Edited version of your private ruling

Authorisation Number: 1012457550511

Ruling

Subject: GST and education courses

Question

Is your supply of language courses to school children a GST-free supply?

Answer

No

Relevant facts and circumstances

You are not currently registered for GST but you expect to register for GST in the next financial year as your income will exceed the registration turnover threshold of $75,000.

You currently provide language courses to school children.

The classes are conducted on school premises either before or after school.

The courses are paid for by the parents directly to you and the schools charge you a rent for the use of the classrooms.

You also run holiday programs and provide private tuition for small groups or individuals. The holiday program is run for one week during the school holidays.

At the end of your courses the children can get a completion certificate.

Adult classes have been run in the past and you expect to run them again in the future. You consider that the courses are likely to add to the employment related skills of the people undertaking the course.

You have advised that:

· you are not a registered training organisation (RTO)

· your course is not designed specifically to meet the special needs of children with disabilities

· you do not receive any funding, approval or accreditation from any state or federal government department or agency

· you are not a body corporate operating on a not-for-profit basis, and

· you are not recognised or funded as a provider of an Adult Community Education (ACE) course.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999 section 38-85.

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

Reasons for decision

Summary

Your supply of language courses to school children is not a GST-free supply as it is not the provision of a primary, secondary, tertiary, special education or adult and community education course, as defined in the A New Tax System (Goods and Services Tax) Act 1999 (GST Act); nor is it GST-free under any other provision in the GST Act.

Detailed reasoning

The supply of an education course is GST-free under section 38-85 of the GST Act. The term 'education course' is exhaustively defined in section 195-1 of the GST Act as:

· a pre-school course

· a primary course

· a secondary course

· a tertiary course

· a special education course

· an adult and community education course

· an English language course for overseas students

· a first aid or life saving course

· a professional or trade course, or

· a tertiary residential college course.

Each of these education courses is further defined in section 195-1 of the GST Act but it can be seen from these definitions that many of the courses must be recognised under a State or Territory law, or be provided by accredited institutions to qualify.

In this case, you supply language courses to school children on school premises either before or after school.

To be an education course and thus, GST-free, your course must satisfy one of the 'education course' definitions in section 195-1 of the GST Act.

The following are the types of education courses from the definition in section 195-1 of the GST Act that could be relevant to your situation.

Goods and Services Tax Ruling GSTR 2000/30 provides guidance on the supplies that are GST-free for pre-school, primary and secondary education courses

Paragraphs 19 to 22 of GSTR 2000/30 explain that a primary course is a course that must be delivered in accordance with a primary curriculum recognised by the education authority in the State or Territory in which the course is delivered and by a school that is recognised as a primary school under State or Territory law.

You are not a recognised primary school under State or Territory law.

However, a primary course also includes any other course of study or instruction that the Commonwealth Education Minister has determined is a primary course for the purposes of the GST Act.

Of relevance to your situation is the A New Tax System (Goods and Services Tax) (Language Other Than English - LOTE - courses offered by ethnic schools) Determination 2004 (LOTE Determination) which was issued by the Education Minister in 2004 with effect from 1 January 2002.

Under the LOTE Determination, a language other than English (LOTE) course that is provided to primary school students by an ethnic school is a primary course for GST purposes where the following is satisfied:

· the LOTE course is provided by, or on behalf of, a school that:

o is a body corporate that operates on a not-for-profit basis

o has as its principal aim the teaching of languages other than English

o has close links with a community whose first/heritage language is not English, and

o is licensed, recognised, accredited, or in any way approved to provide such courses by a State or Territory authority responsible for that approval, in the manner applicable within the relevant State or Territory.

You have advised that you are not a body corporate operating on a not-for-profit basis and therefore, your course will not be a primary course under the LOTE Determination. In addition, at this stage, the Education Minister has not made any other determination that your course is a primary course for the purposes of the GST Act. Accordingly, your language course is not a primary course.

Paragraphs 23 to 28 of GSTR 2000/30 deal with secondary courses. A secondary course means:

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

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

The Education Minister has made a determination under subsection 5D(1) of the Student Assistance Act 1973 for the purposes of that Act, being the Student Assistance (Education Institutions and Courses) Determination 2009 (No. 2) (Determination 2009/2).

Under Determination 2009/2, a secondary course must be delivered by a recognised secondary school, a RTO, a higher education institution or a special school.

A secondary school is either an institution located in Australia that is a government secondary school or is recognised as a secondary school under the law of the State or Territory in which the institution is located.

Determination 2009/2 states that a RTO is:

an organisation that is registered by the relevant State or Territory training recognition authority in accordance with the Australian Quality Training Framework to provide one or more vocational education and training programs

Determination 2009/2 also states that a higher education institution is an institution that is established by a law of the Commonwealth, a State or a Territory as a higher education institution; or an institution registered by the relevant State or Territory higher education recognition authority as a higher education institution.

Based on the information provided, you are not a secondary school, a RTO or a higher education institution and therefore, your course is not a secondary course under Determination 2009/2.

As stated previously, a secondary course also includes any other course of study or instruction that the Education Minister has determined is a secondary course for the purposes of the GST Act.

The Education Minister has determined that the LOTE Determination also applies to a LOTE course that is provided to secondary school students by an ethnic school. However, the school must satisfy the same conditions as those required for the primary course which includes being a body corporate that operates on a not-for-profit basis.

