Edited version of your private ruling

Authorisation Number: 1012502249358

Ruling

Subject: GST and education

Question 1

Is the provision of a nationally accredited certificate II course which may be of any industry area provided within the Australian Qualifications Training Framework (AQTF) GST-free when provided under the auspice of a registered training organisation by:

(a) the school to the students; and

(b) RTO (you) to a class of students?

Answer 1

(a) When provided by the school to students under the auspicing agreement, it will be a GST-free supply of education course.

(b) When provided by you to a class of students under the auspicing agreement, it will be a taxable supply of your service to the school.

Question 2

Are the costs which include quality assurance, professional development, TAFE delivery and/or assessment, certificate cost, and additional consultation payable to you under the contractual agreements for issuing of the credentials subject to GST?

Answer 2

All costs except certificate cost are considerations for taxable supplies and are subject to GST.

In regard to certificate cost, please refer to Question 3 below.

Question 3

Is the payment received by the school on your behalf that relates to the issue of the qualification of certificate II courses to students consideration for a GST-free supply?

Answer 3

Depending on the facts of the case, it may be for a supply that is GST-free under section 38-110 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) or not subject to GST under Division 81 of the GST Act..

Question 4

What are the GST outcomes for the VET for schools fees and charges which are:

(a) Auspicing charges:

· Fee per Industry area for five or less (or more than five) units of competency, and

· Fee per student for certification

(b) Additional service charges:

· Hourly rate for delivery and/or assessment and

· Hourly rate for professional development, additional consultation and travel?

Answer 4

All costs except fee per student for certification are considerations for taxable supplies subject to GST.

In regard to fee per student for certification, please refer to Question 3 above.

Question 5

Are you making a supply of a GST-free education course when subcontracted under contractual agreements with registered training organisations (RTOs) to deliver units of competencies from their accredited courses?

Answer 5

Depending on the contractual agreements between you and the RTOs, there may be two supplies being made for GST purposes:

· a supply of services from you as the subcontractor to the respective RTO, and

· a supply from the respective RTO of an education course to the course participants.

Your supply of training, assessment and management services to the RTOs would not be a supply of a GST-free education course. It would be a taxable supply and subject to GST.

Question 6

Is the supply under the Auspicing agreement a mixed supply for GST purposes as you will be providing induction, validation, moderation, enrolments, delivery and assessment, administration, result and certification and AQTF compliance to the school? If so what parts are taxable?

Answer 6

Yes. You are making a mixed supply. The supply of induction, validation, moderation, enrolment, delivery and assessment, administration and AQTF compliance to the school are taxable supplies. Certification may be GST-free supply under section 38-110 of the GST Act or excluded from GST under Division 81 of the GST Act.

Relevant facts and circumstances

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

You are a registered training organisation (RTO).

Vocational Education and Training (VET) in Schools (VETiS) is designed to help students as they transition to a broad range of post-school options and pathways, including apprenticeships and traineeships.

Students who complete the requirements of the Australian Qualifications Framework (AQF) are issued with either a full certificate qualification or a statement of attainment for individual units of competency by a RTO. This achievement is also used as credit towards their Certificate of Education.

There are three streams of delivery in the VETiS program:

· Profile delivery,

· Auspicing, and

· Fee for service.

The auspicing arrangement is basically in place as the school is not registered to be able to delivery AQF / VET courses in their own right and award a qualification upon completion. The school must rely on a RTO that is scoped to deliver the required course in order to be able to provide the course to their students.

You provide the various services as outlined in the agreement to ensure that the training delivered and the assessments provided by the school is in compliance with the Australian Quality Training Framework (AQTF) standards so that the student can be issued the required qualification by the RTO.

The types of services include Induction, Validation, Moderation, Enrolments, Delivery and assessment, Administration, results and certification; and AQTF compliance.

You also advised that:

· The items which include Induction, Validation, Moderation, Enrolment, Administration and AQTF Compliance would be covered in the Quality Assurance costs; anything provided above and beyond the standard services would be charged as Additional Consultation. TAFE Delivery and Assessment is the cost where you would send out a lecturer to do direct training with the students. Certification cost is the issuing of the qualification and result records.

