Edited version of private advice

Authorisation Number: 1052088497729

Date of advice: 28 February 2023

Ruling

Subject: GST - education

Question 1

Is each supply of the non-accredited Certificate of Fashion Design (Certificate), by Online Education to Australian resident students, GST-free under paragraph 38-85(a) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes, the supply of the non-accredited Certificate of Fashion Design will be GST-free under Section 38-85 of the GST Act.

Question 2

Is each supply of the accredited MST50119 - Diploma of Applied Fashion Design and Merchandising (Diploma), by Online Education to Australian resident students, GST-free under paragraph 38-85(a) of the GST Act?

Answer

Yes, the supply of the non-accredited Certificate of Fashion Design will be GST-free under Section 38-85 of the GST Act.

Question 3

Are the following supplies, by Online Education to Australian resident students, GST-free under paragraph 38-85(b) of the GST Act?

1.    each supply of an extension granted to complete the Certificate over an extended period of up to 12 months;

2.    each supply of an extension granted to complete the Diploma over an extended period of up to 12 months.

Answer

The following supplies by Online Education to Australian resident students are GST-free under paragraph 38-85(b) of the GST Act:

1. Each supply of an extension granted to complete the following Certificate Course over an extended period of up to 12 months.

2. Each supply of an extension granted to complete the Diploma Course over an extended period of up to 12 months.

Question 4

Is each supply by Online Education to an Australian resident student, who has previously completed the Certificate, of recognition of this prior learning via the Recognition of Prior Learning (RPL) process when the student undertakes the Diploma, GST-free under section 38-110(1)(a) of the GST Act?

Answer

Yes, each supply by Online Education to an Australian resident student who has previously completed the non-accredited Certificate Course of recognition of this prior learning via the Recognition of Prior Learning process when the student undertakes in the future the Diploma Course is GST-free under section 38-110 of the GST Act.

Question 5

Will future courses that have the same features and objectives as the Certificate, Diploma, and Prior Ruling Supplies that are supplied by Online Education to Australian resident students be GST-free under paragraph 38-85(a) of the GST Act?

Answer

The Commissioner will decide on future courses only after considering all the relevant facts of the circumstances of these courses.

This ruling applies for the following period:

XX XXX XXXX to XX XXX XXXX

The scheme commenced on:

XX XXX XXXX

Relevant facts and circumstances

XXX (You) is a privately operated provider of XXX courses and has been registered for GST since XXX.

You commenced supplying the XXX on XXX.

The Certificate course consists of XXX and XXX.

The Diploma course consists of XXX and XXX.

The Certificate course is close to the Diploma in respect to the modules and assignments.

You provide support to students XXX for each of the Courses. A personal tutor is also provided to assist each student and to mark their assignments.

Since XXX, XXX has been registered with the Federal Government's Australian Skills Quality Authority (ASQA) under the National Vocational and Education and Training Regulator Act 2011 (Cth) (NVETR Act) as a Registered Training Organisation (RTO) with the RTO code XXX.

According to the Certificate of Registration, XXX originally registered XXX, and then XXX.

The Certificate of Registration states that Online Education's registration under the NVETR Act is subject to its continued compliance with the:

•        VET Quality Framework;

•        conditions set out in sections 22 to 28 of the NVETR Act; and

•        conditions imposed on the organisation's registration under subsection 29(1) of the NVETR Act.

As a result of its registration with ASQA under the NVETR Act, XXX has been approved by the Australian Government Department of Education and Training (Australian DET) to offer the following (but not limited to) accredited Diploma Course:

•        XXX

Currently your website promotes the XXX as:

•        XXX

•        The Diploma has been accredited by ASQA and is a VET course within the meaning of section 3 of the NVETR Act and is also an approved courses within the meaning of the VET Student Loans Act 2016.

•        XXX does not provide any associated items with the supply of the Certificate and Diploma, for example accommodation, course materials, excursions, or meals.

•        Students of both the Certificate Courses and the Diploma Courses have the ability to purchase Extensions:

o   XXX

Your website also states "XXX This involves payment of a fee to you.

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

Reasons for decision

Questions 1 and 2

Section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states:

A supply is GST-free if it is a supply of:

(a)  an * education course; or

(b)  administrative services directly related to the supply of such a course, but only if they are supplied by the supplier of the course.

Terms marked with asterisks (*) are defined in section 195-1 of the GST Act.

Relevantly, an "education course" is further defined in section 195-1 of the GST Act to include a tertiary course and an adult and community education course.

Are the Diploma Course and Certificate Course delivered Tertiary courses?

A tertiary course is defined in the GST Act as follows:

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

(aa) a course of study or instruction accredited at Masters or Doctoral level and supplied by a * higher education institution or a * non-government higher education institution; or

(b) any other course of study or instruction that the Student Assistance Minister has determined is a tertiary course for the purposes of this Act.

What needs to be determined in this instance is whether the courses offered by XXX come within paragraph (a) or (b) of the definition of a tertiary course.

The Student Assistance (Education Institutions and Courses) Determination 2019 made under subsections 3(1) and 5D(1) of the Student Assistance Act 1973 defines tertiary courses as follows:

11 Tertiary courses

(1)  For paragraph 5D(1)(a) of the Act, a tertiary course is a full-time course:

(a)  that is:

(i)         specified in Column 1 of the table in Schedule 2 to this instrument and provided by an education institution specified for that course in Column 2 of that table; and

(ii)        for a course specified in item 5 or 8 of that table -an approved course within the meaning of the VET Student Loans Act 2016; and

(iii)      for a course specified in item 10 of that table-to the extent that the course consists of study in a VET course, an approved course within the meaning of the VET Student Loans Act 2016; or

(b)  that is:

(i)         accredited at Masters level; and

(ii)        specified in Column 2 of the table in Schedule 3 to this instrument; and

(iii)      provided by the education institution specified for that course in Column 1 of that table; or

(c)   to which section 12 of this instrument applies.

