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Edited version of your written advice
Authorisation Number: 1012873218701
Date of advice: 18 September 2015
Ruling
Subject: GST and education course
Question
Are you making a GST-free supply of an education course when you supply your program (the program) to secondary schools?
Answer
No.
Relevant facts and circumstances
You are not registered for GST.
You are not a Registered Training Organisation (RTO).
You will contract with secondary schools (schools) to deliver the program to high school students (students) on behalf of the schools.
You will not have any contractual relationships with the students. The program will be provided by the school to its students.
You believe that the schools receive funding to deliver this program to the students.
You believe that the program will be part of the students' curriculum.
You believe that the program will add to the employment related skills of the students undertaking the program.
The program is not available to adults in the general community.
There is no formal qualification to be gained upon completion of the program.
You provided details of the subjects covered in the program.
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, and
A New Tax System (Goods and Services Tax) Act 1999 section 195-1.
Reasons for decision
Summary
You are not making a GST-free supply of an education course when you supply the program to secondary schools.
Detailed reasoning
Section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides for the supply of an education course to be GST-free.
The term education course is defined in section 195-1 of the GST Act and includes a number of different types of courses. The relevant education course that needs to be considered in your circumstances is secondary education course.
Section 195-1 of the GST Act defines secondary course to mean:
(a) a course of study or instruction that is a secondary course determined by the Education Minister under subsection 5D(1) of the Student Assistance Act 1973 for the purposes of that Act; or
(b) any other course of study or instruction that the Education Minister has determined is a secondary course for the purposes of this Act.
To be GST-free as a secondary course as defined in section 195-1 of the GST Act, a course must satisfy the Student Assistance (Education Institutions and Courses) Determination 2009 (No. 2) (the Education Minister's Determination).
Section 9 of the Education Minister's Determination states:
For paragraph 5D(1)(a) of the Act, a secondary course is a course:
(a) specified in Column 1 of the table in Schedule 1 to this instrument that is provided by an education institution specified for that course in Column 2 of that table; or
(b) provided by a secondary school, a registered training organisation or a higher education institution that leads to an accredited secondary course qualification involving:
(i) accredited secondary course subjects; or
(ii) a VET course.
You are not an education institution as specified in the Education Minister's Determination as you are not a secondary school, an RTO, a higher education institution or a special school. Therefore, your supply will not satisfy the definition of a secondary course under section 38-85 of the GST Act and will not be GST-free.
The Australian Taxation Office view on secondary education courses is outlined in Goods and Services Tax Ruling GSTR 2000/30 Goods and services tax: supplies that are GST-free for pre-school, primary and secondary education courses (GSTR 2000/30).
Paragraph 7 of GSTR 2000/30 provides that the supply of an education course includes the supply of tuition, facilities and other curriculum related activities and instruction.
Paragraphs 42 to 46 of GSTR 2000/30 discuss the meaning of curriculum related activities and instruction and states:
42. The supply of curriculum related activities is part of the supply of an education course. Curriculum related activities include visits to you by organisations such as animal farms, theatre companies and science fairs.
43. The supply of curriculum related instruction is part of the supply of an education course. Curriculum related instruction includes instruction by external tutors or any third parties engaged by you to deliver part or all of the curriculum. It also includes remedial and advanced (extension) teaching provided by you for individual students.
44. As the supply of curriculum related activities and instruction is part of the supply of an education course, it is irrelevant whether the amount charged for the activity or instruction is included in the fee you charge for the course or whether it is charged separately. The amount charged must be paid to you, as the supplier of the education course. If the amount charged for the activities or instruction is paid by students to the provider of the activities or instruction, it is not GST-free to students as a supply of an education course.
45. However, if the provider is approved by the relevant state or territory body to conduct a pre-school, primary or secondary course, the supply made to students is the supply of an education course in its own right and is GST-free.
46. If the supply of the activity or instruction to you is made by an entity that is registered or required to be registered, the supply to you is a taxable supply and the amount you pay for the activities or instruction includes GST. You are entitled to input tax credits in respect of the GST paid on the acquisitions by you of activities or instruction. The subsequent supply that you make to students is GST-free.
In cases where a third party delivers a course, or component of a course, to students at the direction of a course provider, i.e. the school, the services provided by the third party would generally not be considered to be a supply of an education course. In this situation there are two separate supplies being made. The third party is supplying its services to the school and the school is supplying the education course to the students. The third party is not supplying an education course to the students.
Similarly in your case you will contract with the schools to deliver the program to the students on behalf of the schools. The schools will provide payment to you for your services. You will have no contractual relationship with the students. Accordingly, you will be making a separate supply of your services and expertise to the schools in accordance with your contract.
In summary, you will not be making a GST-free supply of an education course under section 38-85 of the GST Act when you deliver the program to the students on behalf of the schools. Your supply of services to the schools will be a taxable supply and subject to GST if you register or become required to be registered for GST.
The supply of the program by the schools to the students may be a GST-free supply of a secondary course if all the necessary requirements of the GST Act are satisfied.