· Validation means the process whereby an assessment is made of the ability of the school to deliver the training to meet industry standard in terms of physical resources, staff qualification, and the validity of delivery and assessment tools.

· Moderation means the process of comparing delivery tools, assessment strategies and examples of student work with that of others who are delivering the same qualification, to ensure tools remain relevant and judgements of competency are consistent.

· Auspicing charge are the fees for you to provide the compliance side of things for AQTF standards as outlined above. You also carry the risk if the course isn't delivered in accordance with these standards (not the school).

· Additional services are anything above and beyond the standard services being provided to the school for the course.

· Under an Auspicing agreement, school staffs deliver and assess national qualifications at the school while your Portfolio staff validate and moderate VET delivery and assessment by the school. Such fees include additional consultation, professional development, TAFE delivery and or assessment, quality assurance and certification cost.

· Auspicing charge and Quality assurance is the same thing.

· The school controls the fees charged to the students.

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 38-110

A New Tax System (Goods and Services Tax) Act 1999 Division 81

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

Reasons for decision

Question 1

Is the provision of a nationally accredited certificate II course which may be of any industry area provided within the Australian Qualifications Training Framework (AQTF) GST-free when provided under the auspice of a registered training organisation by:

(a) the school to the students; and

(b) you to a class of students?

Paragraph 38-85(a) of the GST Act provides that the supply of an education course is GST-free. The definition of an education course in section 195-1 of the GST Act includes among other things, a tertiary course and a professional or trade course.

The definition of a tertiary course in section 195-1 of the GST Act includes 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.

Paragraph 13 of Goods and Services Tax Ruling GSTR 2001/1(GSTR 2001/1) on supplies that are GST-free for tertiary education courses notes:

13. A tertiary course includes all tertiary courses covered by the determination issued by the Education Minister under the Student Assistance Act 1973. This determination is also used to identify those courses that students must be undertaking to be eligible for income support as full-time students. The determination lists the type of course and types of educational institutions that can deliver the course. The eligibility of courses for the Student Assistance Act 1973 is reviewed periodically by the Education Minister.

The Student Assistance Act (SAA) Determination (No. 2009/2) Determination of Education Institutions and Courses under subsections 3(1) and 5D(1) of the Student Assistance Act 1973 states at subparagraph 10 (1) that a tertiary course is a course specified in Schedule 2 to the instrument.

Column 1 of Schedule 2 lists that a tertiary course includes a vocational education and training program that is not a secondary course specified in Schedule 1. Column 2 of Schedule 2 lists that the vocational education and training program is a tertiary course where it is provided by a higher education institution or a registered training organisation (RTO). 

Therefore a vocational education and training program (that is not a secondary course) conducted by a registered training organisation is a tertiary course.

Paragraph 4 of Determination 2009/2 gives the definition of registered training organisation as:

registered training organisation means 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.

Paragraph 4 of Determination 2009/2 states:

vocational education and training program means a course that leads to an award of an AQF qualification or a Statement of Attainment, and the course must be: 

(a) an accredited vocational education and training course; or

(b) a sequence of training consisting of one or more subjects or modules where each subject or module is from an accredited vocational education and training course; or

(c) a structured approach to the development and attainment of competencies for a particular AQF qualification specified in an endorsed training package.

Therefore if your vocational education and training program satisfies the definition for (a), (b) or (c) above, and you are a RTO for those courses, the supply of the education course will be GST-free. As such, any fees that you charge for the course are not subject to GST.

However, under an Auspicing agreement, school staffs deliver and assess national qualifications at the school while your Portfolio staff validate and moderate VET delivery and assessment by the school.

The school controls the fees charged to the students.

Paragraph 43 of GSTR 2001/1 provides:

Where you charge a fee for the supply of an education course that consists of tuition and facilities and curriculum related activities, this fee is consideration for a GST-free supply and you are not required to apportion the fee.

