Edited version of your written advice

Authorisation Number: 1012870461022

Date of advice: 2 September 2015

Ruling

Subject: Goods and services tax (GST) and education

Question 1

Is the supply of your course GST free under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer 1

Yes, the supply of your course is GST free under section 38-85 of the GST Act.

Question 2

Are your supplies GST free under section 38-85 of the GST Act?

Answer 2

The supply of services is not GST-free under section 38-85 of the GST Act. The supply of training is GST-free under section 38-85 of the GST Act.

Relevant facts and circumstances

You provide training courses.

One course includes a classroom style mode of instruction. There are about X-X people in a class.

You:

• deliver educational instruction through an instructor or teacher;

• provide ongoing support and guidance, for example, being available to answer questions;

• assess the individual's progress;

• monitor or supervise;

• provide feedback concerning the individual; and

• assess competency or satisfactory completion at the end of the program of instruction.

You assist in preparing and managing all of the technical documents required in making an application.

You also provide training courses to equip people sitting the final assessment.

One course is conducted on a one to one basis. There is no classroom style instruction. The course runs for about X months. There are about X people to a course. Over X period each student will have a total contact time of about one week.

You:

• deliver educational instruction through an instructor or teacher;

• provide ongoing support and guidance, for example, being available to answer questions;

• assess the individual's progress;

• monitor or supervise; and

• provide feedback concerning the individual.

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.

A New Tax System (Goods and Services Tax) Act 1999 Section 195-1.

Reasons for decision

Question 1

GST is payable by you where you make a taxable supply.

You make a taxable supply where you satisfy the requirements of section 9-5 of the GST Act, which 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 the indirect tax zone; 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 term defined in section 195-1 of the GST Act)

In your case, you satisfy the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act in respect to your course. That is, you supply a course for consideration and you make these supplies in the course or furtherance of an enterprise that you carry on. Additionally, these supplies are connected with the indirect tax zone (ie Australia) and you are registered for GST.

There are no provisions in the GST Act under which your supply of the course is input taxed.

Therefore, what remains to be determined is whether your supply of the course is GST-free.

In accordance with paragraph 38-85(a) of the GST Act a supply of an education course is a GST-free supply.

'Education course' is defined in section 195-1 of the GST Act. The definition lists various types of education courses including a professional or trade course. The other types of education courses listed are not relevant to this case.

Professional or trade course

Section 195-1 of the GST Act defines professional or trade course. It states:

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.

Essential prerequisite' is defined in section 195-1 of the GST Act, which states:

essential prerequisite: a qualification is an essential prerequisite in relation to the entry to, or the commencement of the practice of, a particular profession or trade if the qualification is imposed:

(a) by or under an *industrial instrument; or …

An 'industrial instrument' is defined in section 195-1 of the GST Act as having the meaning given by section 995-1 of the Income Tax Assessment Act 1997 ('ITAA 1997'), and in accordance with that income tax provision, an industrial instrument includes an Australian law.

Section 995-1 of the ITAA 1997 defines 'Australian law' to mean 'a Commonwealth law, a State law or a Territory law'.

Goods and Services Tax Ruling GSTR 2003/1 Goods and services tax: supplies that are GST-free as professional or trade courses (GSTR 2003/1) provides information on what constitutes an 'industrial instrument'. Paragraph 52 of GSTR 2003/1 states:

Many requirements for entry to, or the commencement of the practice of, a profession or trade are contained in regulations to various Australian laws. These regulations are also industrial instruments.

It follows that the specified regulation is an 'industrial instrument'.

The qualification is an essential prerequisite in relation to the entry to, or the commencement of the practice of, a particular profession or trade as the qualification is imposed by or under an industrial instrument.

Your course leads to such a qualification.

Hence, your certificate course is a professional or trade course.

Accordingly, your course is an education course that is GST-free under paragraph 38-85(a) of the GST Act. No GST is payable in respect to the supply of your course.

Question 2

Your supplies comprise two components being:

• your services in assisting an application and

• your services in providing training and preparation for an assessment.

Application

Paragraph 22 of GSTR 2003/1 states, among other things, that a course is a program of systematic and interactive instruction or training for the acquisition of particular skills or knowledge.

Your service in preparing documentation for making an application is not a course. It is a service you provide to assist a client in making the application. Therefore, the service is not a GST-free education course.

Such services satisfy the requirements of section 9-5 of the GST Act. Therefore, your application submission service is a taxable supply and subject to GST.

Final assessment

You provide training and preparation for candidates to undertake the final assessment.

This qualification is an essential prerequisite in relation to the entry to, or the commencement of the practice of, a particular profession or trade as the qualification is imposed by or under an industrial instrument.

Accordingly, the training and preparation for candidates to undertake the final assessment are education courses that are GST-free under paragraph 38-85(a) of the GST Act.

Apportionment re supplies

The issue of when a supply contains both a taxable and non-taxable part (mixed supply) is discussed in Goods and Services Tax Ruling GSTR 2001/8 Goods and services tax: apportioning the consideration for a supply that includes taxable and non-taxable parts (GSTR 2001/8).

GST is payable on a mixed supply that you make, but only to the extent that the supply is taxable. You are required to apportion the consideration for a mixed supply between the taxable and non-taxable parts of the supply to establish the consideration for the taxable part.

Paragraph 92 of GSTR 2001/8 provides that a taxpayer may use any reasonable method to apportion consideration to the separately identifiable taxable part of a mixed supply. However, the apportionment must be supportable by the facts in the particular circumstances and be undertaken as a matter of practical commonsense.

Paragraphs 93 to 113 of GSTR 2001/8 discuss reasonable methods of apportionment including direct and indirect methods of apportionment and situations where a method may not be reasonable.

You will need to apportion the consideration between the taxable part and the non-taxable part of the supply to establish the consideration for the taxable part.