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Edited version of your written advice
Authorisation Number: 1051235243923
Date of advice: 7 June 2017
Ruling
Subject: GST and supply of online course
Question 1
Will the supply of the online course of study by the not-for-profit entity be a GST-free adult and community education course (ACE course) under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Advice
Yes, the supply of the online course of study by the not-for-profit entity will be a GST-free ACE course under section 38-85 of the GST Act.
Relevant facts
You are a not-for-profit entity and registered for the goods and services tax (GST). You are also a Registered Training Organisation (RTO) with a relevant agency, a joint initiative of the Australian, State and territory governments.
You will be supplying an online course of study in your own right.
You will deliver the course as a fully online program. The course will include appropriate content and assessment by way of modular assessment and a project. Qualified teaching personnel from within your organisation will develop the course material for delivery via the internet and over a range of devices.
Students will also receive support (one-on-one and one-to-many), coaching or tutoring for a number of hours over the period of the course. Communication with one of your trainers will take in the form of various communication methods via your Student Management System. Each student's progress will be monitored and discussed with the student concerned. Thus the course is interactive, notwithstanding its online delivery. It is not the mere supply of a self-paced program without any instruction, support, assessment, supervision or feedback.
Successful graduates will receive a certificate of completion issued by you.
The course is clearly designed to add to the employment related skills of the people undertaking the course. The course is expected to attract people who have a desire to advance in their career.
The course will be widely advertised in a range of publications such as newspapers, magazines, and through the use of digital and social media such as your website, LinkedIn, Facebook and Twitter.
There are no prerequisites in which anyone must meet to enrol in this course. There are no qualifications for entry and applications will be accepted on a first come first served basis.
There is no connection between the course and any particular employer or employee, there is no membership qualification as a condition to gaining admission to the course and the course involves online study but does not constitute private tuition to an individual.
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 195-1
Reasons for decision
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 and includes an adult and community education course (ACE course).
An ACE course is defined in section 195-1 of the GST Act to mean a course of study or instruction that is likely to add to the employment related skills of people undertaking the course and:
a) is of a kind determined by the Education Minister to be an ACE course and is provided by, or on behalf of, a body:
● that is a higher education institution; or
● that is recognised, by a State or Territory authority, as a provider of courses of a kind described in the determination, or
● that is funded by a State or Territory on the basis that it is a provider of courses of a kind described in the determination, or
b) is determined by the Education Minister to be an ACE course.
Accordingly, to be GST-free as an ACE course under paragraph (a), the following three requirements must be satisfied:
i. the course must be a course of study or instruction that is likely to add to the employment related skills of people undertaking the course;
ii. the course must be of a kind determined by the Education Minister to be an ACE course, and
iii. the course must be provided by a body that is either a higher education institution, or by a body that is recognised or funded by a State or Territory authority to conduct ACE courses as described in the Education Minister's determination.
First requirement
According to paragraph 22 of Goods and Services Tax Ruling GSTR 2003/1, a course is a program of systematic and interactive instruction or training, for the acquisition of particular skills or knowledge. Indicators of a course include but are not limited to:
● delivery of educational instructions through an instructor or teacher;
● ongoing support and guidance, for example, being available to answer questions;
● assessment of the individual's progress;
● monitoring or supervision;
● provision of feedback concerning the individual; and assessment of competency or satisfactory at the end of the program of instruction.
Further paragraph 24 in GSTR 2003/1 provides that the mere supply of things as a self-paced program without instruction, support, assessment, supervision or feedback is not the supply of a course. Although these things may be used as a learning tools, they do not satisfy the requirement of a course because the lack elements of interactive teaching.
The facts given demonstrate that the online course satisfies the indicators in paragraph 22 of GSTR 2003/1 to be considered as a course of study for GST purposes.
Goods and Services Tax Ruling GSTR 2000/27, discusses the meaning of the phrase 'likely to add to employment related skills'. Paragraph 17 of this ruling sets out that a course will add to the employment related skills if the intended outcome of the course is to develop, increase, advance or improve the employment related skills of the person undertaking the course.
Based on the facts given the course is expected to attract people who have a desire to advance in their career and the intended outcome of the study course is to develop, increase, advance or improve the employment related skills of the people undertaking the course.
In this instance it is accepted that the course you will provide is likely to add to the employment related skills of the people undertaking them.
Second requirement
To satisfy the definition of an ACE course the course must also be of a kind determined by the Education Minister to be an ACE course. A New Tax System (Goods and Services Tax)(Adult and Community Education Courses) Determination 2016 (the Education Minister's ACE Determination) provides the requirements of the kinds of courses determined to be ACE courses.
At subsection 5(2) of the Education Minister's ACE Determination, the Education Minister states that an ACE course must:
(a) not be a course mentioned, in paragraph (a), (b), (c), (d), (f), (h), (i), (j) or (k) of the definition of education course in section 195-1 of the Act; and
(b) be a course that is available to adults in the general community; and
(c) not be a course that is provided by, or at the request of an employer to the employees of that employer; and
(d) not be a course that is provided by, or at the request of an organisation to the members of that organisation, except an organisation for which membership is open to adults in the general community; and
(e) not be a course that is provided by way of private tuition to an individual.
Based on the information provided:
a) The course is not of a kind mentioned in any other paragraph of the definition of 'education course' in section 195-1 of the GST Act.
b) The course will be widely advertised in a range of publications such as newspapers, magazines, and through the use of digital and social media such as your website, LinkedIn, Facebook and Twitter and there are no prerequisites in which anyone must meet to enrol in this course. Further the course is available on a first come and first served basis. Therefore it is considered the course is available to adults in the general community.
c) The course is not provided upon an employer's request.
d) The course is not provided by or at the request of an organisation to members of that organisation.
e) The course is not provided by way of a private tuition to an individual.
In this instance, it is accepted that the course is a kind determined by the Education Minister to be an ACE course since it will satisfy the criteria of the Education Minster's Determination based on the information provided.
Third requirement
Finally, the course must be provided by a body that is either a higher education institution, or by a body that is recognised or funded by a State or Territory authority to conduct ACE courses as described in the Education Minister's determination.
According to subsection 6(1) of the Education Minister's ACE Determination, for paragraph (b) of the definition of adult and communication course in section 195-1 of the GST Act, a course of study or instruction mentioned ion subsection 6(2) of this determination is determined to be an adult and community education course.
Subsection 6(2) of the Education Minister's ACE Determination provides that the course of study or instruction must:
a) Be of a course of the kind described in subsection 5(2); and
b) Be provided by, or on behalf, of a body that:
i. Is a body corporate that operates on a non-for -profit basis; and
ii. Has not been refused recognition, or disqualified, by a State or Territory authority as a provider of courses of the kind described in subsection (5)(2) on the basis of failing to meet or maintain the standards required by that authority.
From the facts given, you are Not-for-profit entity and also a Registered Training Organisation with a relevant agency, a joint initiative of the Australian, State and territory governments. You will supply a course that is likely to add to the employment related skills of participants and does so in accordance with the Education Minister's determination. In this instance, you satisfy the third requirement.
Summary
Accordingly, as the three requirements of an ACE course will be satisfied and you are registered for GST, your supply of the course will be GST-free under section 38-85 of the GST Act.