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Ruling

Subject: GST and supply of services to overseas students

Question

Is your supply of services to overseas students a taxable supply?

Answer

No, your supply of services to overseas students is not a taxable supply.

Relevant facts and circumstances

You are an Australian entity that is registered for GST.

You entered into separate agreements with registered training organisations (RTOs) in Australia.

Under the agreements, you will use your business contacts to recruit overseas students who wish to attend a study program in Australia offered by the RTOs.

Your agreements with the RTOs are for strategic cooperation. There is no monetary payment made for mutual supplies; however, you may later enter into a negotiation should you and the RTOs decide that each of you must make monetary payments for the supply of the others.

When students are interested in the program, they can either enrol, by filling out a form, through your agents overseas or through other institutions overseas with which you also have cooperative agreements.

The students do not have contact with the RTOs. You are their only contact in Australia.

While the students are overseas, you provide your services of facilitating visa applications, purchasing airline tickets and taking out insurance.

When the students arrive in Australia, the RTOs provide airport pick up/transfers, accommodation and the courses.

The total amount paid by the students is inclusive of all costs including visa, airfare, tuition and accommodation. You collect all payments from your agents or the other institutions overseas.

Out of the total amount received from the students, you make payments for the visa, airfare and insurance. You also make the payments to the RTOs for the tuition fees, accommodation and other related costs on behalf of the students. Whatever is left would be the fee for your services to the students.

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 38-190.

A New Tax System (Goods and Services Tax) Act 1999 section 38-355

Reasons for decision

Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states:

You make a taxable supply if:

a) you make the supply for *consideration; and

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

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.

You advised that the total amount that the students pay is inclusive of all costs namely visa applications, airline tickets, insurance, tuition, accommodation; thus, the study program consists of several supplies which are made either by you or other entities such as the RTOs. Accordingly, this ruling only applies to supplies made by you.

Visa applications and insurance

You advised that you provide services to the students while they are still overseas. The services include facilitating visa applications and taking out insurance.

You make the supply of these services for consideration and in the course of the enterprise that you are carrying on. The supply is connected with Australia as you make it through your enterprise in Australia. You are registered for GST.

The requirements in paragraphs 9-5(a) to 9-5(d) of the GST Act are satisfied. Thus, the supply of your services of facilitating visa applications and taking out insurance is a taxable supply unless it is GST-free or input taxed.

There is no provision in the GST Act under which the supply of your services to the overseas students would be input taxed.

Under section 38-190 of the GST Act, supplies of things, other than goods or real property, for consumption outside Australia are GST-free if certain conditions are met.

Item 2 in the table in subsection 38-190(1) of the GST Act provides that a supply that is made to a non-resident who is not in Australia when the thing supplied is done is GST-free if:

· the supply is neither a supply of work physically performed on goods situated in Australia when the work is done nor a supply directly connected with real property situated in Australia; or

· the non-resident acquires the thing in carrying on the non-resident's enterprise, but is not registered or required to be registered.

As you provide your services of facilitating visa applications and taking out insurance while the overseas students are overseas, you make the supply to non-residents who are not in Australia when the thing that you supply is done. Your supply to the overseas students is neither a supply of work physically performed on goods situated in Australia nor a supply directly connected with real property in Australia. The requirements in item 2 in the table in subsection 38-190(1) of the GST Act are satisfied. Therefore, your supply of services of facilitating visa applications and taking out insurance is GST-free. The supply is not a taxable supply.

Airline tickets

You also advised that you assist the overseas students in purchasing airline tickets for travel to Australia. This supply also satisfies the requirements in paragraphs 9-5(a) to 9-5(d) of the GST Act. However, the supply may be GST-free under section 38-355 of the GST Act.

Under item 1 in the table in subsection 38-355(1) of the GST Act, the transport of a passenger from a place outside Australia to the first place of arrival in Australia is GST-free. Item 5 in the table further provides that arranging transport covered by item 1, amongst other items, is also GST-free.

The transport of the students from overseas to the first place of their arrival in Australia is covered by item 1 in the table in subsection 38-355(1) of the GST Act. The supply of your services in assisting the overseas students in purchasing airline tickets is a supply of arranging transport that is covered by item 1 in the table. Thus, your supply of assisting the students in purchasing airline tickets for travel from overseas to Australia is GST-free. The supply is not a taxable supply.

Airport pick-up/transfers, accommodation, tuition

You advised that when the overseas students arrive in Australia, the RTOs provide airport pick-up/transfers, accommodation, and the courses. Therefore, you do not make these supplies

Although you collect payments for these supplies from the students as part of the total price for the study program, you do so in order to make payments to the RTOs on behalf of the students.

These supplies would be taxable supplies if the requirements in paragraphs 9-5(a) to 9-5(d) of the GST Act are satisfied, unless the supplies are either GST-free or input taxed. For instance, the supply of accommodation may be input taxed under Division 40 of the GST Act while the supply of the courses may be GST-free under section 38-85 of the GST Act.

The RTOs may each apply for a private ruling to confirm the GST status of their respective supplies.

Additional information

Note that if you make a supply to the overseas students while they are in Australia, that supply may be subject to GST. Also, when there are changes to your arrangements with the RTOs thereby making them the recipients of your supply of services, your supply will not be GST-free under subsection 38-190(1) of the GST Act. When your circumstances change, you may apply for a further private ruling to determine the GST status of your supply.