Edited version of private ruling

Authorisation Number: 1011721879251

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Ruling

Subject: GST and education course

Question

Is the supply of your specialised reading program a GST-free education course?

Answer

No, the supply of your specialised reading program is not a GST-free education course.

Facts

You supply a specialised intensive reading course (the program).

The program is designed to assist students who have reading difficulties.

It can be adapted depending on the learning style and individual needs of the student.

The program is generally provided in a group structure but it can also be done by correspondence.

A student's progress is monitored regularly.

Currently, you do not receive any government funding for this program.

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

Detailed reasoning

The supply of an education course is GST-free under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). An education course is defined in section 195-1 of the GST Act to mean:

· a pre-school course

· a primary course

· a secondary course

· a tertiary course

· a special education course

· an adult and community education course

· an English language course for overseas students

· a first aid or life saving course

· a professional or trade course, or

· a tertiary residential college course.

Of relevance to your case is a special education course. A course meets the requirements of a special education course as defined in section 195-1 of the GST Act if:

· it is a course of education

· it provides special programs, and

· the special programs are designed specifically for children with disabilities or students with disabilities (or both).

Goods and Services Tax Ruling GSTR 2002/1 provides guidance on supplies that are GST-free as special education courses and discusses the elements set out above.

Course of education

GSTR 2002/1 states at paragraphs 15 and 16 that a course of education is a course or program of study that involves systematic instruction, training or schooling in areas of scholastic and academic pursuits, vocational skills or personal development that is delivered to a group of children or students or to an individual child or student in the form of a series of lessons or classes, or a unit or module that forms part of a larger course.

Paragraph 17 of GSTR 2002/1 further states that the systematic instruction, training or schooling needs to have elements of interactive teaching, for example, delivery by an instructor or teacher, ongoing support and guidance, assessment of the child's or student's progress, monitoring or supervision and provision of feedback.

From all the information that you have provided, we consider that your specialised reading program meets the requirements of a course of education.

Special programs

Paragraph 19 of GSTR 2002/1 explains that a program is a special program if it is:

· designed specifically to meet the special needs of children or students with disabilities

· designed specifically to reduce or prevent the impact of disabilities for children or students with disabilities, or

· not made available to people generally.

Your program is made available to people generally and the information that you have provided does not state that it is designed specifically for children or students with disabilities (see discussion below under subheading 'Designed specifically for children or students with disabilities'). As such, it does not satisfy the requirement of a special program.

Example of a program that is a special program

Simone designs a program for dyslectic students that teach them strategies for recognising letters, numbers and mathematical symbols. Completing Simone's program enables her students to learn more effectively in the classroom. The program is not offered as part of the curriculum at the local schools that Simone's students attend. Simone only makes the program available to students who have been diagnosed as dyslectic and referred to her by an educational psychologist. The program that Simone designs has the characteristics of a 'special program' because it is:

· designed to meet the special needs of dyslectic children or students

· designed to reduce the impact that dyslexia has on the ability of these children and students to participate in the classroom, and

· not made available to children or students generally.

Designed specifically for children or students with disabilities

Paragraph 6 of GSTR 2002/1 explains that a GST-free special education course must be designed specifically for:

· children with disabilities, regardless of whether they are students, or

· students with disabilities, regardless of their age.

GSTR 2002/1 further explains at paragraph 30 that for the purposes of this Ruling, a child is someone who has not yet attained the age of eighteen. A student is someone who is enrolled, or will enrol, in a course or program of study involving systematic instruction, training or schooling in the areas of scholastic and academic pursuits, vocational skills or personal development. A student can be someone of any age and may be enrolled on a full or part-time basis.

GSTR 2002/1 also explains that a disability exists where an individual has difficulty in executing activities or has problems being involved in life situations because some body function or structure is impaired. It is accepted that a child or student has a disability if he or she is diagnosed with a learning disability/specific learning difficulty (including dyslexia), autism spectrum disorder, physical disability, an emotional disorder, a language disorder, a hearing impairment, a visual impairment or an intellectual disability that causes him or her difficulty in executing activities or problems in being involved in life situations.

Paragraphs 22 to 28 of GSTR 2002/1 provide guidance on how to determine whether a program is designed specifically for children or students with disabilities. It explains that the whole of the circumstances of the creation and delivery of the program needs to be considered and relevant matters include the four factors set out below:

1. Evidence of intention

This may be demonstrated by material that indicates the program is marketed specifically for children or students with disabilities. For example, the marketing material may provide details as to how a particular disability will be addressed.

2. Character of the program

The character of a special program may be established by considering its content, the place where it is delivered or how it will be delivered (or a combination of these things).

3. Recipients of the program

A special program needs to be designed specifically for children or students with disabilities. It is not necessary for people with disabilities to be the actual recipients of the program.

4. Relevant obligations

A large number of providers of special education operate within a regulatory environment. For example, to obtain government funding for the education of children or students with disabilities, providers are required to substantiate the proper use of the funds through means such as individual education plans. Programs based on these plans are specifically designed for children or students with disabilities.

You currently do not receive any funding.

The information about your reading program demonstrates that it is designed for students with reading difficulties. The program is provided in a group structure and can also be done by correspondence.

Reading difficulties may have their root cause in a disability but reading difficulty in itself is not a disability. Whilst you may modify the program to some extent to meet an individual's needs, the advertising material and the information that you have provided does not provide evidence to demonstrate that the program is marketed and designed specifically for children or students with disabilities, for example, dyslexia.

As such, your reading program is not designed specifically for children or students with disabilities.

Example of a course that is designed specifically for children or students with disabilities

A company designs programs for children and students who cannot use a standard keyboard to operate a computer because of their physical disabilities. Marketing statements indicate that these programs are intended for children and students who do not have upper limbs or do not have full use of their upper limbs. These programs are designed to teach children and students computing skills using prosthetic or orthotic aids, modified keyboards and/or voice activated software applications. They are designed specifically for children and students with disabilities because:

· marketing material confirms the supplier's intention to provide the programs to children and students with disabilities, and

· the programs' content and method of delivery confirms their character as programs designed for children and students with disabilities.

Examples of programs that are not special education courses

Example 1

An academy of education designs programs for children and students who are behind in their studies. The academy also designs courses for students who want to excel in their studies to gain scholarships or placements at selective schools.

Gemma is dyslectic and her parents have enrolled her at the academy. One of the academy's tutors works with Gemma, through a coaching program. The program is not modified in any way to suit Gemma. Although the program is delivered to a child or student with disabilities, it does not satisfy the definition of a special education course because it has not been designed specifically for children or students with disabilities.

Example 2

George provides tutoring services to students who do not have disabilities, but are having trouble keeping up with their schoolwork. The programs that George supplies are not special programs because they are not designed specifically for children or students with disabilities. Therefore, George is not supplying a special education course.

In conclusion, as explained above, your specialised reading program does not fall within the definition of a special education course and is therefore, not a GST-free education course under section 38-85 of the GST Act.

Consequently, the supply of your specialised reading program will be subject to GST where all the requirements of section 9-5 of the GST Act are satisfied.

Section 9-5 of the GST Act provides that an entity makes a taxable supply if:

· it makes the supply for consideration

· it makes the supply in the course or furtherance of an enterprise that it carries on

· the supply is connected with Australia

· it is registered or is required to be registered, and

· the supply is not GST-free or input taxed.

In your case, your supply is not GST-free or input taxed, you are registered for GST and you make the supply of the reading program for consideration in the course of your enterprise in Australia. As your supply meets all the requirements of section 9-5 of the GST Act, your supply of the specialised reading program is subject to GST.