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Edited version of your private advice
Authorisation Number: 1051534632331
Date of advice: 5 July 2019
Ruling
Subject: GST and Education Courses
Question
Is the supply of a course delivery service by you a GST-free supply of an education course under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
Answer
No, the supply of a course delivery service is not a GST-free supply of an education course under section 38-85 of the GST Act. The supply of a course delivery service is a taxable supply under section 9-5 of the GST Act on which GST is payable.
This ruling applies for the following period
The scheme commences on:
Start date is 5 July 2019
Relevant facts and circumstances
You are registered for GST and carry on an enterprise which involved developing Course X.
· Course X is not a prerequisite course for any professional trade or occupation.
· You are not a higher education institution, registered training organisation (RTO) or an entity funded by the State/Territory.
· You entered into an agreement with an RTO and provided a copy of the agreement.
· You and the RTO have not registered as a partnership for GST purposes.
· The course is delivered on your website.
· The supply of the course to students is treated as a GST-free education course.
· You have no agreements in place with the students and never receive the course fees. You only receive payment for the services you provide
· You issue a tax invoice to the RTO monthly for your services and currently treat your supply of those services as a taxable supply on which GST is payable.
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
Taxably supply
GST is payable on any taxable supply that you make. Section 9-5 of the GST Act provides that you make a taxable supply if
· you make the supply for consideration
· the supply is made in the course or furtherance of an enterprise that you carry on
· the supply is connected with the indirect tax zone (Australia) and
· you are registered or required to be registered for GST.
However, the supply is not a taxable supply to the extent it is GST-free or input taxed.
On the facts given, you are registered for GST and make a supply of services for consideration in the course of an enterprise you carry on in Australia. The supply of services does not satisfy the requirements for an input tax supply. The issue that arises under section 9-5 of the GST Act is whether the supply of the service is a GST-free supply.
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.
A tertiary course under section 195-1 of the GST Act as:
(a) a course of study or instruction that is a tertiary course determined by the *Student Assistance Minister under subsection 5D(1) of the Student Assistance Act 1973 for the purposes of that Act; or
(b) a course of study or instruction accredited at Masters or Doctoral level and supplied by a * higher education institution or a * non-government higher education institution; or
(c) any other course of study or instruction that the Student Assistance Minister has determined is a tertiary course for the purposes of this Act.
(*denotes a defined term in section 195-1 of the GST Act)
As the course is not at a Masters or Doctoral level, paragraph (b) of the definition of tertiary course will not apply. Relevantly we will look at paragraphs (a) and (c) of the definition.
In the Student Assistance (Education Institutions and Courses) Determination 2019 (Determination), the Student Assistance Minister has determined for paragraph 5D(1)(a) of the Student Assistance Act 1973 that a tertiary course is a full time course that includes a course specified in Column 1 of the table in Schedule 2 to the Determination that is provided by an education institution specified for that course in Column 2 of that table.
A VET course, in the Determination, is defined as having the meaning that term is given in section 3 of the National Vocational Education and Training Regulator Act 2011.
In Schedule 2 of the Determination, Column 1 lists the various types of courses and Column 2 states the education institution it must be provided by in order to qualify as a tertiary course. The DW course is a VET diploma course and falls under Item 5 of Column 1 in Schedule 2.
However, Column 2 in Schedule 2 to the Determination provides that the tertiary course must be provided by a higher education institution or RTO.
As you are not a higher education institution or RTO, consideration needs to be given to the arrangement under which you make supplies, including the relationship between you and the RTO, who you are making supplies to and of the nature of those supplies.
With regards to paragraph (c) of the definition of tertiary course, there is no other course of study or instruction determined by the Minister that the course can fall under in order to qualify as a tertiary course.
Tripartite arrangements
The overall arrangement under which the course is supplied to students involves a number of parties. In Goods and Services Tax Ruling GSTR 2006/9, complex arrangements involving more than two entities referred to as tripartite arrangements are considered and may reveal situations where:
a supply is made to one entity but provided to another entity
· two or more supplies made
· a supply made and provided to one entity and third party consideration.
Having had regard to the facts, the agreement and the view expressed in GSTR 2006/9, we have determined there are two supplies being made:
· a supply of services from you to RTO, and
· a supply from RTO of an education course to participants.
Conclusion
Accordingly, as you are not supplying a GST-free education course to the RTO, and the supply of your services do not fall under any other relevant GST-free provisions, the supply of services is a taxable supply under section 9-5 of the GST Act on which GST is payable.
The supply of the course from the RTO to the students may be a GST-free supply under section 38-85 of the GST Act. However, this needs to be determined by the RTO as the supplier. You are not supplying an education course but rather a course delivery service to the RTO who is supplying the course.