Edited version of private ruling

Authorisation Number: 1011720783914

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Ruling

Subject: GST and supply of an education course

Question

Is the portion of the payment that the entity retains consideration for a supply of an education course?

Answer

No, the portion of the payment that the entity retains is not payment for a supply of an education course. It is payment for a taxable supply of its training/teaching services to the registered training organisation (RTO).

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.

· The entity is registered for goods and services tax (GST).

· The entity is not a RTO.

· The entity has entered into an agreement with a RTO.

· Under the agreement the entity will deliver the training of specific units of competency and do the following:

o The entity will assist the participants to complete the units of competency and ensure that they have a sound understanding of the content of each unit.

o The entity will be responsible for printing the workbooks.

o The entity will be responsible for ensuring the assessment sheets are completed and work books are returned to the RTO so that the RTO can complete the assessment process and mark competencies.

o Where modifications are requested, these will have to be approved by the Manager of the RTO prior to delivery to ensure compliance is maintained.

o The entity will ensure that all participants enrolled in the units of competency fill out a RTO enrolment form and forward it to the RTO.

o Any recognition of prior learning (RPL) will be applied for on the RTO's documentation.

o Feedback will be collected by the entity on behalf of the RTO by means of the questionnaire.

o The entity will at all times ensure that the RTO has a record of current qualifications of all staff delivering these units. The entity will ensure that its staff hold a certificate in Training and Assessment (TAA) and any other relevant training pertaining to the units the entity is responsible for under the RTO's scope of registration.

o The entity will provide the RTO information on all trainers who will be delivering training and assessment.

o The entity will provide an outline for its trainers' professional development, in particular, ensuring their TAA currency throughout the year.

· As a party to the agreement the RTO will be responsible for the assessing, record keeping, reporting of competencies to the State Authority (SA) and issuing of certificates for each participant.

· It will be the responsibility of both parties to work cooperatively for the delivery of the course. The RTO will support the entity's staff in the delivery and assessment of the course.

· Both parties may enrol participants and both market the course competency units, etc, on their websites.

· The enrolled participants pay $xxx to the entity for the course. The entity passes $xx on to the RTO in respect of the participants who are eligible to be issued with the certificates. The entity retains the rest of the payment for delivering its services.

· The entity and the RTO do not have a joint bank account.

· The RTO has advised that it is not registered for GST.

Reasons for decision

GST is payable on taxable supplies. A supply is a taxable supply if all the elements of section 9-5 of the GST Act are satisfied. Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (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 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.

(The asterisks indicate terms defined under section 195-1 of the GST Act)

All the elements of section 9-5 of the GST Act must be satisfied for there to be a taxable supply.

The entity has an agreement with a RTO to deliver a training course to participants enrolled with the RTO.

The RTO is making a supply of the course to the participants. The entity is not the supplier of the course. The entity is making a supply of training/teaching services to the RTO and providing these services to the participants who are enrolled with the RTO.

The entity supplies training/teaching services for consideration (retained portion of the fee) in the course or furtherance of its enterprise. The entity's supply is connected with Australia as it occurs within Australia and it is registered for GST. As such, the entity satisfies all the elements of section 9-5 of the GST Act.

The supply of the training/teaching services is neither GST-free nor input taxed. As the entity satisfies all the elements of section 9-5 of the GST Act, it is making a taxable supply of its training/teaching services to the RTO. As such, the portion of the payment that it retains as consideration is for that taxable supply and it is liable to remit 1/11 of that payment as GST to the ATO.