Edited version of private ruling

Authorisation Number: 1011587321718

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Ruling

Subject: GST and supply of an education course

Question: Is the supply of the following training courses a GST-free supply under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999(GST Act)?

· Medium Rigid Truck Licence course

· Heavy Rigid Truck Licence course

· Heavy Combination Truck Licence course

· Multiple Combination Truck Licence course

Answer: Yes. The supply of the following training courses is a GST-free supply under section 38-85 of the GST Act.

· Medium Rigid Truck Licence course

· Heavy Rigid Truck Licence course

· Heavy Combination Truck Licence course

· Multiple Combination Truck Licence course

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

· You carry on a business as a driving school .

· You are registered for the goods and services tax (GST).

· As part of your business you supply the following training courses:

o Medium Rigid Truck Licence course

o Heavy Rigid Truck Licence course

o Heavy Combination Truck Licence course

o Multiple Combination Truck Licence course

· Obtaining the above licences allows the student to drive the following vehicles:

o Medium Rigid - Bus or truck more than 8 tonne with not more than two axles

o Heavy Rigid - Bus or truck more than 15 tonne with at least three axles

o Heavy Combination - Prime mover or truck more than 15 tonne with at least three axles or semi-trailer with at least two axles

o Multiple Combination - B double or road train

· You supply the practical training to enable the student to pass the practical driving test conducted by a State Transport Authority

· You issue certificates of achievement to students on completion of the course.

· The State Transport Authority issues the final licence and qualification.

· Under State law it is mandatory for a person to hold a particular driver's licence before they can enter or commence the relevant driving occupation.

Reasons for decision

These reasons for decision accompany the Notice of private ruling.

The supply of an education course is GST-free under section 38-85 of the GST Act. Paragraph (j) of the definition of education course in section 195-1 of the GST Act includes a professional or trade course.

A professional or trade course is defined in section 195-1 of the GST Act as meaning a course leading to a qualification that is an essential prerequisite:

· for entry to a particular profession or trade in Australia, or

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

For the purposes of the definition of a professional or trade course, the term 'essential prerequisite' is defined in section 195-1 of the GST Act in the following terms:

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 [among other things]:

 (a)   by or under an industrial instrument

The term industrial instrument is defined in section 195-1 of the GST Act as having the meaning given by section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) which states:

industrial instrument means:

(a)  an Australian law; or

(b)  an award, order, determination or industrial agreement in force under an

Australian law.

 In your case, it needs to be determined whether:

· the heavy vehicle driver training that you provide to students is a course,

· the course leads to a qualification,

· the qualification is an essential prerequisite that is imposed by or under an industrial instrument, and

· the qualification is an essential prerequisite for entry to, or to commence the practice of, a particular profession or trade.

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), provides guidance on supplies that are GST-free as professional or trade courses. In particular GSTR 2003/1 considers what is meant by the following terms: course, leads to a qualification, essential pre-requisite and industrial instrument.

Course

Paragraph 22 of GSTR 2003/1 states:

22. Whether you supply a course is a question of fact. In the context of the definition of a 'professional or trade course' in section 195-1, a course is a program of systematic and interactive instruction or training, for the acquisition of particular skills or knowledge. Indicators of a course include, but are not limited to:

· delivery of educational instruction through an instructor or teacher;

· ongoing support and guidance, for example, being available to answer questions;

· assessment of the individual's progress;

· monitoring or supervision;

· provision of feedback concerning the individual; and

· assessment of competency or satisfactory completion at the end of the program of instruction.

The details of the training show that the heavy vehicle driver training that you provide to students is a program of systematic and interactive instruction for the acquisition of the particular skills of driving heavy vehicles. The heavy vehicle driver training is a course for the purposes of the definition of a professional or trade course in section 195-1.

Leads to a qualification

Paragraph 44 of GSTR 2003/1 states in respect of when a licence is a qualification:

44. A relevant authority or professional or trade association may issue a licence or a certificate that qualifies a person to do certain things. For example, a licence to drive a particular class of heavy road vehicle, or a practising certificate. Where this is the case, the certificate or licence is a qualification for the purposes of the section 195-1 definition of a professional or trade course.

In your case, the qualification is the heavy vehicle driver licence that is issued by the local State Transport authority to students who have passed the assessments. The heavy vehicle driver licence is a qualification for the purposes of the definition of a professional or trade course in section 195-1. Although you do not issue the licence, the heavy vehicle driver training that you provide to students leads to the heavy vehicle driver licence being issued. There is a sufficiently direct and demonstrable connection between the heavy vehicle driver training that you provide and the heavy vehicle driver licence issued to students who have passed the assessments.

Qualification is an essential prerequisite imposed by or under an industrial instrument

 Under the section 195-1 definition of essential prerequisite, the qualification must be imposed, among other things, by or under an industrial instrument.

 Paragraph 48 of GSTR 2003/1 states:

48. 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.

You have advised that under State law it is mandatory for a person to hold a particular driver's licence before they can enter or commence the relevant driving occupation.

In your case, the heavy vehicle driver licence issued is a qualification that is imposed by or under an industrial instrument, that being, the State laws referred to above. The heavy vehicle driver licence is a qualification that is an essential prerequisite as it is mandatory for persons to hold heavy vehicle driver licences before they are legally entitled to drive heavy vehicles on public roads in the State.

Qualification is an essential prerequisite in respect of a particular profession or trade

Paragraph 65 of GSTR 2003/1 provides that, as the definition of a professional or trade course in section 195-1 refers to a particular profession or trade, there is a requirement that the qualification be specific to the profession or trade in question.

 Paragraphs 90 of GSTR 2003/1 states in respect of a trade:

90. The word trade is applicable to any skilled handicraft. It includes the operation of particular pieces of equipment or machinery.

The driving of a heavy vehicle is a skilled handicraft and involves the operation of a particular piece of equipment or machinery, that being, the heavy vehicle. You provide training in driving heavy vehicles of varying sizes and complexity, from an 8 tonne truck to a road train.

Different levels of skill are required to drive the different types of vehicle. This is why a specific licence is required and can be obtained only after training and testing in a vehicle representative of the class of vehicle authorised to be driven under the particular class of licence.

The driving of each of these types of heavy vehicle is considered to be a trade for the purposes of the definition of a professional or trade course in section 195-1 of the GST Act. The particular heavy vehicle driver licence is a qualification that is an essential prerequisite for the entry to, or to commence the practice of, a particular trade, that being, the driving of the various types of heavy vehicles, in Australia.

Conclusion:

Your supply of the four heavy vehicle driver training courses referred to in your letter is a professional or trade course within the meaning given in section 195-1 of the GST Act. The supply of these heavy vehicle driver training courses is a GST-free supply of an education course under section 38-85 of the GST Act.