Edited version of your private ruling

Authorisation Number: 1012575062478

Ruling

Subject: GST and education

Question 1

Are the following services provided by you GST-free supplies under section 38-110 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act):

(a) assessment of teacher qualifications

(b) member reviews;

(c) quality assurance assessments?

Answer

(a) No

(b) no

(c) yes

Relevant facts and circumstances

· You are a not-for-profit company established by to provide independent quality assurance in the English language teaching sector.

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

· You monitor the delivery of a language program across Australia through contract with a Government organisation.

· You provide a quality endorsement framework and support function in the form of advice, mentoring, and guidance, and hands-on assistance, educational and related resources, to language teaching providers.

· You have recently become aware that the government regulators in your space do not charge GST on services they provide.

· You are currently charging GST for your supply of 'Members reviews, Quality assurance assessments and Assessment of teacher's qualifications'.

Member reviews

· You contend that you are a professional association. Organisations are entitled to become members of your association and/or remain members of your association provided that they maintain a minimum level of standards in providing language courses.

· As your main purpose is to ensure a minimum standard of language teaching delivery to the general public, you actively assists in, and is desirous of, non-members meeting the requirements and standards set by you.  This ensures that the public can have comfort in the quality of language courses offered by your member organisations in accordance with your standards.

· In order to determine whether organisations meet the minimum level of language standards you provide member reviews for a fee.

Quality assurance assessments

· You provide quality assurance assessments for the purpose of allowing organisations to state that they have been quality assured by you, which is recognition of the quality of those courses within the market place.

· To become and maintain membership, organisations must pass and continue to meet a threshold quality assurance standard.

· Organisations that are approved by you by way of their quality assurance assessments are entitled to become members of your association and to show endorsement by your association in advertising and delivering their language programs.

Assessment of teacher qualifications

· You also assess teacher qualifications for organisations providing language programs that employ language teachers. A positive outcome for the assessment of teacher qualifications is generally a requirement for a teacher to be employed by an organisation approved by you.

· Where a teacher doesn't meet the qualification requirements, you will recommend that the member (or non-member) does not utilise the employee for language delivery until properly qualified. Such a teacher may continue to be employed by the organisation as a teacher or in another role. 

· If an organisation continues to use such a teacher in a frontline teaching role, the organisation's adherence to your quality assurance standards may be affected.

Relevant legislative provisions

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

Section 9-5

Section 38-85

Section 38-110

Section 195-1

Reasons for decision

Summary

Your supply of 'Members reviews, Quality assurance assessments and Assessment of teacher's qualifications' are GST-free supplies where they meet both requirements of section 38-110 of the GST Act.

Detailed reasoning

Assessment of prior learning is GST-free under section 38-110 of the GST Act; the two requirements below must be satisfied.

First requirement

The assessment or issue of qualifications 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.

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.

Section 38-110 of the GST Act has no application to an assessment that is an integral part of an education course as that assessment is an administrative service directly related to the supply of the course.

In your circumstances, section 38-110 must be read as a whole including its heading in accordance with paragraphs 15AB(1)(a) and 15AB(2)(a) of the Acts Interpretation Act 1901 which permit regard to be had to the heading of a provision in order to confirm its ordinary meaning as conveyed by its text).

As indicated in its heading, this section only applies to entities that require their prior learning to be assessed/recognised for the purposes listed in the first requirement above.

Therefore, this section does not apply to a non-individual.

Member reviews

First requirement

Your supply of the Member reviews is to assess whether Organisations meet the minimum level of language standards to become members of your association and/or remain members of your association. As the subject of the review/assessment is to a non-individual, the supply is not within the scope of section 38-110 of the GST Act. There is no other provision of the GST Act or any other Act to treat your Member review of organisations GST-free.

Quality assurance assessments

First requirement

Your supply of the Quality assurance assessments is for the purpose of allowing organisations to state that they have been and continue to be quality assured by you, which is recognition of the quality of those courses within the market place.

Similar to the reasoning above, the quality assurance assessment does not fall within the scope of section 38-110 to be GST-free. There is no other provision of the GST Act or any other Act to treat your Quality assurance assessments of organisations GST-free.

Assessment of teacher qualifications

You also assess teacher's qualifications for organisations providing language programs that employ language teachers. A positive outcome for the assessment of teacher qualifications is generally a requirement for a teacher to be employed by an organisation approved by you.

Where a teacher doesn't meet the qualification requirements, you will recommend that the member (or non-member) does not utilise the employee for language delivery until properly qualified. Such a teacher may continue to be employed by the organisation as a teacher or in another role. 

If an organisation continues to use such a teacher in a frontline teaching role, the organisation's adherence to your quality assurance standards may be affected.

As the assessment of a teacher's qualifications is generally a requirement to gain employment for the delivery of languages you therefore satisfy the first requirement of section 38-110 of the GST Act.

Second requirement

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. The term professional or trade association is not defined in the GST Act. The Macquarie Dictionary defines association as an organisation of people with a common purpose and having a formal structure. Whether a body of persons constitutes a professional or trade association is a matter of fact and degree.

A professional or trade association normally displays the following characteristics:

· its members are practicing the profession or trade;

· it sets its own admittance requirements including acceptable qualifications;

· it sets standards of practice and ethical conduct;

· it aims to maintain the standing of the profession or trade as a whole;

· it has articles of association, by-laws or codes of conduct for its members; and

· it has the ability to impose sanctions on members who contravene the associations rules.

As you display the characteristics outlined above, (as shown in the copy of your constitution provided) you are considered to be a professional or trade association, and therefore satisfy the requirements of paragraph 38-110(2)(a) of the GST Act.

Conclusion

Therefore, where you supply Assessments of teacher's qualifications you satisfy both the requirements under section 38-110 of the GST Act. Accordingly, the supply of your Assessment of teacher's qualifications is a GST-free supply.