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Ruling

Subject: GST and education courses

Question

Are the payments received by you from an organisation for the supply of the education courses a taxable supply?

Answer

No.

Relevant facts and circumstances

· You are registered for goods and services tax (GST)

· You are a Registered Training Organisation (RTO).

· You offer recognised qualifications including a diploma and an advanced diploma course.

· You are offering the two courses to two groups of students organised by an organisation.

· The organisation advertised the courses to its member organisations and all the students are from its member organisations.

· You are providing the course material to the students free of charge.

· You are receiving payment for the course from this organisation and not the students.

· Your education courses lead to national recognised qualifications and are accredited tertiary courses.

Relevant legislative provisions

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 Section 195

Summary

You are making a supply of an accredited education course to the enrolled students for which an organisation is making payment. The supply of an accredited education course will be GST-free provided the requirements of section 38-85 of the GST Act are satisfied and the course is not modified to suit employer or member groups.

Detailed reasoning

You make a taxable supply under section 9-5 of the GST Act if:

· you make a 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 supply of an education course is GST-free under paragraph 38-85(a) of the GST Act. An education course is defined in section 195-1 of the GST Act to include, amongst other things, a 'tertiary course'.

Tertiary course is defined in section 195-1 of the GST Act to mean:

· a course of study or instruction that is a tertiary course determined by the Education Minister under subsection 5D(1) of the Student Assistance Act 1973 for the purposes of that Act

· a course of study or instruction accredited at Masters or Doctoral level and supplied by a higher education institution or a non-governmental higher education institution, or

· any other course of study or instruction that the Education Minister has determined is a tertiary course for the purposes of this Act.

Determination No. 2002/1 - Determination of Education Institutions and Courses under subsections 3(1) and 5D(1) of the Student Assistance Act 1973 provides that an RTO is an education institution for the purposes of the GST Act.

Determination No. 2002/1 provides that an accredited course at the diploma or advanced diploma level delivered by an RTO is a tertiary course. Based on the information provided by you, the education courses that you provide are accredited tertiary courses. As such, your education courses have an accredited status as a GST-free tertiary course.

It needs to be considered whether, when you supply the education courses to the two groups of students organised another organisation, whether the GST-free status of the course remains. Goods and Services Tax Ruling GSTR 2001/1 provides information about education courses purchased by employers. It is considered this would equally apply to the member organisations as it would to employers. Paragraphs 175 and 176 of GSTR 2001/1 states:

175. The test as to whether GST applies when an employer engages a course provider to deliver an education course to employees is an objective test and would depend on the following criteria

(a) Terms of engagement

The provider of the course should look at the terms of their engagement and decide whether the engagement is a contract to develop and deliver a customised course or is it a contract to deliver a GST-free course

(b) The education course

As long as the course retains its accredited status, the supply of the course to the employees at the request of the employer is GST-free.

176. Where the provider modifies the unit or course to suit the needs of the entity, to the point that the course loses its accredited status, the supply of the course will be subject to GST.

You do not develop and deliver a customised course to the member organisations, member employees. As such, it is considered that you are supplying a GST-free tertiary course. Therefore, the payment received by you from the organisation for the supply of the education courses is not for a taxable supply.

Therefore the payments received by you from the organisation are consideration for the supply of an education course to the students. This supply will be GST-free as the requirements of section 38-85 of the GST Act are satisfied and the courses are not modified to suit the needs of the organisation to the point that the courses lose their accredited status.