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Edited version of your private ruling
Authorisation Number: 1012616823280
Ruling
Subject: GST-free supplies of commercial pilot's licence training course
Question
Is the supply of the Commercial Pilot Licence course by the entity subject to GST under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999?
Answer
Yes, the supply of the Commercial Pilot Licence course by the entity is subject to GST as it is not a GST-free education course.
Relevant facts and circumstances
The entity provides flight training in addition to providing scenic and joy flights and charter services.
The entity provides a range of flight training courses including the 'CPL - Commercial Pilot Licence' course.
The entity provides the flight training required for the Civil Aviation Safety Authority (CASA) approved 'integrated CPLA 150 hour course' but the course does not include instruction on the aeronautical knowledge required by CASA to obtain the Commercial Pilots (Aeroplane) Licence.
The entity is registered for GST and receives payment for its courses.
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.
Reasons for decision
The supply of a course is subject to GST if the supply satisfies the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act):
9-5 Taxable supplies
You make a taxable supply if:
(a) you make the supply for *consideration; and
(b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and
(c) the supply is *connected with Australia; and
(d) you are *registered, or *required to be registered.
However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed.
(asterisked terms are defined in section 195-1 of the GST Act. However, there are 14 common terms, specified in subsection 3-5(2) of the GST Act which are not asterisked even though they are defined in section 195-1 of the GST Act)
The supply of the Commercial Pilot Licence course by the entity is for consideration (ie payment); is made in the course of its business, is provided in Australia and Company X is registered for GST. Therefore, the supply of the course is a taxable supply and subject to GST unless it is a GST-free supply.
The supply of an education course is GST-free under section 38-85 of the GST Act. A Commercial Pilots (Aeroplane) Licence (CPLA) course may be either a tertiary course or a professional or trade course, both of which are defined by the GST Act to be education courses which are GST-free.
A tertiary course includes an accredited vocational education and training programme which is provided by either a registered training organisation or a higher education institution. Therefore, a CPLA course or program will be a tertiary course if it is provided by either a tertiary institution or a registered training organisation (within the scope of its accreditation). As the entity is neither a registered training organisation nor a higher education institution, its CPLA course is not a tertiary course.
A professional or trade course is a course of study which leads to a qualification that is an essential prerequisite for entry to a particular profession or trade in Australia or to commence (but not maintain) the practice of a profession or trade in Australia.
The minimum requirements to qualify to hold a CPLA are contained in subregulation 5.104(1) of the Civil Aviation Regulations 1988. This includes passing a commercial pilot licence (aeroplane) theory examination. A Civil Aviation Safety Authority (CASA) approved 'integrated CPLA 150 hour course' is a course that is conducted in accordance with the CASA Day Visual Flight Rules (VFR) syllabus. The Day VFR syllabus includes both the flying training and the aeronautical knowledge and a CASA approved integrated CPLA 150 hour course must include integration of these two parts into the training.
Goods and Services Tax Determination: is the supply of commercial pilot training GST-free as an education course under section 38-85 of the A New Tax System (Goods and Services Tax Act) 1999 (the GST Act)? (GSTD 2000/11) explains the ATO view of the when a CPLA training course is GST-free. Paragraph 7 of GSTD 2000/11 states:
The integrated Commercial Pilots ( Aeroplane ) Licence ( CPLA )150 hour program conducted in accordance with the Civil Aviation Safety Authority (CASA) Day Visual Flight rules (VFR) syllabus will be GST-free (this includes the theory and practical components of the program).
The qualification required to enter the profession of a commercial aeroplane pilot is the CPLA. The pre-requisites to obtaining a CPLA include passing a commercial pilot (aeroplane) licence theory examination and passing commercial pilot (aeroplane) licence flight test (amongst others).
The course provided by the entity does not lead to the awarding of a CPLA because it does not provide the aeronautical knowledge component of the CPLA 150 hour course.
Consequently, the course is not a 'professional or trade course' and is not GST-free under section 38-85 of the GST Act.
As the Commercial Pilot Licence course is not a GST-free education course, the supply of the course by Company X is a taxable supply under section 9-5 of the GST Act.