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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012607350225

Ruling

Subject: GST and the supply of a training course including the intellectual property rights

Question 1

Is the supply of a training course, including the intellectual property rights and all course materials, by an Australian entity (you) to another entity in Australia, a taxable supply?

Answer

Yes. Your supply of the training course including the intellectual property rights and all course materials to an entity in Australia is a taxable supply.

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.

You conduct training courses and developed this course and you own all rights to the intellectual property and the materials.

You are registered for GST purposes in Australia.

You are no longer running this training course and you have been approached by an Australian entity who wishes to purchase the course including the intellectual property rights, all course materials, training notes, practice exams and questions.

At this stage there is no written contract for this proposed sale.

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 paragraph 9-10(2)(e)

A New Tax System (Goods and Services Tax) Act 1999 section 9-40

Reasons for decision

Characterising the supply

Goods and Services Tax Ruling GSTR 2003/8 (GSTR 2003/8) discusses the nature of a supply of a right as follows:-

      11. With a supply of a right or option, the thing that is done is the creation, grant, transfer, assignment or surrender of the right or option. Whether a right or option is created, granted, transferred, assigned or surrendered in Australia will depend on how the creation, grant, transfer, assignment or surrender is effected. For example, if a right to use intellectual property is granted by the execution of a written contract, the grant of the right is done in Australia if the contract is executed in Australia.

Paragraph 81 of GSTR 2003/8 provides that intellectual property is a generic term describing a variety of rights to control or profit from ideas and information. One of the areas of intellectual property is 'forms of expression' and these intellectual property rights prevent others from copying the forms in which ideas are expressed and are protected by the Copyright Act 1968 (Cth), Designs Act 1906 (Cth) or Circuit Layouts Act 1989 (Cth).

Paragraph 9-10(2)(e) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that a creation, grant, transfer, assignment or surrender of any right is a supply. Thus when you supply the intellectual property rights to another entity, you are making a supply under the GST legislation.

Taxable Supply

Section 9-40 of the GST Act provides that you must pay the GST payable on any taxable supply that you make.

A supply is a taxable supply if it meets all the requirements of section 9-5 of the GST Act, which provides that you make a taxable supply if:

    a) you make the supply for consideration

    b) the supply is made in the course or furtherance of your 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, the requirements of section 9-5 will be satisfied as follows:-

      • you will receive payment when you sell the course, thus you will make the supply for consideration

      • the supply will be made in the course of your enterprise that you are still operating

      • you will make the supply of rights, here in Australia and you are providing this supply to an Australian entity, thus the supply is connected with Australia

    • you are still registered for GST, and

    • none of the GST-free or input taxed provisions are applicable to this supply.

Accordingly, the proposed sale of the intellectual property rights to the training course and course materials to an entity in Australia will be a taxable supply and will be subject to GST.

Other Information

All publications mentioned in this ruling are available on our website at www.ato.gov.au


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