Edited version of private ruling

Authorisation Number: 1011792438753

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Ruling

Subject: GST and education

Question 1

Is GST payable on the supply of the courses within the scope of your registration as a Registered Training Organisation (RTO)?

Answer 1

No, GST is not payable on the supply of the courses within the scope of your registration as a RTO as they are GST-free.

Question 2

Is GST payable on the materials and items you supply to students undertaking your courses?

Answer 2

No, GST is not payable on the materials and items you supply to students undertaking your courses, as the materials and items are GST-free.

Facts

N

You carry on an enterprise of providing training courses and are registered for goods and services tax (GST).

You are a registered training organisation (RTO).

Within the scope of your registration as a RTO, you are approved to deliver recognised training packages.

You provide the students with all their learning material in the form of training materials, work books, case studies and log books which have been printed from your computer system and assembled by you.

The manuals are used by the students within the classrooms and at home to complete the workbooks.

All the learning materials are included in the fee structure for each unit of study.

Reasons for decisions.

Question 1

GST is payable on any taxable supply that you make. Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you make a taxable supply if:

(a) you make a supply for consideration

(b) the supply is made in the course or furtherance of an enterprise that you carry on

(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.

Section 38-85 of the GST Act provides that a supply of an education course is GST-free. The term education course is defined in section 195-1 of the GST Act to include, amongst other things, a tertiary course.

To be GST-free as a tertiary course, a course must satisfy the Education Minister's determination under subsection 5D(1) of the Student Assistance Act 1973 currently the Student Assistance (Education Institutions and Courses) Determination 2009 (No.2).

The Education Minister's determination No.2009/2 provides that a vocational education and training program conducted by a Registered Training Organisation is considered to be a tertiary course.

The courses you deliver have been accredited as vocational educational and training courses by the regulatory authority in your state. In addition, you have advised that you are a RTO and that the accredited courses comprise competencies that are offered within your scope of registration as a RTO. Hence, the courses you supply satisfy the definition of a tertiary course and their supply is therefore GST-free under section 38-85 of the GST Act.

Question 2

You have advised that you charge a single fee which includes the cost of the learning material which is printed from your computer system and are assembled by you.

Section 38-95 of the GST Act provides that a supply of course materials for a subject undertaken in an education course is GST-free.

Goods and Services Tax Ruling GSTR 2001/1, which is available from our website www.ato.gov.au, discusses supplies that are GST-free for tertiary courses. GSTR 2001/1 advises that any fee that you charge for tuition and facilities associated with such a course is not subject to GST.

Section 195-1 of the GST Act defines course materials, in relation to an education course, as those provided by the supplier of the course that are necessarily consumed or transformed by students undertaking the course, for the purposes of the course. Therefore, for materials or items to be considered course materials, all of the following requirements must be met:

(i) The materials or items must be provided by you to students; and

(ii) The materials must be necessarily consumed or transformed by the students undertaking the course; and

(iii) The materials or items must be consumed or transformed for the purpose of the course.

First requirement:

GSTR 2001/1 discusses the meaning of provided by you to students. 'Provided' is not defined in the GST Act and therefore takes on its general meaning. 'Provide' is defined to mean to furnish or supply. 'Supply', in this context, takes on its ordinary meaning rather than its GST meaning and is defined to mean to furnish a person with what is lacking or requisite or to furnish or provide (something lacking or requisite). A 'requisite' is defined to mean a necessary thing or something required by circumstances.

It is your responsibility to determine what is needed by a student undertaking your course, for example by way of a book list. If you make these items available to students undertaking the course, whether or not by way of sale, the first requirement will be satisfied.

Second requirement:

To satisfy the definition of a course material, the materials must be necessarily consumed or transformed by students undertaking your course. 'Consumed' means destroyed or expended by use or used up. For example, pencils used by students to take notes in class. 'Transformed' means changed in form; changed to something of a different form. For example, cooking ingredients in a home economics class.

You have confirmed that the training materials will be used by the students within the classroom and at home. As such, these items satisfy the second requirement.

Third requirement:

Course materials are only those that are necessarily consumed or transformed by the students undertaking the course for the purpose of the course. 'Purpose' means the object for which anything exists or is done, made, used, etc or an intended or desired result; end or aim. For the purposes of the GST Act, only those materials listed by you as being necessary for a particular course or subject are GST-free. That is, only those consumable items that are required to undertake the course that are listed on a book list are GST-free.

You have indicated that the course materials are used for the purpose of the course, to complete the number of treatments required between each intensive training. As such the third requirement is satisfied.

We consider that you meet the three requirements when you supply learning materials to your students and that such supplies are GST-free as course materials under section 38-95 of the GST Act.