Edited version of private advice

Authorisation Number: 1051856571346

Date of advice: 30 June 2021

Ruling

Subject: GST and education course

Question

Are the education/training courses provided by you to organisations requiring Tailored Training Programs (TTPs) GST-free supplies of adult and community education (ACE) courses under Subdivision 38-C of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No.

Relevant facts and circumstances

You together with four other entities (Entity A, Entity B, Entity C and Entity D) form a consortium.

The consortium consists of experts funded to provide specific health training until 30 June 20XX.

The consortium delivers specific health training funded by the government.

You have a Head Agreement with the government wherein the government has agreed to provide you a grant.

The grant is to enable you to better support activities for specific health services that respond to existing and emerging challenges.

You have subcontractor agreements with the other consortium members. The subcontractor agreements detail the required key performance indicators (KPIs) and deliverables of each consortium partner that feed into the overall deliverables of the Head Agreement.

As part of the deliverables, the consortium delivers Tailored Training Programs (TTPs) to organisations. As part of the TTP, consortium members consult with organisations on their staff's training needs. A comprehensive training program is put together under an agreement. The comprehensive training program may include consortium training offerings and other external training provided by Entity D.

You have stated the completion of these courses is not essential for a person to gain employment in the field in that it is not a legal requirement, though certain organisations may mandate that their workers undertake a course in order to work there. Staff from the organisations will receive a certificate of attendance and utilise this for recognition towards continuing professional development.

The courses in question are supplied by you to organisations requiring TTPs and fall under the other external training delivered by Entity D. You are not involved in delivering these courses but the courses are delivered on your behalf. Your role is to formulate a service agreement consisting of all the recommendations to meet the organisation's needs. The service agreement is executed by the organisation and you, as the party to the head agreement. Under the DTA KPIs you are required to deliver a certain number of TTPs for which the grant is provided.

You provided, as a sample, a template of the Service Agreement between Entity D, an organisation and you. The template, when completed, details all of the training being provided to the organisation. You state that all of the training adds to employment related skills of those taking the course. This is an expectation of the training and why you receive the funding.

One of the courses is an accredited course run by Entity D. The rest of the courses count towards continued professional development for staff. Not all of the courses are developed by Entity D. Some of them that form a service agreement are delivered by Entity D, while other courses are delivered by others across the consortium depending on what is required by the organisation.

If the TTP includes training by Entity D, you get a quote from Entity D for the cost of the training. You invoice the organisation for chargeable components of these courses (including GST) upon signing the service agreement. Entity D then invoices you (excluding GST as Entity D is not registered for GST).

You have provided a sample quote from Entity D for the cost of conducting training on a specific health topic. The quote states that this course is suitable for staff providing support to people living with a certain health condition.

Relevant legislative provisions

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

Reasons for decision

Subsection 7-1(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that GST is payable on taxable supplies.

The supply of training courses by you to organisations requiring TTPs will be taxable if it satisfies all the elements of section 9-5 of the GST Act. Under section 9-5 of the GST Act 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 Australia; and

•         you are registered, or required to be registered, for GST.

However, the supply is not a taxable supply to the extent that it is GST-free or input taxed.

The facts indicate that your supply of training courses by you to organisations requiring TTPs satisfies the requirements under paragraphs 9-5(a), (b), (c) and (d) of the GST Act as the supply is made for consideration, the supply is made in the course or furtherance of your enterprise, the training courses are conducted in Australia and you are registered for GST. In addition, there is no provision of the GST Act that would make your supply input taxed in your factual situation.

Therefore, your supply of the training courses by you to organisations requiring TTPs will be a taxable supply under section 9-5 of the GST Act, unless the supply is GST-free.

Section 38-85 of the GST Act provides that:

•         a supply of an education course is GST-free and

•         a supply of any administrative service directly related to the supply of such a course is GST-free if supplied by the supplier of that course.

An education course is defined in Division 195 of the GST Act to include, amongst other things, an adult and community education course (ACE course). As the training courses in question do not fall within the meaning of the other education courses listed in the definition under section 195-1, we only need to consider whether the courses are an ACE course.

