Edited version of private advice

Authorisation Number: 1052146850399

Date of advice: 21 June 2024

Ruling

Subject: GST and supply of an education course

Question 1

Is the supply of the course a GST-free supply of an education course under paragraph 38-85(a) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act?

Answer

Yes.

Question 2

Is the supply of the prerequisite course a GST-free supply of an education course under paragraph 38-85(a) of the GST Act?

Answer

Yes.

This private ruling applies for the following period:

Commencing ddmmyyy and ending ddmmyyy

Relevant facts and circumstances

You are registered for GST. You provide an education course and a prerequisite course.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 Section 38-85

Reasons for decision

Please note all references to legislation are to the A New Tax System (Goods and Services Tax) Act 1999 unless otherwise specified.

Questions

1.    Is the supply of the course a GST-free supply of an education course under paragraph 38-85(a)?

2.    Is the supply of the prerequisite course a GST-free supply of an education course under paragraph 38-85(a)?

Summary

1.    The course is a professional or trade course and its supply is a GST-free supply of an education course under paragraph 38-85(a).

2.    The prerequisite course is a professional or trade course and its supply is a GST-free supply of an education course under paragraph 38-85(a).

Detailed reasoning

Paragraph 38-85(a) provides that a supply is GST-free if it is a supply of an education course.

The term 'education course' is defined in section 195-1 to include amongst others a 'professional or trade course'. The term 'professional or trade course' is also defined in section 195-1 as:

a course leading to a qualification that is an *essential prerequisite:

(a)  for entry to a particular profession or trade in Australia; or

(b)  to commence the practice of (but not to maintain the practice of) a profession or trade in Australia.'

For the purposes of this ruling, none of the other "education courses" mentioned in section 195-1 are relevant.

Goods and Services Tax Ruling GSTR 2003/1 Goods and services tax: supplies that are GST-free as professional or trade courses (GSTR 2003/1) explains the meaning of 'professional or trade course' in section 195-1. The supply of a course that meets the requirements of the definition is an education course that is GST-free under paragraph 38-85(a).

First requirement - Does the course lead to a qualification?

'Qualification' is not defined in the GST Act and the term therefore takes its ordinary meaning. The Macquarie Dictionary online, www.macquariedictionary.com.au, accessed 20 June 2024, defines 'qualification' as 'a quality, accomplishment, etc., which fits for some function, office, etc'.

Paragraph 44 of GSTR 2003/1 provides that a relevant authority or professional or trade association may issue a licence or a certificate that qualifies a person to do certain things.

Second requirement - Is the qualification an essential prerequisite for entry to, or to commence the practice of a profession or trade in Australia?

For the purposes of the definition of 'professional or trade course, the term 'essential prerequisite' is defined in section 195-1 as:

a qualification is an essential prerequisite in relation to the entry to, or the commencement of the practice of, a particular profession or trade if the qualification is imposed:

(a) by or under an *industrial instrument; or

(b) if there is no industrial instrument for that profession or trade but there is a professional or trade association that has uniform national requirements relating to the entry to, or the commencement of the practice of, the profession or trade concerned - by that association; or

(c) if neither paragraph (a) nor (b) applies but there is a professional or trade association in a State or Territory that has requirements relating to the entry to, or the commencement of the practice of, the profession or trade concerned - by that association.

Paragraph 47 of GSTR 2003/1 provides that under the definition of 'essential prerequisite', the qualification must be imposed by or under an industrial instrument or if not, by a professional or trade association that operates on a national or at a State or Territory level.

Paragraph 48 of GSTR 2003/1 provides that a qualification is an essential prerequisite if it is mandatory for a person to have the qualification before he or she can enter into, or commence the practice of, a particular profession or trade. This necessarily requires the imposition of penalties or sanctions if a person enters into, or commences the practice of, the profession or trade without the relevant qualification.

Paragraph 60 of GSTR 2003/1 states the following:

60. If more than one professional or trade association, either at national level or for a particular State or Territory, has requirements relating to the entry to, or the commencement of the practice of, the profession or trade concerned, no qualification, set by any of the associations as a requirement for entry or commencement, would be 'an essential prerequisite'. None of the associations can prevent someone entering that profession or trade through one of the other associations.

Footnote 13 was added to paragraph 60 to note that two associations that, at first may seem to be imposing qualifications for the same profession or trade, may in fact be representing specialisations that are different professions or trades.

Paragraph 69 of GSTR 2003/1 provides that a professional or trade association may impose more than one qualification for entry to, or to commence the practice of, a particular profession. Each qualification may be an essential prerequisite if it is specifically for entry to, or to commence the practice of, the profession. Paragraph 73 further provides that where a professional association imposes one of a choice of two or more qualifications for entry to, or to commence the practice of, a particular profession, each qualification is an essential prerequisite.

Paragraphs 92 to 94 in GSTR 2003/1 and the example at paragraph 95 deal with specialisations within a particular profession or trade as opposed to separate professions or trades. Relevantly, they state:

92. For the purposes of the definition of a 'professional or trade course' in section 195-1, a distinction must be drawn between a course that provides a qualification to enter into a profession or trade and one that is undertaken to acquire specialist or additional skills within that profession or trade.

93. A course leading to a qualification that merely enhances a recipient's proficiency to undertake a wider range of activities in his or her profession or trade, is not a professional or trade course.

94. For a specialisation to be characterised as a separate profession or trade, its attributes must be more than merely a set of additional skills or endorsements that enable a person to undertake different tasks within their profession or trade. Whether a specialisation within a profession or trade in a broader sense is a separate profession or trade will require a practical judgment having regard to a range of factors in each case, including whether:

•         the specialisation services a different client base;

•         the tasks performed are in a different field of learning or science;

•         the specialisation is covered by an industrial instrument that specifically deals with that specialisation;

•         the specialisation has its own distinct professional or trade association that determines the educational or qualification requirements for entry into that specialisation; and

•         any additional study of significant duration is required in order to perform the tasks in that specialisation.

Course

We accept that the program leads to a qualification and the first requirement is satisfied.

A qualification is an essential prerequisite in relation to the entry to, or the commencement of the practice of, a particular profession or trade if the qualification is imposed:

(a)  by or under an *industrial instrument; or

(b)  if there is no industrial instrument for that profession or trade but there is a professional or trade association that has uniform national requirements relating to the entry to, or the commencement of the practice of, the profession or trade concerned - by that association;...

To determine if there is a professional or trade association that has uniform national requirements relating to the entry to, or the commencement of the practice of the profession; we need to ascertain what the profession is.

Therefore, it is considered that a qualification is an essential prerequisite in relation to the entry to and the commencement of the practice of being a profession.

Hence, the course is a professional or trade course and its supply is a GST-free supply of an education course under paragraph 38-85(a).

Prerequisite course

The prerequisite course is a pathway to commencing the course. The number of prerequisite course subjects to be undertaken by a candidate will depend on their prior education.

The candidate's tertiary qualifications and/or the completion of the prerequisite course are required to commence the course. Hence, we consider the prerequisite course to form an additional requirement, for some candidates, for entry to the profession and therefore it is an essential prerequisite for entry to, or commencement of the practice of the profession. Hence, the prerequisite course is a professional or trade course and its supply is a GST-free supply of an education course under paragraph 38-85(a).

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