Edited version of your private ruling

Authorisation Number: 1012111230587

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Ruling

Subject: GST and supply of assessment services

Question

Do you have to charge the RTOs goods and services tax (GST) when you supply assessment services to them?

Advice

Yes, you have to charge the RTOs GST when you supply assessment services to them.

Relevant facts

You are a self employed assessor and registered for the goods and services tax (GST).

A statutory body is responsible for machine operator licensing in a State or Territory. You are registered as an 'Accredited Assessor' with this statutory body and you carry out assessments to determine if applicants are suitable for licensing as machine operators.

You are not a registered training organisation (RTO).

You have verbal agreement with RTOs who are training people for their application for machine operator licences (trainees) to carry out assessments to determine if the trainees are suitable for licensing as machine operators.

The RTOs provide the training procedure for operating the machine to the trainees and on completion of the training of the procedure the RTOs contact you to do the assessment of these trainees. The RTO issues statement of attainment if the trainee is successful. The trainees then lodge their copy of statement of attainment with the statutory body for the actual licence.

Relevant legislative provisions

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

A New Tax System (Goods and Services Tax) Act 1999 Section 38-110.

Reasons for decision

GST is payable on a taxable supply.

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.

Based on the information received, your supply of assessment services will satisfy the conditions at paragraphs 9-5(a), 9-5(b), 9-5(c) and 9-5(d) of the GST Act as:

· you supply these assessment services to the RTOs for consideration;

· you make the supply in the course or furtherance of an enterprise that you carry on;

· the supply is connected with Australia as it is done in Australia and made through a business that you carry on in Australia; and

· you are registered for GST.

Your supply of assessment services is therefore a taxable supply to the extent that the supply is not GST-free or input taxed.

There are no provisions in the GST Act or any other Act under which the supply is input taxed. Therefore, what remains to be determined is whether the supply is GST-free.

GST-free

A supply comprising the assessment or issue of qualifications is GST-free under section 38-110 of the GST Act where the two requirements below are satisfied.

First requirement

The assessment or issue of qualifications is for the purposes of:

· access to education; or

· membership of a professional or trade association; or

· registration or licensing for a particular occupation; or

· employment.

Second requirement

The supply must be carried out by:

· a professional or trade association; or

· an education institution; or

· an entity that is registered by a training recognition authority of a State or Territory in accordance with the Australian Recognition Framework to provide skill recognition (assessment only) services; or

· an authority of the Commonwealth or of a State or Territory; or

· a local government body.

Section 38-110 of the GST Act has no application to an assessment that is an integral part of an education course as that assessment is an administrative service directly related to the supply of the course.

From the facts given, section 38-110 of the GST Act is relevant to your supply as your assessment services are made to the RTOs and not the trainees which indicates that you are not making a supply of education course to the RTOs.

We will now consider whether you satisfy the two requirements in section 38-110 of the GST Act.

First requirement

The assessment you supply is for the purpose of the trainee gaining a licence and gain employment as a machine operator. As such your supply satisfies the first requirement in section 38-110 of the GST Act.

Second requirement

From the facts received you do not satisfy any parts in the second requirement as:

· you are not a professional or trade association;

· you are not an education institution;

for a body to be an entity that is registered by a training recognition authority of a State or Territory in accordance with the Australian Recognition Framework to provide skill recognition (assessment only) services it must be registered with the authority responsible for recognition of vocation education and training and for the accreditation of training organisation. Recognition as a training provider or assessor by an authority with jurisdiction over matters which include licensing to operate particular machinery will not meet this criterion.

Accordingly, you are not an entity that is registered by a training recognition authority of a State or Territory in accordance with the Australian Recognition Framework to provide skill recognition (assessment only) services.

· an authority of the Commonwealth or of a State or Territory means a government department, instrumentality, corporation and so on that is constituted to undertake or is granted jurisdiction over a particular function. It does not extend to persons who undertake activities on their own behalf under a licence or accreditation issued by such an authority.

You, as an accredited assessor, are an independent body and are not attached to or part of the statutory body, being the authority in this instance. You therefore are not an authority under part (d) in the second requirement.

· you are not a local government body.

Since you do not satisfy the second requirement, your supply of assessment services to the RTOs is not GST-free under section 38-110 of the GST Act.

Summary

Your supply of assessment services to the RTOs is a taxable supply under section 9-5 of the GST Act and you need to include GST to the fee you charge to the RTOs.