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Edited version of private advice
Authorisation Number: 1012637246061
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You cannot rely on the rulings in the Register of private binding rulings in your tax affairs. You can only rely on a private ruling that we have given to you or to someone acting on your behalf.
The Register of private binding rulings is a public record of private rulings issued by the ATO. The register is an historical record of rulings, and we do not update it to reflect changes in the law or our policies.
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Ruling
Subject: GST and professional and vocational training courses
Question 1
Is the supply of your course ' X', a GST-free supply under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Decision 1
No, under section 38-85 of the GST Act, the supply of this course is not a GST-free supply.
Question 2
Is the supply of your course 'Y', a GST-free supply under section 38-85 of the GST Act?
Decision 2
No, under section 38-85 of the GST Act, the supply of this course is not a GST-free supply.
Question 3
When issuing GST-free invoices to your clients, do you have to insert the heading 'Tax Invoice', when in fact no tax is being charged?
Decision 3
You can retain the heading 'Tax Invoice' and add a note on the invoice to state the supply does not include goods and services tax (GST). Or else you could cross off the word 'Tax' and leave the word 'Invoice'.
Relevant facts and circumstances
• You are a registered training organisation and offer training courses that are accredited under the vocational education sector. You consider that these courses are GST-free supplies as per the guidelines of Goods and Services Tax Ruling GSTR 2003/1 (GSTR 2003/1).
• At the end of each course, there is an assessment of each participant. On successful completion of the course and the assessment, you issue a certificate of completion to the participant.
• You issue invoices to the employers of the participants. As you consider your courses as GST-free supplies, you do not charge GST on your invoices. However, you insert the heading 'Tax Invoice' on each invoice you issue.
• Your inquiry specifically refers to two courses that you offer, which are accredited by the relevant state government authority (authority).
• The first course is called 'X'. This course is designed to meet the legislated training requirements for employees, who are members of workplace health & safety committees.
• As per your website, this course applies to all workplaces in all industries. The objectives of the above course are:
• to give safety and health representatives the knowledge and skills to effectively perform their roles and functions under the legislation;
• to assist in improving safety and health in workplaces.
• The second course is called 'Y'. This course is a pre-requisite for issuing licences by the authority within the state.
• It is not a nationally accredited course. It is only accredited within the state.
• It is required by anyone in the profession. The person can be a fencing contractor, plasterer or a person from any profession. The person could be skilled or unskilled. It is not a prerequisite for entry into the respective profession of the person. However, if a person has to perform this task as a part of their work, within the state they cannot do it without this licence.
• As per our records, you are registered for GST. Your enterprise is provision of occupational health and safety consultancy services.
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 the decisions
Decision 1
Section 38-85 of the GST Act provides that:
A supply is GST-free if it is a supply of:
(a) an education course; or
(b) administrative services directly related to the supply of such a course, but only if they are supplied by the supplier of the course.
Under section 195-1 of the GST Act, an education course includes a professional or trade course. A professional or trade course means a course leading to a qualification that is an essential prerequisite:
(a) for entry to a particular profession or trade in Australia; or
(b) to commence the practice of (but not to maintain the practice of) a profession or trade in Australia.
Therefore, a course you offer will be a professional or trade course as defined in section 195-1 of the GST Act, if:
• it is a course leading to a 'qualification'; and
• the qualification is an 'essential prerequisite'.
The term 'qualification' is not defined in the GST Act. As quoted below, paragraphs 42-45 of GSTR 2003/1 have explained what is a qualification.
What is a qualification?
42. 'Qualification' is not defined in the GST Act. The term therefore takes its ordinary meaning. The Macquarie DictionaryF11 defines 'qualification' as 'a quality, accomplishment, etc., which fits for some function, office, etc.'
43. A qualification is normally acquired through study or experience and equips a person to perform a particular task or function. In the context of the definition of a professional or trade course in section 195-1, a qualification is an attribute or quality that is acquired after undertaking a course. It is evidenced by some document that indicates successful completion of the course. The document would normally be accepted by a Commonwealth, State or Territory authority, or a professional or trade association, or an employer as suitable evidence that a person has successfully completed the relevant course.
