Edited version of private advice

Authorisation Number: 1012658590137

Ruling

Subject: GST and skills assessment services

Question 1

Is V making a taxable supply when it supplies skills assessment services for the purposes of the Migration Regulations 1994?

Answer

V is making taxable supplies when the applicant being assessed is in Australia. When the applicant is overseas V's skills assessment services are GST-free supplies.

Relevant facts and circumstances

V is a Registered Training Organisation (RTO) for the purposes of providing training, assessments and credentials in vocational education and training.

V has entered into a deed with an Australian government to provide services in the form of assessment of skills against relevant Australian qualifications for applicants trained overseas. V provides these services for applicants who reside within and outside Australia. The applicants undertake a skills assessment of their overseas qualification for the purposes of migration only; this does not guarantee the likely success of obtaining Australian residency status, licensing or registration or employment.

In respect of assessments done overseas V has appointed overseas based agents and at times sends its own staff to perform this function.

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 9-25

A New Tax System (Goods and Services Tax) Act 1999 section 38-110

A New Tax System (Goods and Services Tax) Act 1999 section 38-190

Reasons for decision

Summary

V's supplies are connected with Australia and drawn into the GST system. V's supplies to Australian based applicants are subject to GST as the requirements for GST-free status afforded for recognition of prior learning cannot be met.

V's supplies to overseas based applicants are GST-free as GST-free status is afforded to certain types of consumption outside Australia.

Detailed reasoning

A supply of skills assessment services for the purposes of the Migration Regulations 1994 will be a taxable supply where the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) are met:

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.

For the purposes of this ruling we will assume that V's supply satisfies the requirements of paragraphs 9-5(a), 9-5(b) and 9-5(d) as you have not taken issue with those paragraphs.

You have indicated however that you believe that V's supplies are not connected with Australia as required in paragraph 9-5(c) above. Subparagraphs 9-25(5)(a) and 9-25(5)(b) of the GST Act (section 9-25 sets the requirements for 'connected with Australia') state that a supply of anything other goods or real property is connected with Australia if:

(a) the thing is done in Australia; or

(b) the supplier makes the supply through an *enterprise that the supplier *carries on in Australia; or

V carries out its assessment services in Australia through its enterprise in Australia; therefore the supply of skills assessment services is connected with Australia.

In examining whether V's supplies can be GST-free, sections 38-110 and 38-190 of the GST Act are relevant.

Recognition of prior learning

Section 38-110 of the GST Act deals with recognition of prior learning, it states:

1) A supply is GST-free if the supply is the assessment or issue of qualifications for the purpose 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.

e) However, a supply is not GST-free under subsection (1) unless the supply is 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.

(*denotes a defined term in section 195-1 of the GST Act).

The assessment services are only provided for migration purposes rather than to ascertain access to education, membership of a professional or trade association, registration or licensing for a particular occupation or employment as required by the GST law. Therefore section 38-110 of the GST Act does not apply and V is required to charge GST on these supplies.

Services supplied to non-residents outside Australia

Broadly, services provided to non-residents who are not in Australia in relation to the supply can be made GST-free under certain circumstances.

We take the view that the arrangements between V, the government and applicants having skills assessed can be characterised as a contract between V and the applicants with the assessment services being supplied by V to the applicants directly. The deed, under this synopsis, is for governance and also authorises V to carry out the task.

In this case V's supplies are initially drawn into the GST system as the supplies are connected with Australia by virtue of subparagraph 9-25(5)(b) of the GST Act (see above).

However when the skills assessment is done overseas it is supplied to a non-resident who is not in Australia. Item 2(a) in subsection 38-190(1) of the GST Act confers GST-free status to this exact situation.

Item 2 provides that a supply of a thing (other than goods or real property) made to a non-resident is GST-free if it is a supply that is made to a non-resident who is not in Australia when the thing supplied is done, and:

(a) the supply is neither a supply of work physically performed on goods situated in Australia when the work is done, nor a supply directly connected with *real property situated in Australia; or

(b) the *non-resident acquires the thing in *carrying on the non-resident's *enterprise, but is not *registered or *required to be registered for GST.

(* denotes a term defined in section 195-1 of the GST Act.)

Therefore the skills assessments done for overseas based applicants are GST-free supplies. This remains the case whether the assessor is in-situ overseas or working remotely from Australia.