Edited version of your private ruling

Authorisation Number: 1012482582976

Ruling

Subject: GST and education courses

Question

Is your supply to a certain organisation (Organisation) a GST-free supply of a tertiary education course?

Answer

No. It is a taxable supply of services.

Relevant facts and circumstances

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

· Your associated company entered into a written agreement with the Organisation (Agreement) to deliver their course and course materials to the Organisation.

· During the period of the Agreement, you replaced your associated company as the entity referred to in the Agreement.

· When you replaced your associated company, you and the Organisation agreed that both parties would continue to operate under the same Agreement.

· Students can enrol in several types of courses being offered by the Organisation that you deliver.

· During the period of the Agreement where you were the entity referred to in the Agreement, you were a Registered Training Organisation specialising in certain types of courses.

· Various clauses of the Agreement show:

· students enrol for the courses as the Organisation's students

· the Organisation has some control over the quality of the courses

· the Organisation sets the entrance requirements of the courses

· the Organisation accredits the courses

· course fees are paid to the Organisation.

· Further to this, you have stated that you:

· developed the course outline

· wrote the original course and made any relevant changes

· conducted the tutorials

· set the exams

· graded the students

· conducted some workshops offsite from the Organisation (financed by a related company)

· dealt with accreditation authorities.

Relevant legislative provisions

All references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act):

Section 9-5

Section 38-85

Section 195-1.

Reasons for decision

Section 38-85 of the GST Act provides that a supply of an education course is GST-free. Section 195-1 of the GST Act further provides that an education course includes a tertiary course.

In your case, the Agreement requires you to deliver your course as several courses accredited by the Organisation.

It is evident from the Agreement that the courses are the Organisation's courses given a student undertaking one of the courses enrols with the Organisation as their student, the Organisation sets the entrance requirements, the Organisation accredits the courses and course fees are paid to the Organisation.

You must also meet certain requirements of the Agreement when delivering your course. For example, under the Agreement, you are required to meet certain quality standards that have been put in place by the Organisation.

Given this, you are making a supply of services to the Organisation and not an education course to students. What you are providing are those things necessary, such as presentation skills, materials, course content and knowledge in the subject area that can be utilised by the Organisation to enable them to provide their accredited courses to their students.

The Australian Tax Office (ATO) view on supplies for GST purposes is given in the public ruling GSTR 2006/9 (available from the ATO website). Your situation is not dissimilar to the principal illustrated in the example given in paragraphs 165 to 170 of GSTR 2006/9 as shown below:

Example 6: teaching services

165. A, a supplier of teaching services, enters into a contract with B, a course provider, to provide teaching services to B's students.

166. B conducts professional or trade courses that are GST-free under section 38-85. Students enrol with, and pay fees directly to, B. When a student completes the course, B is authorised by the relevant State or Territory authority to conduct a test. If a student passes the test, B facilitates the issuing of the qualification/licence by the relevant State or Territory authority.

167. A has no contractual relationship with the students.

168. A makes a supply of the teaching services to B and A provides this supply to the students. A's supply is not a GST-free supply of a professional or trade course.

Supply of teaching services B Supply of GST-free course

ä æ

________________________________

A Provision of teaching services C

169. However, B does make a GST-free supply of a professional or trade course to the students. The students enter into contractual arrangements with B for the supply of the professional or trade course. B makes a supply of the course to the students. It does not matter whether B's employees do the actual teaching or B subcontracts the teaching to another entity (in this case A).

170. Based upon these contractual arrangements, the students are the recipients of the supply of the professional or trade course made by B, and B is the recipient of the supply of teaching services made by A.

In this example, A has the skills and knowledge to provide a Professional or Trade Education course to B and could possibly run such a GST-free Education course to their own students. However, this is not a relevant factor when determining what entity is supplying the Education course. In the example it is B that is supplying the course using the skills and knowledge of A.

As such, you are not making a GST-free supply of a tertiary education course (or any other type of education course) but under section 9-5 of the GST Act, a taxable supply of services.