Edited version of your written advice

Authorisation Number: 1051374951699

Date of advice: 25 May 2018

Ruling

Subject: GST and the supply of education course (the course)

Question

Is your supply of the course a GST-free supply?

Answer

No. Your supply of the course is not GST-free, it is a taxable supply.

Relevant facts and circumstances

You are a RTO, registered for GST. You are a provider of accredited and non-accredited courses in the industry.

You have a number of courses that involve the delivery of units of competency from a variety of training packages. The course does not result in the participants receiving a Statement of Attainment as the course does not align with a complete unit of competency from one of your approved training packages. The course is written by you as an entry level course. The course contains information that is found in many of your approved packages but is not mapped fully. The course is aimed at people who wish to be employed or are currently employed in the industry. The participants in the course will receive a Statement of Completion and the course itself is structured to meet the base level requirements for the industry.

You state that the course is not an accredited course. It is not a course leading to a

qualification that is an essential prerequisite for entry to a particular profession or trade in Australia; or to commence the practice of a profession or trade in Australia. It has not been formally reviewed and endorsed by the relevant state vocational education and training (VET) authority.

The course is open to adults in the general community. The course is not provided by way of private tuition to individuals.

The course is not provided to the members of an organisation which requests you to provide the course to its members.

There are no prerequisites for entry into the course.

In addition, you advise that:

● You are not a higher education institution that is established by a law of the Commonwealth, a State or a Territory as a higher education institution or an institution registered or taken to be registered by the Tertiary Education Quality and Standards Agency (TEQSA) as a higher education institution.

● You are not recognised by a State or Territory authority, as a provider of courses of a kind described in the Education Minister's Determination the A New Tax System (Goods and Services Tax) (Adult and Community Education Courses) Determination 2016 (ACE Determination).

● You are not funded by a State or Territory on the basis that you are a provider of courses of a kind described in the ACE Determination.

● You are a private provider and not a body corporate operating on a not-for-profit basis.

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 195-1.

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

Student Assistance Act 1973

Reasons for decision

Summary

Your supply of the course is not a GST-free supply of education courses under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). It is a taxable supply

Detailed reasoning

GST-free education course:

An education course is GST-free under section 38-85 of the GST Act.

Under section 38-85 of the GST Act you make a GST-free supply if it is a supply of:

(a) an education course; or

(b) administrative services directly related to the supply of such a course, but only if they are supplied by the supplier of the course.

An education course is defined in section 195-1 of the GST Act to include, amongst other things, a tertiary course, a professional or trade course and an adult and community education (ACE) course. These are the only types of education courses from the definition in section 195-1 of the GST Act that could be relevant to your situation.

Tertiary course

For a course to be GST-free as a tertiary course, it must satisfy the definition of ‘tertiary course’ under section 195-1 of the GST Act.

A tertiary course means:

(a) a course of study or instruction that is a tertiary course determined by the Education Minister under subsection 5D(1) of the Student Assistance Act 1973 for the purposes of that Act; or

(aa)…..

(b) any other course of study or instruction that the Education Minister has determined is a tertiary course for the purposes of this Act.

Goods and Services Tax Ruling (GSTR) 2001/1 provides the Commissioner’s view as to what supplies are GST-free supplies of tertiary education courses.

Under subsection 5(D)(1) of the Student Assistance Act 1973 (SAA), the Education Minister has determined courses of study or instruction that are tertiary courses in the Student Assistance (Education Institutions and Courses) Determination 2009 (No. 2) (SAA Determination).

Section 10 of the SAA Determination provides further clarification on tertiary courses. It states:

(1) For paragraph 5D (1)(a) of the Act, a tertiary course is a full time course:

(a) specified in Column 1 of the table in Schedule 2 to this instrument

that is provided by an education institution specified for that course in

Column 2 of that table; or…

(2) Without limiting paragraph (1), a course that meets the requirements of

paragraphs (1)(a) and (b) and is not a full time course is a tertiary course for

the purposes of paragraph 1061PC of the Social Security Act 1991….

