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Edited version of your written advice
Authorisation Number: 1013084367601
Date of advice: 5 September 2016
Ruling
Subject: GST and GST-free supplies
Question 1
Will the supply from Entity A to Entity B for which Entity B pays a registration fee, and the costs of accommodation and travel be GST-free pursuant to section 38-90 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
No.
Relevant facts and circumstances
Entity A is registered for GST.
The Entity A organises events for Entity B. Entity B pay the registration fee, accommodation and travel costs to Entity A. These events are educational to the Entity B's development and character. The event Entity B participates in is directly relate to an activity they do at school and is not of a recreational nature.
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 38-90, and
A New Tax System (Goods and Services Tax) Act 1999 Section 195-1.
Reasons for decision
You make a taxable supply where you satisfy section 9-5 of the GST Act. This section provides that 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.
Where Entity A provides a supply to Entity B to participate in an event for a payment of a registration fee and to cover the costs of Entity B's accommodation and travel, it will be a taxable supply under section 9-5 of the GST Act. As Entity A is making a supply for consideration, the supply is made by Entity A in the course or furtherance of an enterprise that it carries on, the supply is connected to the indirect tax zone as it is done in the indirect tax zone, and you are registered for GST.
There are no provisions that would result in the supply being input taxed however we will consider the operation of section 38-90 of the GST Act.
Section 38-90 of the GST Act provides:
(1) A supply is GST-free if it is a supply of an excursion or field trip, but only if the excursion or field trip;
(a) is directly related to the curriculum of an *education course; and
(b) is not predominantly recreational.
(2) However:
(a) if the course is a *tertiary course, a *tertiary residential college course or a professional or trade course - any supply of accommodation as part of the excursion or field trip is not GST-free; and
(b) in any case - any supply of *food as part of the excursion or field trip is not GST-free under this section.
(* denotes a defined term under section 195-1 of the GST Act)
The issue for Entity A is whether they satisfy paragraph 38-90(1)(a) of the GST Act in that is the supply directly related to the curriculum of an education course.
Education course is a defined term under section 195-1 of the GST Act and means:
(a) …; or
(b) a *primary course; or
(c) a *secondary course; or
(d) …; or
The primary course is further defined under section 195-1 of the GST Act as:
(a) a course of study or instruction that is delivered:
(i) in accordance with a primary curriculum recognised by the education authority of the State or Territory in which the course is delivered; and
(ii) by a school that is recognised as a primary school under the law of the State or Territory; or
(b) any other course of study or instruction that the Education Minister has determined is a primary course for the purposes of this Act.
Paragraph 20 of Goods and Services Tax Ruling: supplies that are GST-free for pre-school, primary and secondary education courses (GSTR 2000/30) provides:
20. A primary course is any course delivered by a school in accordance with the primary curriculum recognised by the education authority of the State or Territory. A school, as defined in the GST Act, is an institution approved by the education authority of a state or territory, to conduct a primary course.
The secondary courses are further defined under section 195-1 of the GST Act as:
secondary course means:
(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.
Paragraphs 24 to 28 of GSTR 2000/30 provides:
24. Under the Education Minister's determination, a secondary course can be delivered by a recognised secondary school, a registered training organisation, a higher education institution or a special school.
25. A secondary course includes all secondary courses covered by the determination made by the Education Minister under the Student Assistance Act 1973 . This determination is also used to identify those courses that students must be undertaking to be eligible for income support as full-time students. The determination lists the type of course and types of educational institutions that can deliver the course. The eligibility of courses for the Student Assistance Act 1973 is reviewed periodically by the Education Minister.
26. Apart from any determination referred to in paragraph (a) of the definition of a secondary course, the Education Minister can determine that any other course of study or instruction is a secondary course for the purposes of paragraph (b) of the definition.
27. Only courses covered by the Education Minister's determination under subsection 5D(1) of the Student Assistance Act 1973 or under a separate determination, are GST-free as secondary courses.
28. It is considered that reference to subsection 5D(1) of the Student Assistance Act 1973 includes both paragraphs (a) and (b) of that subsection and a secondary course includes a part of a course of study or instruction. Therefore parts of a secondary course including the study of one subject or module is covered by the Education Minister's determination under subsection 5D(1) of the Student Assistance Act 1973 and is GST-free.
The GST-free provision for excursions and field trips where it mentions that it must directly relate to the curriculum of an education course is limited to applying to entities that make the supply of the education course.
The ATO view on this point is provided under paragraph 106 to 108 and an example is provided under paragraph 118 to 120 of GSTR 2000/30 as follows:
106. You make a supply of an excursion or field trip where you coordinate the various elements for the recipients of the supply. These elements include transport, accommodation, entry fees, etc. You work out the charge of the excursion or field trip to each student. Where this is the case, the supply of the excursion or field trip is GST-free to the student.
107. Where you engage a third party to provide all or a part of your excursion or field trip and you pay the third party for this, you are entitled to an input tax credit for the GST paid on the creditable acquisition. The subsequent supply to the student by you is GST-free.
108. It is administratively difficult for a third party to determine whether an activity is directly related to the school curriculum. Only you as the provider of the course can make that decision. Consequently, where a third party supplies any part of the excursion or field trip directly to students and/or staff, this supply is a taxable supply. Example - taxable supply by a third party of an excursion to a swimming carnival
118. The staff and students of a girls' college attend an inter - school swimming carnival to participate in the carnival and support the school team. The transport is supplied by a private bus company - it packages the transport and entry to the pool. The students and staff pay the company directly for the excursion.
119. Although the sport of swimming and participation in inter - school sport are directly related to the school curriculum, the supplier of the education course does not supply the excursion. For this reason, the supply of the excursion is not GST - free to the students. The supply of the excursion to staff is not GST - free.
120. However, had the girls' college engaged the bus company to supply the packaged excursion, the supply to students and staff would have been GST-free.
Therefore where Entity A makes a supply to Entity B, for which Entity B pays a registration fee, and the costs of accommodation and travel, the supply will not be GST-free under section 38-90 of the GST Act.