Students who complete the requirements of the Australian Qualifications Framework (AQF) are issued with either a full certificate qualification or a statement of attainment for individual units of competency by a RTO. This achievement is also used as credit towards their Certificate of Education.

Hence it is the school which is supplying the education course and you merely provide services to the school for a fee.

Accordingly, the provision of a nationally accredited certificate II course which may be of any industry area provided within the AQTF will be GST-free when provided under the auspice of a registered training organisation by the school to the students.

From the facts provided, the only circumstance where you will provide a nationally accredited certificate II course within the AQTF under the auspicing agreement to a class of students is when you provide TAFE Delivery and/or Assessment where you would send out a lecturer to do direct training with the students. If this is the case, it is a fee for service provided by you to the school. You will be making a taxable supply to the school. For more detail please refer to Question 2 below.

Question 2

Are the costs which include quality assurance, professional development, TAFE delivery and/or assessment, certificate cost, and additional consultation payable to you under the contractual agreements for issuing of the credentials subject to GST?

Section 9-5 of the GST Act provides that you make a taxable supply if:

a) you make the supply for consideration

b) the supply is made in the course of carrying on an enterprise

c) the supply is connected with Australia, and

d) 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.

In your case, Induction, Validation, Moderation, Enrolment, Administration and AQTF Compliance would be covered in the Quality Assurance costs; anything provided above and beyond the standard services would be charged as Additional Consultation. TAFE Delivery and Assessment is the cost where you would send out a lecturer to do direct training with the students. Certification cost is the issuing of the qualification and result records.

Accordingly, you satisfy all the requirements (a) to (d) of section 9-5 of the GST Act as the supplies of the quality assurance, professional development, TAFE delivery and/or assessment, and additional consultation are made for consideration, are made in the course of your enterprise in Australia and you are registered for GST purposes. Hence they are taxable supplies under section 9-5 of the GST Act.

Certificate cost will be discussed in Question 3 below.

Question 3

Is the payment received by the school on your behalf that relates to the issue of the qualification of certificate II courses to students consideration for a GST-free supply?

Recognition of prior learning

A supply of an assessment or issue of qualifications for the recognition of prior learning is GST-free under section 38-110 of the GST Act if the following two requirements are satisfied:

First requirement

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

(a) access to education; or

(b) membership of a professional or trade association; or

(c) registration or licensing for a particular occupation; or

(d) employment.

In your case, you conduct an initial assessment for the recognition of prior learning for nationally recognised and accredited qualifications. Accordingly, you satisfy the first requirement of section 38-110 of the GST Act.

Second requirement

The supply must be carried out by:

(a) a professional or trade association; or

(b) an education institution; or

(c) 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

(d) an authority of the Commonwealth or of a State or Territory; or

(e) a local government body.

To satisfy the second requirement of section 38-110 of the GST Act, you must be one of the kinds of body specified above, such as a professional or trade association or an education institution. For the purposes of the GST Act, an education institution is defined in section 195 of the GST Act and bears the meaning given by subsection 3(1) of the Students Assistance Act 1973. Section 3(1) of the Students Assistance Act 1973 includes a registered training organisation in its definition of an education institution.

As a registered RTO you are considered to be an educational institution which satisfies the second requirement of section 38-110 of the GST Act.

Therefore, where you supply assessment services or issue of qualifications for the recognition of prior learning in respect of the courses within your scope of registration as a RTO you satisfy both requirements under section 38-110 of the GST Act. Accordingly, the supply of your assessment services or issue of qualifications for the recognition of prior learning is a GST-free supply.

Consequently, the payment received on your behalf that relates to the issue of your qualification of certificate II courses to students is GST-free under section 38-110 of the GST Act.

However, paragraph 47 of GSTR 2001/1 provides that:

Where fees or charges are levied under a by-law and specified in the Treasurer's determination under Division 81, the payment of the fee or charge is not the provision of consideration and not subject to GST.

In your case, if the fees or charges for issue of academic statements are specified in the Treasurer's determination under Division 81, the payment of the fee or charge is not the provision of consideration and not subject to GST. The latest Determination can be downloaded from the Treasury Department's website www.treasury.gov.au.

