) the supply is made in the course of your business;

(c) the courses are performed/provided in Australia or made through an enterprise that you carry on in Australia (and therefore the supply is connected with Australia); and

(d) you are registered for GST in Australia.

However, section 9-5 of the GST Act also provides that the supply is not taxable to the extent that it is GST-free or input taxed.

Your supply of training and assessment services to RTO does not satisfy the input taxed provisions under the GST Act. The GST-free provisions are taken into consideration.

GST-free

A supply of an education course is GST-free under section 38-85 of the GST Act. An education course is defined in section 195-1 of the GST Act to include among other things;

● a tertiary course;

● an adult and community education (ACE) course; and

● a professional or trade course.

Each of the above courses is further defined under section 195-1 of the GST Act.

Based on the facts provided, you have entered into an Agreement with RTO to deliver their training courses to their clients; therefore, we need to determine firstly what supplies are being made under the contractual agreements and who is making the supplies.

Goods and Services Tax Ruling GSTR 2006/9 (which is available from the Australian Taxation Office's (ATO) website at www.ato.gov.au) discusses supplies in tripartite or multi party arrangements. In two party transactions, a thing supplied to an entity is typically also provided to that entity. In more complex arrangements involving more than two entities, which we refer to as tripartite or multi party arrangements, analysis may reveal:

● a supply made to one entity but provided to another entity

● two or more supplies made, or

● a supply made and provided to one entity and third party consideration.

Furthermore, indicators of whether you are the supplier of an education course include who controls:

● the selection of and enrols the students;

● the requirements for course content, accreditation and the issue of any qualification;

● the regulations and procedures for the conduct of the course; and

● the marketing and quality assurance of the course.

Based on the information provided, RTO conducts training courses under section 38-85 of the GST Act. Students enrol with and pay fees directly to RTO. When students complete the course, RTO as RTO issues the statement of attainment.

You have no contractual agreement relationship with the students to provide the training courses. You make a supply of training and assessment services to RTO and provide your services to the students on behalf of RTO.

Under the Agreement between you and RTO and applying the ATO view in GSTR 2006/9, there are two supplies being made for GST purposes:

● a supply of services from you to RTO, and

● a supply from RTO of an education course to the course participants

In relation to the first supply above, we consider that you are not supplying an education course but rather are supplying RTO with training and assessment services which in turn are provided to the students pursuant to the terms and conditions of the Agreement. RTO supplies the training courses to the students that are delivered by you on behalf of RTO.

Therefore, you are supplying training and assessment services to RTO. RTO supplies the training courses and also supplies statement of attainment to the course participants.

Accordingly as you are not supplying an education course to the students but rather you are supplying training and assessment services to RTO, your supply of training assessment services is not GST-free under section 38-85 of the GST Act.

Conclusion

The supply of training and assessment services by you to RTO does not satisfy the requirements of GST-free education courses under section 38-85 of the GST Act and are not GST-free. Furthermore, the supply of training and assessment services by you to RTO do not satisfy any other GST-free provisions.

Therefore, the supply of training and assessment services by you to RTO is a taxable supply under section 9-5 of the GST Act and is subject to GST.

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