Edited version of your written advice

Authorisation Number: 1012680902283

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

No.

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 (Deed) with the Commonwealth of Australia 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.

V has obtained written approval to subcontract the services under the Deed. V is treating the supply of the skills assessment services as a taxable supply.

In respect of assessments done overseas by V itself, 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 GST-free pursuant to section 38-110 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).

Detailed reasoning

A supply of skills assessment services made under the Deed will be a taxable supply where the requirements of section 9-5 of the 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 indicated in your original application 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.

2) 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 provided, according to the Deed, at Purpose A '… in the form of assessment skills of Applicants trained overseas against relevant Australian Qualification Framework (AQF) qualifications …'. In the first instance the Deed does not appear to prescribe actions for an exclusive purpose as V's asserts; i.e. that V makes its supply for migration purposes only.

In clarifying what supply is made, it is instructive to look at the character of the actual supply made as a result of the Deed rather that what is assumed to be supplied from a legalistic reading of the Attachments to the Deed. This approach is supported by the courts, see Edmonds J, ATS Pacific Pty Ltd & Anor v FC of T 2014 ATC 20-449 at paragraph 29:

We are not here concerned with whether a supply occurred on entry into a contract (cf., Federal Commissioner of Taxation v Reliance Carpet Co Pty Ltd (2008) 236 CLR 342; Federal Commissioner of Taxation v Qantas Airways Ltd (2012) 247 CLR 286) or even with the characterisation of that supply it if did occur. We are here concerned with the character of a supply made as a result of performance of the terms and conditions of a contract. The terms and conditions are the instrumentality through which the supply is made, but the text of these terms and conditions is not conclusive of the character of the supply that is made; that will depend as much on the manner of performance of those terms and conditions as the text of the terms and conditions themselves; it will also depend on the commercial or business purposes, discerned objectively, of those who have entered into the relevant contract.

In fact, in the case at hand, it is apparent that the skills assessments to be done by V must be for potential migrants who are relying on trade skills and qualifications to gain entry to the Australian workforce; without starting on an approved path to the workforce, migration cannot be considered. In essence V submits that its supply is that of testing suitability for an overarching goal of migration rather the lower echelon '… assessment of skills … against the relevant [AQF]' as stated in the Deed.

A skills assessment that results in an applicant being assessed as qualified or unqualified to work in a given trade or profession, must, on even a cursory examination, be for an underlying purpose of employment. This is particularly so where an applicant is commencing the assessment process with the aim of working in their chosen trade or profession. The Department of Immigration and Border Protection (Department) notes as much about skilled migration on its website:

If you like the idea of Australia's climate and lifestyle and are looking for a career challenge in a country with lots of opportunities - take the next step to find out more about Australia's skilled working visas.

The Department's approach to skilled migration is at odds with V's; the Department envisages a skills assessment against employment/licensing related criteria as a prerequisite to a career in Australia whereas V contemplates no such linkage.

We note the 'Standard Successful Letters' that form Attachments to the Deed all state that the applicants have undertaken a 'skilled migration assessment', pointing to the outcome that V's skills assessments are undertaken with a view to satisfy work qualification requirements (skills) rather than purely migration requirements in the first instance. The fact that successful migration may follow is of no consequence.

Therefore we consider that V's supply of skills assessments under the Deed is a GST-free supply pursuant to section 38-110 of the GST Act.

Services supplied to non-residents outside Australia

As section 38-110 of the GST Act applies to all V's supplies it is not necessary to consider GST-free treatment under section 38-190.