Therefore, where an education course is specified in Column 1 of the table in Schedule 2 (Column 1) and is provided by an education institution specified for that course in Column 2 of that table in Schedule 2 (Column 2), the education course is a tertiary course under the SAA Determination.

The education institutions listed in Column 2 of the SAA determination are either a higher education institution or registered training organisation (RTO). You are not a higher education institution per the definition in section 5 of the SAA Determination.

The meaning of RTO is not provided in the GST Act but is outlined in SAA Determination as:

registered training organisation means an organisation that is registered by the relevant State or Territory training recognition authority in accordance with the Australian Quality Training Framework to provide one or more vocational education and training programs

You are registered as an RTO with the National Register in Australia and have been given approval to provide accredited courses, but the course is not among those accredited courses. Hence the course does not meet the requirements of a tertiary course. Therefore, the supply of the course is not a GST-free supply of a tertiary courses

Professional or trade course

For a course to be GST-free as a professional or trade course, it must satisfy the definition of ‘professional or trade course’ under section 195-1 of the GST Act. The course must:

(a) lead to a qualification; and

(b) that qualification must be an essential prerequisite for entry to, or to commence the practice of (but not to maintain or progress the practice of) a profession or trade in Australia.

Goods and Services Tax Ruling (GSTR) 2003/1 provides the Commissioner’s view as to what supplies are GST-free supplies of professional or trade courses.

Paragraph 48 of GSTR 2003/1 provides that a qualification is an essential prerequisite if it is mandatory for a person to have the qualification before he or she 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 qualifications.

Paragraph 49 of GSTR 2003/1 states:

A qualification that is imposed for reasons other than for entry to, or to commence the practice of, a profession or trade, is not an essential prerequisite for the purposes of a professional or trade course. Similarly, a qualification required by an employer or group of employers, but which is not imposed by an industrial instrument, or a professional or trade association at either the national level, or State or Territory level will not be an essential prerequisite.

Paragraph 66 of GSTR 2003/1 further states:

Qualifications that are general in nature and that relate to the entry to, or the commencement of the practice of, a number of professions or trades, are not essential prerequisites for entry to, or to commence the practice of, a particular profession or trade.

You advise that the course is an introductory course which does not lead to a qualification that is an essential prerequisite for entry to a particular profession or trade in Australia; or to commence the practice of a profession or trade in Australia. Hence the course does not fulfil the second requirement, and therefore does not satisfy the definition of a professional or trade course. The course is not a GST-free professional or trade course.

Adult and community education (ACE) course

Under section 195-1 of the GST Act, an ACE course is 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 adult and community education course and is provided by, or on behalf of, a body:

(i) that is a higher education institution; or

(ii) that is recognised, by a State or Territory authority, as a provider of courses of a kind described in the determination; or

(iii) that is funded by a State or Territory on the basis that it is a provider of courses or a kind described in the determination; or

(b) is determined by the Education Minister to be an adult and community education course.

The Education Minister has determined courses of study or instruction that are ACE courses in the A New System (Goods and Services Tax) (Adult and Community Education courses) Determination 2016 (ACE Determination).

Paragraphs 11-13 of GSTR 2000/27 state:

Definition of an adult and community education course

11. For a course to be a GST-free adult and community 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; and

(ii) The course must be of a kind determined by the Education Minister to be an adult and community education 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 adult and community education courses as described in the Education Minister's determination

12. It is important to note that the Education Minister is not responsible for determining whether an adult and community education course is likely to add to the employment related skills of people undertaking the course. This criterion is separate from the Minister's Determination, and will depend on the facts of each case.