44. A relevant authority or professional or trade association may issue a licence or a certificate that qualifies a person to do certain things. For example, a licence to drive a particular class of heavy road vehicle, or a practising certificate. Where this is the case, the certificate or licence is a qualification for the purposes of the section 195-1 definition of a professional or trade course.
45. Documents that are qualifications or that provide evidence of a qualification include:
• a statement of satisfactory completion;
• a certificate (including a degree or diploma);
• a licence; or
• an accreditation.
As you provide a certificate to each participant at the successful completion of the course and the assessment and it is accepted by the employers, we accept that your course leads to a qualification.
Essential Prerequisite
It is necessary to determine whether your course is an essential prerequisite for the person concerned. As quoted below, paragraphs 46-49 of GSTR 2003/1 consider when a qualification is an essential prerequisite.
Is the qualification an essential prerequisite?
46. Your course will only be a professional or trade course if it leads to a qualification that is an essential prerequisite for entry to, or to commence the practice of, a particular profession or trade.
47. Under the section 195-1 definition of 'essential prerequisite', the qualification must be imposed:
(i) by or under an industrial instrument;
(ii) if there is no industrial instrument, by a professional or trade association that operates on a national level; or
(iii) if neither (i) nor (ii) applies, by a professional or trade association that operates at a State or Territory level.
48. A qualification is an essential prerequisite if it is mandatory for a person to have the qualification before he or she can enter into, or commence the practice of, a particular profession or trade. This necessarily requires the imposition of penalties or sanctions if a person enters into, or commences the practice of, the profession or trade without the relevant qualification.
49. A qualification that is imposed for reasons other than for entry to, or to commence the practice of, a profession or trade, is not an essential prerequisite for the purposes of a professional or trade course. Similarly, a qualification required by an employer or group of employers, but which is not imposed by an industrial instrument, or a professional or trade association at either the national level, or State or Territory level will not be an essential prerequisite.
As mentioned in your website, the above course applies to all workplaces in all industries. It is a general course aimed at giving safety and health representatives the knowledge and skills to effectively perform their roles and functions under the legislation
We consider that the qualification gained from this course is not an essential prerequisite for entry into or commencement of a particular profession or a trade.
Accordingly, we consider that, under section 38-85 of the GST Act, the supply of this course is not a GST-free supply of a professional or trade course.
Decision 2
As with the above course, on completion of the 'Y' course and the assessment, you issue a certificate to each successful participant. It can be considered as a qualification. Therefore, the first requirement for a GST-free supply of an education course is satisfied. It is necessary to determine whether it is an essential prerequisite for a profession or a trade.
The available information indicates that this qualification is not an essential prerequisite for entry into or commencement of a profession or trade. This qualification can be used by any person in the particular state.
Therefore, under section 38-85 of the GST Act, the supply of this course is not a GST-free supply of an education course.
Decision 3
Goods and Services Tax Ruling GSTR 2013/1 (GSTR 2013/1) refers to tax invoices. Paragraph 20 of GSTR 2013/1 refers to documents headed 'tax invoice' for supplies that are not taxable, which is quoted below.
Documents headed 'tax invoice' for supplies that are not taxable
20. A tax invoice cannot include words that indicate that the price of what is supplied is inclusive of GST to the extent the supply is not a taxable supply. However, a supplier may issue a document headed 'tax invoice' for a supply that is not a taxable supply if it shows that the price of the supply does not include GST. For example, the supplier could include a statement on the document that the price of the supply does not include GST or show the GST as nil or zero. Alternatively, the supplier could cross out the words 'Tax Invoice' or the word 'Tax'.
Therefore, if you make a GST-free supply, on the invoice you could retain the heading 'Tax Invoice' but include a statement to indicate that the supply does not include GST. In the alternative, you could simply cross off the word 'Tax'.