Edited version of your written advice

Authorisation number: 1051229781754

Date of Advice: 31 May 2017

Ruling

Subject: Goods and Services Tax: supply of licence to operate a forklift truck training course

Question

Is the supply of training courses by you to customers in Australia subject to GST?

Answer

No. Your supply of specified training course is GST-free education course under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and not subject to GST.

Relevant facts and circumstances

You are an entity which is registered for GST.

You have entered into a partnership arrangement (Agreement) with RTO to deliver Vocational Education and training (VET) qualifications on its behalf. The Agreement allows you, who is not an RTO to deliver and assess training through the partnering arrangement.

Under the Agreement, you undertake training and assessment of all students for qualification for the Resource Industry and Transport packages (RII TL/I) within the scope of RTO.

RTO is registered for GST.

You supply a specified training course which provides the student with the training required to pass the National Assessment Instrument (Exam) to gain a licence and the assessment itself.

The specified training course is set out over 3-5 days (pending experience) and has a theory component, calculations component and a practical component.

The specified training course is recognised by Australian Skills Quality Authority (ASQA) and Workplace Health and Safety (WHS) Queensland (QLD).

You have a Confirmation of Alignment and Certificate of Accreditation from WHS QLD certifying that you are aligned with RTO as an accredited assessor to provide the training courses.

You provide your own resources and facilities to train and assess the students. You issue the tax invoice to students for the supply of the specified training courses.

On successful completion of the course, you will issue a Certificate of Competency to the students and upon recommendation from you, the RTO will then issue a Statement of Attainment to the successful trainee.

You pay RTO an administration fee per unit of competency issued to the students.

The specified training course leads to specific qualification and is essential prerequisite for entry into the particular trade.

The specified training course is mandatory for person to have a licence qualification before they commence the practice into that profession. In fact the only way a person is allowed to operate the equipment without the qualification is if they are enrolled in the specified training course and they are supervised by a licensed operator i.e. undergoing the course.

If someone is caught operating a equipment without the qualification, the person will be penalised by WHS QLD under the QLD Workplace Health and Safety Act 2011 and the QLD Workplace Health and Safety regulations 2011.

The course is also done by those already in a trade who wish to be able to conduct an extra duty of their trade and also as their professional development.

The specified training course is available to adults in the general community. In some cases you provide the course to an employee at the request of the employer or to a member of an organisation at the request of the organisation.

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

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

Reasons for decision

GST is payable on a taxable supply. Section 9-5 of the GST Act states:

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 (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.

(*denotes a defined term in section 195-1 of the GST Act)

Your supply of specified training courses to the students in Australia will be taxable if all the requirements in section 9-5 of the GST Act are satisfied.

From the facts given, the supply of specified training courses by you to the students in Australia satisfy paragraphs 9-5(a) to 9-5(d) of the GST Act, as follows:

(a) you make the supply of specified training courses in return for consideration by way of payments;

(b) the supply is made in the course of your business;

(c) the courses are performed/provided in Australia or made through an enterprise that you carry on in Australia (and therefore the supply is connected with Australia); and

(d) you are registered for GST in Australia.

However, section 9-5 of the GST Act also provides that the supply is not taxable to the extent that it is GST-free or input taxed.

Your supply of specified training courses to the students in Australia does not satisfy the input taxed provisions under the GST Act. The GST-free provisions are taken into consideration.

GST-free

A supply of an education course is GST-free under section 38-85 of the GST Act. An education course is defined in section 195-1 of the GST Act to include among other things;

● a tertiary course;

● an adult and community education (ACE) course; and

● a professional or trade course.

Each of the above courses is further defined under section 195-1 of the GST Act.

Based on the facts provided, you are not acting as agent for RTO. You decide the course fee, source students, collect fees and issue the invoice for the course using your own name and ABN. You organise and conduct the training and assessment. Hence you are the entity supplying the course to the students.

Professional or trade course

To be a 'professional or trade course' as defined in section 195-1 of the GST Act, the course that you supply must:

1. lead to a qualification; and

2. that qualification must be an 'essential prerequisite' for entry to, or to commence the practice of (but not to maintain the practice of) a particular 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 (which is available at www.ato.gov.au) explains the meaning of 'professional or trade course' in section 195-1 of the GST Act.

First requirement

GSTR 2003/1 states that having established that you supply a course, you then need to decide whether the course leads to a qualification. We consider that the words 'leading to' require a causal connection between the course that is undertaken and the qualification that is ultimately obtained. We also consider that a causal connection exists where there is a sufficiently direct and demonstrable link or connection between the course and the qualification. The qualification must result from, and will follow successful completion of, the course.

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 a 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.

Based on the information provided, on successful completion of the specified training course, as an assessor you will issue a Certificate of Competency to the students and upon recommendation from you, the RTO will then issue a Statement of Attainment to the successful trainee.

Under the Agreement, you will be supplying a course that will result in the student having the requisite skills and knowledge to attain the particular Certificate of Competency and the Statement of Attainment for which they have enrolled for training. Therefore, the supply of specified training course will lead to a qualification and the first requirement is satisfied.

We now need to determine whether the second requirement of 'professional or trade course' under section 195 of the GST Act is satisfied.

Second requirement

A qualification is an essential prerequisite if it is mandatory for a person to have the qualification before they can enter into, or commence the practice of, a particular profession or trade. This necessarily requires the imposition of penalties or sanctions if a person enters into or commences the practice of, the profession or trade without the relevant qualification. The qualification must be a legal requirement, for example a law, regulation or industrial agreement to be one imposed by a professional or trade organisation, either nationally or on a State basis.

'Trade' has a wide meaning involving the recognition of a category or body of practical vocational skills of some difficulty and some generality. The word 'trade' is applicable to any skilled handicraft. It includes the operation of particular pieces of equipment or machinery. Whether the operation of a particular piece of equipment is considered a trade will depend on the facts such as the type of equipment and the particular skills required for operating the equipment.

Based on the information received, a Certificate of Competency relating to the specified training course is a statutory requirement for the prescribed occupation in Queensland, and the Queensland State Legislation imposes penalties for failure to comply with that requirement. Therefore, the Statement of Attainment issued as a result of undertaking the course delivered by you is an essential prerequisite and the second requirement is satisfied.

Accordingly, the specified training course delivered by you will be the supply of a professional or trade course under the GST Act. The supply of specified training course will therefore be a GST-free supply of an education course under section 38-85 of the GST Act when provided by you to the students, under the Agreement with RTO.