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Edited version of private advice
Authorisation Number: 1051660599141
Date of advice: 17 April 2020
Ruling
Subject: Whether the supply of specific training elements is a GST-free supply
Question
Is your supply of specific training elements a GST-free supply of education course?
Answer
Yes, your supply of specific training elements are a GST-free supply of an education course(s) under section 38-85(a) of the A New Tax System (Goods and Services Tax) Act 1999 ('GST Act').
Relevant facts and circumstances
You are registered for goods and services tax (GST)
You asked if specific elements of training that you intend to supply are GST-free
You are a registered RTO and CRICOS provider
You provided documents including a draft agreement. The agreement included the term of the training and what was included in the costs relating to the training arrangement.
Relevant legislative provisions
Subsection 38-85(a) of the GST Act
Section 195-1 of the GST Act
Reasons for decision
Legislation:
Subsection 38-85(a) of the GST Act provides a supply of an education course is GST-free, and
Section 195-1 of the GST Act further defines
· an education course to include a professional or trade course
· a professional or trade course means a course leading to a qualification that is an essential prerequisite:
(a) for entry to a particular profession or trade in Australia, or
(b) to commence the practice of (but not to maintain the practice of) a profession or trade in Australia.
· Essential prerequisite:
a qualification is an essential prerequisite in relation to the entry to, or the commencement of the practice of, a particular profession or trade if the qualification is imposed:
(a) by or under an *industrial instrument; or
(b) if there is no industrial instrument for that profession or trade but there is a professional or trade associated that has uniform national requirements relating to the entry to, or the commencement of the practice of, the profession or trade concerned - by that associate; or
(c) if neither paragraph (a) nor (b) applies but there is a professional or trade associate in a State or Territory that has requirements relating to the entry to, or the commencement of the practice of, the profession or trade concerned - by that association.
[Note items with an * asterisk are further defined in section 195-1 of the GST Act]
ATO View:
Our Goods and Services Tax Ruling GSTR 2003/1: Goods and services tax: supplies that are GST-free as a professional or trade course ('GSTR 2003/1') explains our view of the meaning 'professional or trade course' and includes (emphasis added):
29. A program of subjects that you supply as one course may be a mixed supply. The supply is a mixed supply if it comprises subjects that are separately identifiable as a professional or trade course, and other subjects or things that are taxable. You will need to apportion the consideration for a mixed supply between the taxable and non-taxable parts to find the consideration for the taxable part.
...
43.... In the context of the definition of a professional or trade course in section 195-1, a qualification is an attribute or quality that is acquired after undertaking a course. It is evidenced by some document that indicates successful completion of the course. The document would normally be accepted by a Commonwealth, State or Territory authority, or a professional or trade association,...
44. A relevant authority or professional or trade association may issue a licence or a certificate that qualifies a person to do certain things. For example, a licence to drive a particular class of heavy road vehicle, or a practising certificate. Where this is the case, the certificate or licence is a qualification for the purposes of the section 195-1 definition of a professional or trade course.
45. Documents that are qualifications or that provide evidence of a qualification include:
· ...
· a licence;...
Is the qualification an essential prerequisite?
46. Your course will only be a professional or trade course if it leads to a qualification that is an essential prerequisite for entry to, or to commence the practice of, a particular profession or trade.
47....
48. 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 qualification.
Applying the law and ATO view to your circumstances
Based on the above, we are satisfied the specific training elements you supply will be a GST-free supply of an education course(s) under subsection 38-85(a) of the GST Act, as we are satisfied these specific training elements are an essential prerequisite that leads to professional qualification.