Edited version of private advice

Authorisation Number: 1051787565983

Date of advice: 11 December 2020

Ruling

Subject: GST on professional or trade courses

Question

Is the amount you receive from the students for the courses you provide GST-free under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Part of the amount you receive from the students is for the Registered Training Organisation's (RTO) professional course where you are collecting as agent on behalf of the student and not consideration for any supply that you make.

Part of the amount you receive from the students, your course fee (minus the amount for the RTO professional course) is not consideration for a GST-free supply under section 38-85 of the GST Act.

These amounts are consideration for a taxable supply under section 9-5 of the GST Act.

Relevant facts and circumstances

You are an entity and you are registered for the goods and services tax (GST).

You are not a Registered Training Organisation (RTO).

You do not have an agreement with the RTO for the delivery of the RTO's courses, however, you facilitate the purchase of the RTO's course on behalf of the student.

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

In accordance with paragraph 38-85(a) of the GST Act a supply of an education course is a GST-free supply.

Education course is defined in section 195-1 of the GST Act. The definition lists various types of education courses, including professional or trade courses.

Section 195-1 of the GST Act defines professional or trade course. It states:

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' is defined in section 195-1 of the GST Act, which states:

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 association that has uniform national

requirements relating to the entry to, or the commencement of the

practice of, the profession or trade concerned by that association; or

(c) if neither paragraph (a) nor (b) applies but there is a professional or

trade association 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.

An 'industrial instrument' is defined in section 195-1 of the GST Act as having the meaning given by section 995-1 of the Income Tax Assessment Act 1997 ('ITAA 1997'), and in accordance with that income tax provision, an industrial instrument includes an Australian law.

Under section 995-1 of the ITAA 1997, 'Australian law' includes a State law.

The RTO courses supplied to the student are professional courses, as they achieve qualifications that are an essential prerequisite for entry into a particular profession, as defined under section 195-1 of the GST Act.

The recipient of the supply is the student. However, the question is who is providing the supply of the RTO's professional course for consideration as per paragraph 9-5(a) of the GST Act?

Goods and Services Tax Ruling GSTR 2000/37 explains amongst other things, agency relationships and disbursements.

48. Agents may incur expenses on a client matter both as an agent of the client and as a principal in the ordinary course of providing their services to the client. For example, in most cases, even though agreements between solicitors and clients may not use the term agent or agency, it is clear that the clients have authorised the solicitors to act on their behalf in the particular matter. When the solicitor acts as an agent for the client, the general law of agency applies so that the solicitor is 'standing in the shoes' of the client.

49. If a disbursement is made by a solicitor and incurred in the solicitor's capacity as a paying agent for a particular client, then no GST is payable by the solicitor on the subsequent reimbursement by the client. This is because the goods or services to which the disbursement relates are supplied to the client, not to the solicitor, by a third party. Also, the reimbursement forms no part of the consideration payable by the client for the supply of services by the solicitor. However, if goods or services are supplied to the solicitor to enable the solicitor to perform services supplied to the client, GST is payable by the solicitor on any reimbursement by the client of expenses incurred on those goods or services, whether the reimbursement is separately itemised or included as part of the solicitor's overall fee. This is because the reimbursement is part of the consideration payable by the client for services supplied by the solicitor.

Based on the information provided the RTO payment, by you on behalf of the student for the RTO's course, would be a disbursement. Therefore, the amount paid to you by the student, which represents the cost for the RTO professional course, is not subject to GST as you are acting as the student's agent. However, GST is to be calculated on the remaining amount received from the student which represents both the services you supply to the student and the extra training modules these are both taxable supplies under section 9-5 of the GST Act.