Senate

Further Supplementary Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 3 - Changes to the GST treatment of education

Introduction

3.1 This Chapter explains the amendments and requests for amendments to Division 38-B of the ANew Tax System (Goods and Services Tax) Bill 1998 (the Bill) that relate to education. In particular, the amendments will provide that:

•

certain adult and community education courses will be GST-free. For an adult and community education course to be GST-free, it must be likely to add to the employment related skills of the people who undertake the course; and

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certain first aid, resuscitation and other similar life saving courses run by non profit bodies will be GST-free.

3.2 The remainder of this Chapter will explain these amendments and requests for amendments in more detail.

Background

U Under section 38-85 of the Bill, an education course, and administrative services provided by the supplier of the education course and directly related to the supply of such a course, is GST-free.

3.4 Section 195-1 (the Dictionary ) of the Bill provides the definition of an education course as being:

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a pre-school, primary, secondary or tertiary course;

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a Masters or Doctoral course;

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a special education course;

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an English language course for overseas students;

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a professional or trade course; or

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a tertiary residential college course.

3.5 Apart from the supply of education courses being GST-free, Division 38-B of the Bill contains other rules that apply to education courses. The main rules are:

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an excursion or field trip that is directly related to the curriculum of an education course and is not predominantly recreational is generally GST-free (section 38-90);

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a supply of course materials for a subject undertaken in an education course is generally GST-free (section 38-95); and

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a supply by way of sale, lease or hire of goods that relate to an education course, and membership of student organisations, are not GST-free (section 38-100).

3.6 Further information about the treatment of education courses can be found in paragraphs 5.33 to 5.64 of the Explanatory Memorandum to the Bill.

Explanation of the amendments

3.7 The amendments will amend the definition of education course to include the following courses:

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an adult and community education course [Request 12 to the Bill and Amendment 10 to the Bill] ; and

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a first aid or life-saving course [Request 13 to the Bill and Amendment 21 to the Bill] .

3.8 An adult and community education course or a first aid or life saving course will be an education course for the purpose of the GST if it satisfies all of the requirements set out in the Bill. If it does, the supply of such a course will be GST-free under section 38-85 and will also be subject to the other concessions as described in paragraph 3.5 above.

Adult and community education courses

3.99 Request 12 to the Bill inserts paragraph (fa) adult and community education course into the definition of education course in the Dictionary . Amendment 10 to the Bill inserts into the Dictionary , the definition of adult and community education course.

3.10 An adult and community education course must be a course of study or instruction and must satisfy all of the following conditions:

1.

The course must be of a kind determined by the Education Minister to be an adult and community education course.

2.

The course must be provided by a body that is either:

(a)

a higher education institution (eg. a university);

(b)

recognised by a State or Territory authority, as a provider of courses of a kind described in the Education Ministers determination; or

(c)

funded by a State or Territory authority on the basis that it is a provider of courses of a kind described in the Education Ministers determination.

3.

The course must be likely to add to the employment related skills of people undertaking the course.

[Amendments 11 and 13 to the Bill]

3.11 It is important to note that the Education Minister is not responsible for determining whether an adult and community education course is likely to add to the employment related skills of people undertaking the course. This criteria is separate from the Ministers determination, and will depend on the facts of each case.

3.12 In addition to the 3 criteria set out in paragraph 3.10 above, the Education Minister may also make a determination that a course be an adult and community education course (paragraph (b) of the definition of adult and community education course in the Dictionary ). For such a course to be an education course, and therefore, GST-free, it must:

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be determined by the Education Minister to be an adult and community education course; and

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be likely to add to the employment related skills of people undertaking the course.

3.13 Again, the Education Minister will not determine that a particular course is likely to add to the employment related skills of people undertaking the course.

First aid or life saving courses

3.14 Request 13 to the Bill inserts paragraph (ga) first aid or life saving course into the definition of education course in the Dictionary . Amendment 21 to the Bill inserts into the Dictionary , the definition of first aid or life saving course.

3.15 Essentially, a first aid or life saving course will be an education course, and therefore GST-free, where it is a course of study or instruction and it meets all the following conditions:

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the course must principally involve training individuals in first aid, resuscitation or other similar life saving skills; and

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it must be provided by a non-profit body that is either:

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

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approved to provide such courses by a State or Territory body that has responsibility for approving the provision of such courses.

[Amendment 21 to the Bill]