Question 4

What are the GST outcomes for the VET for schools fees and charges which are:

(a) Auspicing charges:

· Fee per Industry area for five or less (or more than five) units of competency, and

· Fee per student for certification

(b) Additional service charges:

· Hourly rate for delivery and/or assessment and

· Hourly rate for professional development, additional consultation and travel?

As provided in the facts, auspicing charge and quality assurance is the same thing.

As such, Auspicing charges for units of competency; and additional service charges for delivery and/or assessment, professional development, additional consultation and travel are consideration for services provided by you to the school. They are consideration for taxable supplies under section 9-5 of the GST Act. The fee per student for certification may be consideration for a GST-free supply under section 38-110 of the GST Act or not subject to GST under Division 81 of the GST Act. For details please refer to Questions 2 and 3 above.

Question 5

Are you making a supply of a GST-free education course when subcontracted under contractual agreements with registered training organisations (RTOs) to deliver units of competencies from their accredited courses?

Goods and Services Tax Ruling GSTR 2006/9 (GSTR 2006/9) discusses supplies in tripartite or multi party arrangements. In two party transactions, a thing supplied to an entity is typically also provided to that entity. In more complex arrangements involving more than two entities, which we refer to as tripartite or multi party arrangements, analysis may reveal:

· a supply made to one entity but provided to another entity

· two or more supplies made, or

· a supply made and provided to one entity and third party consideration.

Furthermore, indicators of whether you are the supplier of an education course include who controls:

· the selection of and enrolls the students;

· the requirements for course content, accreditation and the issue of any qualification;

· the regulations and procedures for the conduct of the course; and

· the marketing and quality assurance of the course.

Depending on the contractual agreements between you and the RTOs and applying the ATO view in GSTR 2006/9, there are two supplies being made for GST purposes:

· a supply of services from you as the subcontractor to the respective RTO, and

· a supply from the respective RTO of an education course to the course participants.

In relation to the first supply above, we consider that you as the subcontractor are not supplying an education course but rather are supplying the RTOs with training services which in turn is provided to the course participants pursuant to the terms and conditions of contractual agreements. The RTOs supply the education course to the course participants that is provided by you.

Where you are not supplying an education course but rather are supplying the RTOs with training, assessment and management services then this supply is not a GST-free education course, it will be a taxable supply and subject to GST if all of the relevant requirements of section 9-5 of the GST Act are met. If that is the case, you are making a supply to the RTOs and are receiving consideration whether in the form of an hourly rate or in the form of the retained portion of the course participants' fees for that supply.

The supply is made in the course of your enterprise that you carry on and is connected with Australia as the supply of the services is made through your enterprise carried on in Australia and you are registered for GST. Furthermore, the supply is not an input taxed supply nor any other GST-free supply under the GST Act. Therefore as all the requirements in section 9-5 of the GST Act are met your supplies of training, assessment and management services to the RTOs are taxable supplies and will be subject to GST.

Question 6

Is the supply under the Auspicing agreement a mixed supply for GST purposes as you will be providing induction, validation, moderation, enrolments, delivery and assessment, administration, result and certification and AQTF compliance to the school? If so what parts are taxable?

According to the facts provided, Induction, Validation, Moderation, Enrolment, Administration and AQTF Compliance would be covered in the Quality Assurance costs, anything provided above and beyond the standard services would be charged as Additional Consultation. TAFE Delivery and Assessment is the cost where you would send out a lecturer to do direct training with the students. Certification cost is the issuing of the qualification and result records.

Hence, the supply of Induction, Validation, Moderation, Enrolment, Delivery and Assessment, Administration and AQTF Compliance services by you to the school will be taxable supplies under section 9-5 of the GST Act as discussed in Question 2 above.

In regard to result and certification, please refer to Question 3 above. If the fees or charges for issue of academic statements are specified in the Treasurer's determination under Division 81, the payment of the fee or charge is not the provision of consideration and not subject to GST. If otherwise, it will be GST-free under section 38-110 of the GST Act.

Consequently, you are making a mixed supply for GST purpose under the auspicing agreement.