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Edited version of your written advice
Authorisation Number: 1012903066804
Date of advice: 2 November 2015
Ruling
Subject: GST and supply of educational product
Question
Is your supply of the education product to school teachers a GST-free supply of course materials under section 38-95 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Advice
No. Your supply of the educational product to school teachers is a taxable supply under section 9-5 of the GST Act.
Relevant fact
You are an Australian company and registered for the goods and services tax (GST). You are not a registered training organisation (RTO).
You sell an educational product to schools. The teachers use the educational product to create unique course materials for students to whom they are supplying the education course.
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 38-95
A New Tax System (Goods and Services Tax) Act 1999 Section 195-1
Reasons for decision
Summary
Your supply of the educational product to school teachers is a taxable supply under section 9-5 of the GST Act.
Detailed reasoning
Under section 38-95 of the GST Act a supply of 'course materials' for a subject undertaken in an education course is GST-free.
The term 'course materials' in relation to an education course is defined in section 195-1 of the GST Act to mean 'materials provided by the entity supplying the course that are necessarily consumed or transformed by the students undertaking the course for the purposes of the course'.
Paragraph 83 of GSTR 2001/1 explains that to determine whether materials or items will be considered to be course materials all of the following requirements must be met:
• The materials or items are provided by you to students; and
• The materials are necessarily consumed or transformed by the students undertaking the course; and
• The materials are consumed or transformed for the purposes of the course.
Paragraphs 92, 97 to 98 of GSTR 2001/1 provide examples of when the requirements of a course material are satisfied. The 'you' in paragraph 83 of GSTR 2001/1 refers to the entity that is supplying the course as per definition of 'course materials' in section 195-1 of the GST Act.
In your case, you supply the educational product to school teachers who use the product to create unique course materials which they will provide to students when supplying the education course. Accordingly, you are not the supplier of the education course.
Accordingly, your supply of the educational product does not satisfy the definition of 'course materials' as defined in section 195-1 of the GST Act as you are not the entity that is supplying the education course to the students. Therefore, your supply of educational product is not GST-free under section 38-95 of the GST Act.
Paragraph 38-85(b) of the GST Act provides that a supply of administrative services that is directly related to the supply of an education course is GST-free but only if the supply is made by the supplier of the course.
Paragraph 75 of GSTR 2001/1 provides examples of supply of administrative services and includes administration of the supply of course materials.
According to paragraphs 73 and 74 of GSTR 2001/1, administrative services must be in a direct line or immediately associated or connected with the supply of education course. Administrative services provided by an entity other than the supplier of the course will be subject to GST.
In your case, paragraph 38-85(b) of the GST Act is not applicable as you are neither the supplier of the course nor providing administrative services since you are not administrating the supply of course materials.
The purpose of the educational product is to assist the teachers to create course materials for students to whom they are supplying the education course. Accordingly, you are providing the educational product to the teacher and not to the students since the school teachers are using the educational product for their purposes.
Since your supply of the educational product to the teachers is not an input taxed supply under the GST law, your supply is subject to GST under section 9-5 of the GST Act as you are registered for GST.