Edited version of your written advice

Authorisation Number: 1013082349316

Date of advice: 9 September 2016

Ruling

Subject: GST and Education course - re-certification

Question

Are the training courses for re-certification to certificate holders that you supply GST-free education courses under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No, the courses are subject to GST. The supply of re-certification courses to certificate holders are not GST-free supplies of education courses under section 38-85 of the GST Act as the re-certification courses do not meet the requirements of a professional or trade course as defined in section 195-1 of the GST Act.

Relevant facts and circumstances

You are registered for the goods and services tax (GST).

You are an Authorised Qualification Body (AQB) and Authorised Examination Centre approved by the Australian Institute of Non Destructive Testing (AINDT) and the British Institute of Non Destructive Testing (for internationally recognised certificates).

AINDT is the Industry's regulating body and provides a certification scheme to meet requirements of various Australian Standards. Its Certification Board provides examinations through a network of AQBs and through its own examination centres in Australia.

Once an applicant completes training and exams, they must apply to AINDT for certification.

You provide various courses and their examinations which result in qualifications in accordance with ISO9712 and are pre-requisites for obtaining work as Inspection Technicians.

Technicians are required to re-certify every 5 years. If they don't, in order to continue in their employment, they would need to go back to initial exams and conduct any necessary training to prepare them for the exam. Re-certification is considered a pre-requisite for work. This is not like paying a subscription or membership fee to a professional organisation. It is a re-testing of competence in order to allow continuance in the role as an Inspection Technician.

Refresher training is usually conducted to maintain skills. No qualification is gained. It is not a pre-requisite for work.

Proficiency training is usually conducted to ensure a company or individual is competent in a method they are certified for. It is only a pre-requisite for work if deemed so in company procedure.

Relevant legislative provisions

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

A New Tax System (Goods and Services Tax) Act 1999 - section 38-110

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

A New Tax System (Goods and Services Tax) Act 1999 - section 9-5

A New Tax System (Goods and Services Tax) Act 1999 - section 9-40

Reasons for decision

Section 9-40 of the GST Act provides that you are liable for GST on any taxable supply that you make.

Section 9-5 of the GST Act, provides you make a taxable supply if:

(a) you make the supply for consideration

(b) the supply is made in the course or furtherance of an enterprise that you carry on

(c) the supply is connected with the indirect tax zone (Australia), and

(d) you are registered, or required to be registered for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

Section 38-85 of the GST Act provides that an education course is GST-free. The definition of education course in section 195-1 of the GST Act includes a professional or trade course.

Professional or trade courses are defined in section 195-1 of the GST Act to mean 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.

In relation to the entry to, or the commencement of the practice of a particular profession, section 195-1 of the GST Act provides that a qualification will be an essential prerequisite where:

• the course is a legal requirement for example a law, regulation or industrial agreement, or

• the course is a requirement imposed by a professional or trade association, either nationally or on a State basis.

Goods and Services Tax Ruling GSTR 2003/1 provides guidance on when a course meets the requirements of GST-free professional or trade course as defined in section 195-1 of the GST Act.

Of relevance here, GSTR 2003/1 advises that a course that leads to a qualification that is an essential pre-requisite for maintaining or progressing within the practice of a profession or trade is not a professional or trade course. According to paragraph 99 in GSTR 2003/1, maintaining the practice of a profession or trade includes such things as:

• undertaking continuing professional development;

• re-licensing;

• re-accreditation;

• renewal of annual practising certificates; and

• refresher course.

Therefore, a GST-free professional or trade course must:

1) lead to a qualification; and

2) the qualification is an essential prerequisite for entry to, or to commence the practice of a profession or trade in Australia.

Commencement of practice in a trade

GSTR 2003/1 explains that documents that are qualifications or that provide evidence of a qualification include a statement of satisfactory completion, a certificate (including a degree or diploma), a licence or an accreditation. The first requirement will be satisfied where such documentation is awarded to the students undertaking the course upon successful completion of all of the units or modules that make up the course. A course must provide the requisite skills and knowledge for an individual to attain the qualification at the conclusion of the course.

Your courses lead to qualifications that are essential prerequisites imposed by a trade association to commence trades in Australia. As the qualifying for commencement of practice in a trade course meets the requirements of a professional or trade course as defined in section 195-1 of the GST Act, you are making a GST-free supply of education course to attain the qualification under section 38-85 of the GST Act.

Maintaining the practice of a trade

Paragraph 98 of GSTR 2003/1 points out that the clear and unambiguous exclusion in paragraph (b) of the definition of a professional or trade course in section 195-1 of maintaining the practice of a profession or trade in Australia ensures that a course which only leads to a qualification of maintaining the practice of a profession or trade is not a professional or trade course for the purpose of section 38-85 of the GST Act.

As stated above, maintaining the practice of a profession or trade includes such things as:

• undertaking continuing professional development;

• re-licensing;

• re-accreditation;

• renewal of annual practising certificates; and

• refresher course.

Your supply of re-certification courses is in the form of a re-accreditation and does not meet the clear requirements of a professional or trade course as defined in section 195-1 of the GST Act. You are not making a GST-free supply of education course under section 38-85 of the GST Act when you supply the re-certification courses. Your supply will be subject to GST as you are registered for GST.