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Ruling

Subject: GST and supply of yoga teacher training

Question

Is a training course conducted by you to train students to become yoga instructors, considered to be a GST-free education course for the purposes of section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act)?

Answer

No. The yoga instructor training course is not considered to be a professional or trade course, thus it is not a GST-free education course.

Relevant facts and circumstances

You are an individual sole trader that carries on a business of yoga teaching. You are registered for GST.

You are a private school and you are not a registered training organisation (RTO).

You also conduct courses to teach students to become instructors in your industry.

Your course is accredited by a private industry association that ensures your curriculum is adhered to and meets their requirements. This association is not an RTO, but they are a nationally recognised professional association that imposes uniform requirements for its members. Your instructor training course qualification is an essential prerequisite for entry into this association.

You advise that instructors in your industry must undertake training with an accredited school to be able to obtain professional indemnity and public liability insurance. Many prospective employers will require their instructors to obtain insurance before they commence practice as a teacher; however this is dependent on the employer.

There is no industrial instrument that requires a person to have this particular qualification as an essential prerequisite before they can commence work as an instructor in your industry.

There is no current national, State or Territory professional or trade association that imposes uniform national entry requirements for instructors to obtain admission into their organisation.

There are a number of private industry associations within Australia that qualified instructors may wish to join. They would need to complete any industry training with a preferred accredited provider to obtain accreditation and to be eligible for membership in their chosen association.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999, Section 7-1

A New Tax System (Goods and Services Tax) Act 1999, Section 9-5

A New Tax System (Goods and Services Tax) Act 1999, Section 38-85

A New Tax System (Goods and Services Tax) Act 1999, Paragraph 38-85(a)

A New Tax System (Goods and Services Tax) Act 1999, Section 195-1

Reasons for decision

Subsection 7-1(1) of the GST Act provides that GST is payable on taxable supplies.

The supply of a training course will be taxable if it satisfies all the elements of section 9-5 of the GST Act. Under section 9-5 of the GST Act you make a taxable supply if:

· you make the supply for consideration

· the supply is made in the course or furtherance of an enterprise that you carry on

· the supply is connected with Australia, and

· you are registered, or required to be registered, for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

The facts indicate that your supply of a training course satisfies the requirements under paragraphs 9-5(a), 9-5(b), 9-5(c) and 9-5(d) of the GST Act as the supply is made for consideration, the supply is made in the course or furtherance of your enterprise, the training course is conducted in Australia and you are registered for GST.

Therefore, your supply of the instructor training course will be a taxable supply under section 9-5 of the GST Act, unless the supply is GST-free or input taxed.

An education course is GST-free under section 38-85 of the GST Act. The term 'education course' is defined in section 195-1 of the GST Act and consists of a number of different courses. The instructor training course that you supply has been considered under the category of a professional or trade course.

Professional or Trade Course

Section 195-1 of the GST Act provides that a 'professional or trade course' is:

· 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 a profession or trade in Australia.

The views of the Commissioner of Taxation (Commissioner) as to what supplies are GST-free as a professional or trade course are contained in Goods and Services Tax Ruling GSTR 2003/1 (GSTR 2003/1).

First requirement - leading to a qualification

Your course must lead directly to a qualification, for example a certificate or licence that is awarded to a person undertaking your course upon successful completion of all of the units or modules that make up your course. Your course must provide the requisite skills and knowledge for an individual to attain the qualification at the conclusion of your course.

As you issue the person undertaking your course with a certificate of competency or documentation that certifies that he/she has undertaken and successfully completed your course it is accepted that your course leads to a qualification. Therefore the first requirement is satisfied.

Second requirement - qualification to be an essential prerequisite

Section 195-1 of the GST Act defines essential prerequisite, which provides that:

a qualification is an essential prerequisite in relation to the entry to, or commencement of the practice of, a particular profession or trade if the qualification is imposed:

(a) by or under an industrial instrument; or

(b) if there is no industrial instrument for that profession or trade but there is a professional or trade association that has uniform national requirements relating to the entry to, or the commencement of the practice of, the profession or trade concerned - by that association; or:

(c) if neither paragraph (a) or (b) applies but there is a professional or trade association in a State or Territory that has requirements relating to the entry to, or the commencement of the practice of, the profession or trade concerned - by that association.

Under paragraphs 48 of GSTR 2003/1, the Commissioner is of the view that a qualification is an essential prerequisite if it is mandatory for a person to have the qualification before he/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.

Further, paragraph 49 of GSTR 2003/1 provides that a qualification that is imposed for reasons other than for entry to, or to commence the practice of, a profession or trade, is not an essential prerequisite for the purposes of a professional or trade course. Similarly, a qualification required by an employer or group of employers, but which is not imposed by an industrial instrument, or a professional or trade association at either the national level, or State or Territory level will not be an essential prerequisite.

In the present case, you are supplying a training course leading to a qualification to enable students to become instructors in your industry. There is no legislative instrument that regulates the completion of this course as a prerequisite to commence practice as an instructor. There is more than one professional association at the national level and they do not impose uniform requirements for this training course. There is no particular State or Territory professional or trade association that imposes requirements relating to the profession of the trade and no penalties or sanctions if an instructor has not completed this particular course.

Paragraphs 59, 60 and 61 of GSTR 2003/1 provide that a professional or trade association's ability to impose membership requirements is not conclusive evidence of that association's ability to impose a qualification that is an essential prerequisite. If more that one professional or trade association has requirements relating to the entry of, or the commencement of the practice of the profession or trade concerned, no qualification set by any of the associations as a requirement for entry or commencement, would be an 'essential prerequisite'. None of the associations can prevent someone entering that profession or trade through one of the other associations as this would require some threat of legal sanction or penalty.

In your case the private industry association that you are affiliated with has requirements for entry into their association are unique to them. As there are multiple professional associations no one association can set a requirement for entry or commencement that would be an essential prerequisite as defined by the GST Act.

You advise that most employers would prefer that the instructor has a qualification in order to obtain professional insurance and indemnity for that instructor. Paragraph 49 of GSTR 2003/1 makes the distinction that a qualification required by an employer or group of employers, which is not imposed by an industrial instrument or a professional or trade association will not be an essential prerequisite.

The qualification gained by undertaking the instructor training course is not an essential prerequisite in relation to the entry of, or the commencement of the practice of, a particular profession or trade, thus it is not considered to be a professional or trade course.

In conclusion, although your course complies with the first requirement, it fails to meet the second requirement as outlined above, and does not satisfy the definition of a professional or trade course. Further, on the basis of the facts provided your course does not satisfy the other GST-free education courses as defined in section 195-1 of the GST Act. Accordingly, your supply of the instructor training course is not a GST-free education course under section 38-85 of the GST Act, and is subject to GST.

Other Information

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