Edited version of your written advice

Authorisation Number: 1012758639900

Ruling

Subject: GST and education courses

Question

Are you making a GST-free supply of education courses under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) when you supply the following courses?

List 1: accredited courses

List 2: non accredited courses

Answer

Yes, your supply of the courses on List 1 is a GST-free supply.

No, your supply of the courses on List 2 is not a GST-free supply, it is a taxable supply.

Relevant facts and circumstances

You are registered for GST. You are a provider of accredited and non-accredited courses.

You provided the following information on the courses that you offer.

List 1:

You are registered on the National Register, Training.gov.au, as a Registered Training Organisation (RTO). The courses on List 1 are accredited vocational education and training (VET) courses that are within the scope of your registration as an RTO.

Upon completion of all course requirements and displaying evidence of competence, nationally recognised Certificate will be issued to the participants of List 1 courses.

List 2:

The courses on List 2 are not accredited courses. They are not courses leading to a qualification that is an essential prerequisite for entry to a particular profession or trade in Australia; or to commence the practice of a profession or trade in Australia. They have not been formally reviewed and endorsed by the relevant state vocational education and training authority.

The participants in these courses are usually employees sent by their employers. However, the courses are also open to adults in the general community.

The courses are not provided by way of private tuition to individuals.

The courses are not provided to the members of an organisation which requests you to provide the courses to its members.

There are no prerequisites for entry into these courses.

In addition, you advise that:

• You are not a higher education institution that is established by a law of the Commonwealth, a State or a Territory as a higher education institution or an institution registered or taken to be registered by the Tertiary Education Quality and Standards Agency (TEQSA) as a higher education institution.

• You are not recognised by a State or Territory authority, as a provider of courses of a kind described in the Education Minister's Determination A New Tax System (Goods and Services Tax) (Adult and Community Education Courses) Determination 2000 (ACE Determination).

• You are not funded by a State or Territory on the basis that you are a provider of courses of a kind described in the ACE Determination.

• You are a private provider and not a body corporate operating on a not-for-profit basis.

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 195-1.

A New Tax System (Goods and Services Tax) Act 1999 Section 38-85

Reasons for decision

Summary

The courses on List 1 are accredited courses offered within the scope of your registration as an RTO hence they are GST-free supplies of tertiary courses.

Your supply of the courses on List 2 is not a GST-free supply, it is a taxable supply.

Detailed reasoning

A supply 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 satisfied. Section 9-5 of the GST Act states:

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

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

From the facts given, you satisfy the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. This is because you make the supply for consideration, the supply is made in the course of an enterprise that you carry on, the supply is connected with Australia as you deliver the courses in Australia and you are registered for GST.

The input taxed provisions are not applicable in your case. Therefore, the supplies of the courses listed in this ruling are taxable to the extent that they are not GST-free.

The supply of an education course is GST-free under section 38-85 of the GST Act. An education course is defined in section 195-1 of the GST Act to include, amongst other things, a tertiary course, a professional or trade course and an adult and community education (ACE) course. These are the only types of education courses from the definition in section 195-1 of the GST Act that could be relevant to your situation.

In deciding whether each of your courses listed in this ruling satisfy the requirements of a GST-free supply of an education course, it is necessary to consider whether these courses satisfy the definition of a tertiary course, a professional or trade course, or an ACE course.

List 1 courses:

Tertiary course

A tertiary course is defined in the GST Act to include a course that is determined by the Education Minister to be a tertiary course for the purposes of the Student Assistance Act 1973.

The Education Minister has issued the Student Assistance (Education Institutions and Courses) Determination 2009 (No.2) (SA Determination 2009/2).

There are two conditions that must be met. Paragraph 10 and Schedule 2 of the SA Determination 2009/2 provide that an accredited VET program conducted by an RTO is a tertiary course. Hence the accreditation of a course itself will not mean that your supply of that course is GST-free if that course is not offered within the scope of your registration as an RTO.

You are an RTO. Further, the courses on List 1 are accredited courses that are within the scope of your registration as an RTO. Hence the courses on List 1 meet the requirements under schedule 2 of the SA Determination 2009/2. As these courses satisfy the definition of a tertiary course in the GST Act, the supply of these courses is GST-free.

List 2 courses:

Tertiary course

You state that these are not accredited courses. The Training.gov.au website confirms that the courses on List 2 are not within the scope of your registration as an RTO. Hence they do not meet the requirements of a tertiary course. Therefore, the supply of a course on List 2 is not a GST-free supply of a tertiary course.

Professional or trade course

For a course to be GST-free as a professional or trade course, it must satisfy the definition of 'professional or trade course' under section 195-1 of the GST Act. The course must:

(a) lead to a qualification; and

(b) that qualification must be an essential prerequisite for entry to, or to commence the practice of (but not to maintain or progress the practice of) a profession or trade in Australia.

Goods and Services Tax Ruling (GSTR) 2003/1 provides the Tax Office view as to what supplies are GST-free supplies of professional or trade courses.

Paragraph 48 of GSTR 2003/1 provides that 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 qualifications.

Paragraph 49 of GSTR 2003/1 states:

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.

Paragraph 66 of GSTR 2003/1 further states:

Qualifications that are general in nature and that relate to the entry to, or the commencement of the practice of, a number of professions or trades, are not essential prerequisites for entry to, or to commence the practice of, a particular profession or trade.

You advise that the List 2 courses do not lead to a qualification that is an essential prerequisite for entry to a particular profession or trade in Australia; or to commence the practice of a profession or trade in Australia. Hence the List 2 courses do not fulfil the second requirement, and therefore do not satisfy the definition of a professional or trade course. The courses are not GST-free professional or trade courses.

ACE course

Goods and Services Tax Ruling (GSTR) 2000/27 explains which supplies of adult and community education courses are GST-free.

For a course to be GST-free as an ACE course, it must satisfy the definition of ACE courses under section 195-1 of the GST Act. The course must:

a. be a course of study or instruction that is likely to add to the employment related skills of people undertaking the course; and

b. be of a kind determined by the Education Minister to be an ACE course;

and

c. be provided by, or on behalf of, a body that is:

i. a higher education institution; or

ii. recognised or funded by the relevant State or Territory authority as a provider of ACE courses; or

iii. a body corporate that operates on a not-for-profit basis and has not been refused recognition, or disqualified, by a State or Territory authority as a provider of ACE courses.

You are not a higher education institution as defined in the SA Determination 2009/2, because you state that you are not an institution that is established by a law of the Commonwealth, a State or a Territory as a higher education institution or an institution registered or taken to be registered by the Tertiary Education Quality and Standards Agency (TEQSA) as a higher education provider.

You state that you are not recognised by a State or Territory authority, as a provider of courses of a kind described in the ACE Determination.

You state you are not funded by a State or Territory on the basis that you are a provider of courses of a kind described in the ACE Determination.

You are a private provider and not a body corporate operating on a not-for-profit basis.

Hence the third requirement of an ACE course is not satisfied and the List 2 courses are not GST-free ACE courses.

In conclusion, your supply of the List 2 courses is a taxable supply.