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Ruling
Subject: goods and services tax (GST) and education
Question:
Are your methods for calculating GST liabilities, input tax credits, proceeds from sales of courses, the fees for your services to the RTO, the amounts you pay the RTO and net figures under scenarios 1, 2 and 3 correct?
Answer:
Yes.
This ruling applies for the following periods:
The scheme commences on:
Relevant facts and circumstances
You are registered for GST.
You supply services to course suppliers, which are RTO.
You provided the following scenarios, which include examples that illustrate your understanding of how to calculate certain figures.
Scenario 1:
Under this scenario:
· The RTO sells an online course through its payment gateway GST-free because it deems that the course meets the GST-free criteria.
· An RTO invoices a student.
· The RTO manages details and records for compliance and the RTO issues certificates with its RTO number and name.
Example:
RTO sells a certain number of courses at a certain price each excluding GST = a certain amount of money.
No GST is payable to the Australian Taxation Office (ATO).
RTO net is a certain amount of money.
Scenario 2
Under this scenario:
· The RTO sells an online course through its payment gateway GST-free because it deems that the course meets the GST-free criteria.
· An RTO invoices a student.
· The RTO manages details and records for compliance.
· The RTO issues certificates with its RTO number and name.
· The RTO contracts you to perform administrative services.
Example:
RTO sells a certain number of courses at a certain price each excluding GST = a certain amount of money.
You invoice the RTO for the contracted services. Your charge is the number of courses supplied x a certain amount of money (before adding GST), which equals a certain amount of money plus GST (a certain amount of money) = a certain amount of money.
You would pay a certain amount of GST to the ATO.
The RTO would claim back the certain amount of GST from the ATO.
RTO net = a certain amount of money.
Your net would be a certain amount of money.
Grand total net would be a certain amount of money.
Scenario 3
Under scenario 3:
· An RTO offers an online course GST-free because it deems that the course meets the GST-free criteria.
· The RTO manages the details and records for compliance.
· The RTO issues certificates with its RTO number and name.
· The RTO contracts you to market and sell the courses and perform the administration on the RTO's behalf.
Example:
You, under direction from an RTO, sell a certain number of courses at a certain price each excluding GST through your payment gateway. You issue GST-free invoices on behalf of the RTO.
The total proceeds from the supplies of the courses would be a certain amount of money (the number of supplies of courses x price for course).
You would invoice the RTO for your services, which is the number of supplies of courses x a certain amount of money plus GST (a certain amount of money) = a certain amount of money.
You would pay the ATO a certain amount of money.
The RTO would claim back the certain amount of money from the ATO.
RTO net would be a certain amount of money.
Your net would be a certain amount of money.
Grand total net would be a certain amount of money.
You would pay the RTO a certain amount of money.
Meanings of certain terms:
· By 'RTO net', you mean the proceeds from the RTO's supplies of courses less the fee you charge for your services (if applicable) plus the RTO's input tax credit on its acquisition of services from you (if applicable).
· By 'your net ', you mean the charge for your services to the RTO less your GST liability.
· By 'grand total net', you mean the sum of RTO net and your net.
Relevant legislative provisions
A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1)
A New Tax System (Goods and Services Tax) Act 1999 section 9-5
A New Tax System (Goods and Services Tax) Act 1999 section 9-40
A New Tax System (Goods and Services Tax) Act 1999 section 9-70
A New Tax System (Goods and Services Tax) Act 1999 subsection 9-75(1)
A New Tax System (Goods and Services Tax) Act 1999 section 11-15
A New Tax System (Goods and Services Tax) Act 1999 section 11-20
A New Tax System (Goods and Services Tax) Act 1999 section 11-25
Reasons for decision
Scenario 1:
If an RTO sells GST-free courses, there would be no GST on the charge for the courses as GST is not payable on GST-free supplies.
If the RTO sells a certain number of GST-free courses at a certain price each, the total proceeds from the supplies of the courses would be a certain amount of money (number of courses supplied x price per course).
No GST would be payable to the ATO.
RTO net would be a certain amount of money.
Scenario 2
If an RTO sells GST-free courses, there would be no GST on the charge for the courses as GST is not payable on GST-free supplies.
If an RTO sells a certain number of GST-free courses at a certain price each, the total proceeds from the supplies of the courses would be a certain amount of money (the number of courses x the price per course).
GST is 10% of the value of a taxable supply.
The value of a taxable supply is 10/11ths of the price.
GST would be payable on your supply of services to the RTO.
If you charged the RTO a certain amount of money per course for the contracted services under scenario 2 (before adding GST) and there were a certain number of supplies of courses and the agreement you have with the RTO allowed you to charge GST on top of the certain amount of money per course, the GST exclusive value of your supply would be a certain amount of money (the fee you charge per course x the number of courses supplied). The GST you would charge would be a certain amount of money (the GST exclusive value of your supply x 10%). You would be liable to pay this GST to the ATO. The total charge for your services would be a certain amount of money (GST exclusive value of your services + the GST amount).
The amount of an input tax credit is equal to the GST component of the price of a taxable supply.
Where the GST liability on your supply of services to the RTO is a certain amount of money, the RTO would be entitled to an input tax credit of that amount of money.
RTO net would be a certain amount of money (the total proceeds from the supplies of the courses - your total charge + input tax credit amount).
Your net would be a certain amount of money (your total charge - your GST liability).
Grand total net would be a certain amount of money (RTO net + your net).
Scenario 3
If an RTO sells GST-free courses, there would be no GST on the charge for the courses as GST is not payable on GST-free supplies.
If you, under direction from an RTO, sell a certain number of courses at $100 each excluding GST, through your payment gateway, the total proceeds from the supplies of the courses would be $10,000 (100 x $100).
GST is 10% of the value of a taxable supply.
The value of a taxable supply is 10/11ths of the price.
GST would be payable on your supply of services to the RTO.
If you charged the RTO a certain amount of money per course for the contracted services under scenario 3 (before adding GST) and there were a certain number of supplies of courses and the agreement you have with the RTO allowed you to charge GST on top of the amount you charge per course, the GST-exclusive value of your supply would be a certain amount of money (your charge per course x the number of supplies of courses). The GST you would charge would be a certain amount of money (the GST-exclusive value of your supply x 10%). You would be liable to pay this GST to the ATO. The total charge for your services would be a certain amount of money (the GST-exclusive value of your supply + GST on your supply).
The amount of an input tax credit is equal to the GST component of the price of a taxable supply.
Where the GST liability on your supply of services to the RTO is a certain amount of money, the RTO would be entitled to an input tax credit of that amount of money.
RTO net would be a certain amount of money (the total proceeds from the supplies of the courses - your charge for the services you supply to the RTO + the RTO input tax credit).
Your net would be a certain amount of money (your charge for the services you supply to the RTO - your GST liability).
Grand total net would be a certain amount of money (the sum of the RTO net and your net).
You would pay the RTO a certain amount of money (the total proceeds from the supplies of the courses - your charge for the services you supply to the RTO).