(2)  Without limiting subsection (1), a course that meets the requirements of paragraph (1)(a), (b) or (c) and is not a full-time course is a tertiary course for the purposes of section 1061PC of the Social Security Act 1991.

(3)  For paragraph 5D(1)(b) of the Act, a unit of a course mentioned in subsection (1) or (2) is part of a tertiary course.

The relevant items in Schedule 2 to consider are items 4, 5 and 8 that are as follows:

'VET course' has the meaning that term is given in section 3 of the National Vocational Education and Training Regulator Act 2011.

Diploma Course

Given that you are an RTO and the Diploma Course is a VET accredited course, it falls within item 5 of Schedule 2 (because they fall within column 1 and column 2 of Schedule 2).

The course is also an approved course within the meaning of the VET Student Loans Act 2016.

The A New Tax System (Goods and Services Tax) (Tertiary Courses) Determination 2017 defines VET course and approved course as follows:

VET course has the same meaning as in the Student Assistance Determination.

approved course has the same meaning as in the VET Student Loans Act 2016

Accordingly, the Diploma Course falls within the meaning of a tertiary course for the purposes of the GST Act.

Certificate Course

The Certificate Course does not meet the requirements of the definition of a Tertiary course.

Are the Certificate Courses delivered by XXX Adult and Community Education (ACE) courses?

An Adult and Community Education course (ACE course) is defined in section 195-1 of the GST Act as follows:

adult and community education course means a course of study or instruction that is likely to add to the employment related skills of people undertaking the course and:

(a)  is of a kind determined by the *Student Assistance Minister to be an adult and community education course and is provided by, or on behalf of, a body:

(i)    that is a * higher education institution; or

(ii)   that is recognised, by a State or Territory authority, as a provider of courses of a kind described in the determination; or

(iii)  that is funded by a State or Territory on the basis that it is a provider of courses of a kind described in the determination; or

(b)  is determined by the Student Assistance Minister to be an adult and community education course.

The Commissioners' views in regard to an ACE course is outlined in Goods and Services Tax Ruling Goods and services tax: adult and community education courses; meaning of "likely to add to employment related skills" (GSTR 2000/27).

GSTR 2000/27 states the following:

What is likely to add to the employment related skills of people undertaking an adult and community education course?

15. The test as to whether an adult and community education course is likely to add to the employment related skills of people undertaking the course is an objective test and not dependent on the subjective intention of the providers of the course or the recipients. However we consider a course satisfies the test if the course meets the following requirements:

(a)  It is directed at people who want to add to their employment related skills; and

(i)    The objectives of the course specify the employment related skills that participants will acquire in undertaking the course; and

(ii)   The means of imparting the skills to the participants are clearly identified prior to the commencement of the course; and

(iii)  There is a reasonable expectation that the skills being developed will be used in the course of being an employee, or working in a business, occupation, profession or trade, rather than for recreational, hobby, artistic or cultural endeavours.

16. In addition to the criteria outlined in paragraph 15, you should also consider the following:

(a)  How the course is marketed.

(b)  A course that markets the employment related skills that will be acquired by undertaking the course will support your conclusion that the course will, on the balance of probabilities, add to the employment related skills of the participants.

(c)   Whether the course is similar to an accredited vocational education and training (VET) program.

(d)  If you can clearly demonstrate that a majority of the course content is the same as part or all of a recognised VET program, this factor will support your contention that the course is likely to add to employment related skills of people undertaking the course.

(e)  The outcomes of the course.

(f)    If you can present evidence that the majority of people undertaking your course are gaining employment relevant to the skills they have acquired in the course, this would also demonstrate that the course is likely to add to the employment related skills of people undertaking the course. There must be a reasonable expectation that the course is going to "add to the employment related skills of people undertaking the course".

It is our view the Certificate Course is likely to add to the employment related skills of people undertaking these courses. For instance, it is our view that the marketing material are directed at people who want to add to their employment related skills; and

(i)    The objectives of the course specify the employment related skills that participants will acquire in undertaking the course; and

(ii)   The means of imparting the skills to the participants are clearly identified prior to the commencement of the course; and

(iii)  There is a reasonable expectation that the skills being developed will be used in the course of being an employee, or working in a business, occupation, profession or trade, rather than for recreational, hobby, artistic or cultural endeavours.

Further, the Diploma Course is an accredited VET course, and the course material of the Certificate Courses is similar to the course content of the Diploma Course. This can be found in both the course outlines and required modules being closely aligned.

Your marketing material provides a pathway for people to gainful employment due to the course being recognised by several international bodies and provides an opportunity for students to XXX and XXX. There's also professional workplace modules such as "XXX" and "XXX", which would be of no use to those not wishing to enter employment in the industry. This qualification can be used to increase the students experience and overall ability in an effort to gain access to employment within the industry.

On this basis, it is our view that the Certificate Course falls within the meaning of an ACE course. Accordingly, the supply of this course is a supply of GST-free education course.

Question 3

It is our view that the fees charged for the following services come within paragraph 38-85(b) of the GST Act as fees for administrative services that are directly related to the supply of the GST-free courses.

(a)  Each supply of XXX.

(b)  Each supply of XXX.

Question 4

It is our view that the supply by XXX (RTO) to an Australian resident student who has previously completed the non-accredited Certificate Course of recognition of this prior learning via the Recognition of Prior Learning process when the student undertakes in the future the Diploma Course is considered as a supply of an assessment for the purpose of access to education. Accordingly, this supply is GST-free under section 38-110 of the GST Act.

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