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Edited version of your written advice

Authorisation Number: 1051203376937

Date of advice: 20 March 2017

Ruling

Subject: GST, supply of a right and mixed supply

Question 1

Is the supply by Entity A to students under the education course a mixed supply, comprising of:

      (a) A supply of administration, management and related services; and

      (b) A supply of a right to receive an education course from another entity?

Question 2

Where the supply is a mixed supply, are the GST treatments of the components of the supply as follows:

      (a) The supply of administrative, management and related services should be taxable for GST purposes under section 9-5 of the GST Act; and

      (b) The GST treatment of the supply of right to receive an education course from another entity should reflect the GST treatment of the underlying education course (as determined by the other entity), and constitute either a taxable supply (in accordance with section 9-5) or a GST-free supply (in accordance with paragraph 9-30(1)(b) of the GST Act)?

Answer

The supply will be a mixed supply where the right to receive the education course is GST-free in that the education course needs to satisfy paragraph 38-85(a) of the GST Act, however, where the education course is not GST-free in that it does not satisfy paragraph 38-85(a) of the GST Act, the supply will not be a mixed supply.

Relevant facts and circumstances

    ● Entity A is a wholly owned subsidiary of Entity B and registered for GST.

    ● The education course is a course developed by Entity A and Entity B.

    ● Although not the subject of this submission, for completeness, the agreements state that Entity A grants the other entity with the right and licence to deliver the education course.

    ● Students looking to compete the education course are required to submit an application with Entity A, together with payment.

    ● Entity A assesses each application and determines whether the applicant is eligible to undertake the education course.

    ● The various administrative, management and related services are provided by Entity A , include such things as:

      ● Administration of the student registrations, including applications, transfers, deferrals, suspensions and withdrawals;

      ● Student invoicing and accounts receivable management;

      ● Maintenance and collection of outstanding student fees;

      ● Assessment and provision of feedback on Work Placement Reports;

      ● Ongoing student support and communication;

      ● Communication with internal and external stakeholders (ie. Internship placement opportunities and leads);

      ● Marketing and promotion.

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 9-30, and

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

Reasons for decision

A supply is taxable where it satisfies section 9-5 of the GST Act. This section provides that you make a taxable supply if:

      (a) You make a supply for consideration;

      (b) The supply is made in the course or furtherance of an enterprise that the supplier carries on;

      (c) The supply is connected with the indirect tax zone (Australia); 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.

In this situation Entity A is making a supply to a student of consisting of services including administrative, management and related services and a right to an education course.

Entity A will satisfy section 9-5 of the GST as the supply is for consideration, the supply is in the course or furtherance of an enterprise that Entity A carries on, the supply is connected with Australia as it is done in Australia and Entity A is registered for GST.

However, a supply is GST-free pursuant to subsection 9-30(1) of the GST where it is GST-free under Division 38 or under a provision of another Act, or it is a supply of a right to receive a supply that would be GST-free under paragraph 38-85(a).

Where this is the case and the other entity determines the supply of the education course is GST-free, pursuant to section 38-85 of the GST Act or another Act, Entity A's supply of the right to the education course will also be GST-free and a mixed supply to a student.

Conversely, where the other entity determines the supply of the education course is taxable, Entity A's supply of the right to the education course will also be taxable and will not be a mixed supply to a student.


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