Requirements specified in paragraph (b) of the definition

13. Paragraph (b) of the definition of adult and community education course allows the Education Minister to determine, independently of the requirements set out in paragraph (a) that a course is an adult and community education course as defined in section 195-1. In these circumstances, for such a course to be GST free, it must:

(i) be determined by the Education Minister to be an adult and community education course; and

(ii) be likely to add to the employment related skills of people undertaking the course.

Paragraph (a) of the ACE definition in section 195-1 of the GST Act.

The course must be of a kind determined by the Education Minister to be an adult and community education course

At subsection 5(2) of the ACE Determination, the Education Minister states that an ACE course must:

(a) not be any other education course defined in section 195-1 of the GST

Act; and

(b) be available to adults in the general community; and

(c) not be provided by or at the request of an employer to employees of that

employer; and

(d) not be provided by or at the request of an organisation to 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.

The course is not of a kind mentioned in any other paragraph of the definition of education courses in section 195-1 of the GST Act. The course is not one of the following courses (that are defined separately and may be GST-free in their own right):

● secondary, tertiary, or special education

● an English language course for overseas students

● a professional or trade course

● a first aid or lifesaving course

● a tertiary residential college course

The course is widely advertised via the internet. Therefore, the course is available to adults in the general community. In addition, the course is not:

● provided by or for an employer to their employees

● provided by or for an organisation to their members, except for general community organisations with few restrictions on membership

● private or individual tuition

Hence the course is of the kind described in subsection 5(2) of the ACE determination.

However, the Note section provides that the course also has to be likely to add to the employment related skills of the participants, and be provided by, or on behalf of, a higher education institution or a body that is recognised or funded by a State or Territory authority to conduct adult and community education courses

likely to add to employment related skills

Goods and Services Tax Ruling GSTR 2000/27 discusses the meaning of 'likely to add to employment related skills'. Paragraph 15 of GSTR 2000/27 states:

15. The test as to whether an adult and community education course is likely to add to the employment related skills of people undertaking the course is an objective test and not dependent on the subjective intention of the providers of the course or the recipients. However we consider a course satisfies the test if the course meets the following requirements:

(a) It is directed at people who want to add to their employment related skills; and

(i) The objectives of the course specify the employment related skills that participants will acquire in undertaking the course; and

(ii) The means of imparting the skills to the participants are clearly identified prior to the commencement of the course; and

(iii) There is a reasonable expectation that the skills being developed will be used in the course of being an employee, or working in a business, occupation, profession or trade, rather than for recreational, hobby, artistic or cultural endeavours.

We accept that the course is aimed at adding to the employment related skills of the participants in the food safety industry, hence it satisfies this requirement.

However, as you are not a higher education institution or a body that is recognised or funded by a State or Territory authority to conduct adult and community education courses as described in the ACE determination, the course is therefore not an adult and community education course for the purposes of paragraph (a) of the ACE definition in section 195-1 of the GST Act.

Paragraph (b) of the ACE definition in section 195-1 of the GST Act:

determined by the Education Minister to be an adult and community education course

Subsection 6(1) of the ACE Determination refers to subsection 6(2), which provides that if the course is of the kind described in subsection 5(2) of the ACE determination, the course only has to satisfy the requirement for the provider, for it to qualify as an adult and community education course.

The ACE Determination states, at subparagraph 6(2)(b)(i), that the course must be provided by a body corporate that operates on a not-for-profit basis.

As you are not a body corporate that operates on a not-for-profit basis, you do not satisfy subparagraph 6(2)(b)(i). We do not need to discuss subparagraph 6(2)(b)(ii) of the ACE Determination.

The course is therefore not an adult and community education course for the purposes of paragraph (b) of the ACE definition in section 195-1 of the GST Act.

Therefore, the course you provide is not a GST-free education course under subsection 38-85(a) of the GST Act.

For a course to be GST-free as an ACE course, it must satisfy the definition of an ACE course under section 195-1 of the GST Act. In conclusion, your supply of the course is not GST-free, it is a taxable supply.