As you are not a body corporate operating on a not-for-profit basis your course will not be a secondary course under the LOTE Determination. In addition, at this stage, the Education Minister has not made any other determination that your course is a secondary course for the purposes of the GST Act. Accordingly, your language course is not a secondary course.

Goods and Services Tax Ruling GSTR 2001/1 discusses the definition of tertiary education courses for GST purposes.

Paragraph 13 of GSTR 2001/1 provides that a tertiary course includes all tertiary courses covered by the determination issued by the Education Minister under the Student Assistance Act 1973.

In Determination 2009/2, the Education Minister has determined that a course, specified in Column 1 of the table in Schedule 2 of that determination, which is conducted by an education institution specified for that course in Column 2 of that table is a tertiary course. The types of educational institutions listed in Determination 2009/2 include a RTO, a higher education institution or any other body approved by the relevant State or Territory to conduct the specified course.

Your course is not specified in Column 1 of the table in Schedule 2 of Determination 2009/2. In addition, based on the information provided, you are not a RTO or a higher education institution or any other body approved by the relevant State or Territory. Therefore, your language course is not a tertiary course under the GST Act.

A special education course is a course of education that provides special programs designed specifically for children and/or students with disabilities.

Guidance on the Commissioner's views of what supplies are GST-free as special education courses is contained in Goods and Services Tax Ruling GSTR 2002/1.

A program is a special program if it is:

· designed specifically to meet the special needs of children or students with disabilities

· designed specifically to reduce or prevent the impact of disabilities for children or students with disabilities, or

· not made available to people generally.

A program when looked at as a whole needs to be recognised as a special program rather than each and every part of the course. For example, the course's content may mirror that of an existing curriculum-based course provided in a school, but be delivered in a way that makes it suitable for children or students with disabilities.

You have advised that your course is not designed specifically to meet the special needs of children with disabilities. Therefore, your language course is not a special education course for the purposes of the GST Act.

Goods and Services Tax Ruling GSTR 2000/27 discusses ACE courses for GST purposes.

Paragraph 11 of GSTR 2000/27 explains that for a course to be treated as a GST-free ACE course it must be:

· a course of study or instruction that is likely to add to the employment related skills of people undertaking the course

· of a kind determined by the Education Minister to be an adult and community education course, and

· provided by a body that is either a higher education institution or by a body that is recognised or funded by a State or Territory authority to conduct adult and community education courses.

GSTR 2000/27 discusses the meaning of the phrase 'likely to add to employment related skills'. The test as to whether an ACE course is likely to add to the employment related skills of people undertaking the course is an objective test and not dependent on the subjective intention of the providers of the course or the recipients.

The Commissioner considers that the test will be satisfied if a course is directed at people who want to add to their employment related skills and meets the following criteria:

· the objectives of the course specify the employment related skills that participants will acquire in undertaking the course

· the means of imparting the skills to the participants are clearly identified prior to the commencement of the course, and

· there is a reasonable expectation that the skills being developed will be used in the course of being an employee, or working in a business, occupation, profession or trade, rather than for recreational, hobby, artistic or cultural endeavours.

Other factors considered relevant by the Commissioner are:

· how the course is marketed

· whether the course is similar to an accredited vocational education and training (VET) program, and

· the outcomes of the course (that is, can the course supplier present evidence that a majority of people undertaking the course gain employment relevant to the skills acquired in the course).

To satisfy the definition of an ACE course, the course must also meet the requirements of the Education Minister's Determination being the A New Tax System (Goods and Services Tax) (Adult and Community Education Courses) Determination 2000 (ACE Determination).

At paragraph 5(2) of the ACE Determination the Education Minister states that an ACE course must:

· not be any other education course defined in section 195-1 of the GST Act

· be available to adults in the general community

· not be provided by or at the request of an employer to employees of that employer

· not be provided by or at the request of an organisation to members of that organisation, except an organisation for which membership is open to adults in the general community, and

· not be a course that is provided by way of private tuition to an individual.

The Commissioner considers that in this context the word 'adult' refers to a person aged 15 years or more who is not in full-time education.

The ACE Determination also specifies that to be determined by the Education Minister to be an ACE course a course must satisfy the second requirement (outlined immediately above) and be provided by, or on behalf of, a body that is recognised or funded as a provider of ACE courses or a body corporate operating on a not-for-profit basis that has not been refused recognition or disqualified by a State or Territory authority as a provider of ACE courses.

All three requirements must be met before a course will satisfy the definition of an ACE course under the GST Act.

The facts show that you currently only supply your course to school children. As your course is not currently available to adults (persons over 15 years) it is not an ACE course under the GST Act.

You have advised that you intend to conduct classes for adults in the future. It may be that those classes are likely to add to the employment-related skills of the participants (but that issue is not determined here). However, in order to be an ACE course, the adult course must also satisfy all of the criteria outlined under the second and third requirements. Specifically, you must be recognised or funded as a provider of ACE courses. Note that the second requirement excludes courses that are provided by way of private intuition to individuals.

In conclusion, your supply of courses to school children is not an education course under section 38-85 the GST Act, nor are they GST-free under any other provision in the GST Act.

Therefore, if you register or are required to be registered for GST your supply of the courses will be subject to GST because all of the other requirements for a taxable supply will be satisfied. That is, the supply of the courses will be made for consideration, the supply will be made in the course of carrying on your enterprise, the supply is connected with Australia and the supply is not GST-free or input taxed.