Section 195-1 of the GST Act provides that an ACE course means a course of study or instruction that is likely to add to the employment related skills of people undertaking the course (the first requirement) and:

(a) is of a kind determined by the *Student Assistance Minister to be an adult and community education course and is provided by, or on behalf of, a body (the second requirement):

(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 of a kind described in the determination; or

(b) is determined by the Student Assistance Minister to be an adult and community education course (the third requirement).

Asterisked terms are defined in section 195-1 of the GST Act.

The first requirement of an ACE course is that the course is likely to add to the employment related skills of people undertaking the course. GSTR 2000/27 Goods and Services Tax: adult and community education courses; meaning of likely to add to employment related skills (GSTR 2000/27) provides the ATO view on the term 'likely to add to employment related skills'.

Paragraphs 15 to 17 of GSTR 2000/27 provides that 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. Where a course meets the following requirements we consider it to meet this test:

1. It is directed at people who want to add to their employment related skills; and

2. the objectives of the course specify the employment related skills that participants will acquire in undertaking the course; and

3. the means of imparting the skills to the participants are clearly identified prior to the commencement of the course; and

4. 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.

5. In addition to the criteria outlined above we also consider:

6. (i) How the course is marketed;

7. (ii) Whether the course is similar to an accredited vocational education and training (VET) program;

8. (iii) The outcomes of the course and evidence that the majority of people undertaking your course are gaining employment relevant to the skills they have acquired in the course; and

9. (iv) The intended outcome of the course is to develop, increase, advance or improve the employment related skills of the people undertaking the course.

Additionally, the example from paragraph 31 from this ruling is relevant:

Example - Computer Course

31. The Tahmero University offers a course titled "Excel 2000 - Advanced". The course outline states that the applicants must have completed Excel - Intermediate or equivalent. The course is designed to teach the more advanced features of Excel 2000. An intermediate knowledge of Excel is a stated pre-requisite. The course objectives demonstrate that it is a course designed to add to the employment related skills of people undertaking the course and it is GST-free.

In your case, applying the principles from GSTR 2000/27:

•         There is no offering of courses that allows interested participants to pick which course they want to undertake so they can develop their skills based on their needs.

•         You have advised that the consortium works with organisations to tailor courses specific to the organisations. That is, the courses are formulated to meet the organisations' needs of their staff rather than directed at people who want to add to their employment related skills.

•         The completion of the courses in question is not a legal requirement for a person to gain employment in the field. However, you state it adds to the skills of those taking the course and already in employment within an organisation.

•         The template provided of the Service Agreement between the consortium, an organisation and you does not mention the details of the course or the topics to be covered. The courses are tailored based on the requirements of the organisational and the skilling requirements the organisation needs of their staff.

•         Similarly, the sample of training provided states generally that this course is suitable for an organisation's staff providing support to people living with a specific health condition but does not state that completion of this course is necessary to care for patients with this specific health condition.

We consider that you don't meet criteria 1 and 2 and 5(i), (ii) and (iii) in paragraphs 15 to 17 of GSTR 2000/27 as described above. All in all, the documents you have provided support your statement that the completion of the health courses in question is not mandatory for a person to gain employment in the field but adds to the skills of the participants who are employed in a particular organisation.

Therefore, your supply of training courses to organisations requiring TTPs does not satisfy the first requirement of an ACE course in section 195-1 of the GST Act. For completeness, we will consider the other two requirements of an ACE course.

The second requirement of an ACE course is that the course is of a kind determined by the Student Assistance Minister.

To be of a kind determined by the Student Assistance Minister to be an ACE course, the course must meet certain requirements in the Minister's Determination A New Tax System (Goods and Services Tax) (Adult and Community Education Courses) Determination 2016. Atsubsection 5(2) of this Determination, the Minister states that an ACE course must:

(a) not be any other education course defined in section 195-1 of the 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 (or which membership 's open to adults in the general community;

and

(e) not be a course that is provided by way of private tuition to an individual

You do not satisfy all of these requirements, to satisfy the Education Minister's remaining requirements, the courses are to be available to adults in the general community and not to be provided to an employer/organisation to their employees/staff. As evidenced in the Service Agreement the parties to the agreement are you and a particular organisation, and the course is not available to adults in the general community.

The note after paragraph 5(2)(e) in A New Tax System (Goods and Services Tax) (Adult and Community Education Courses) Determination 2016 provides that in addition to being of the kind described in subsection 5(2) of this determination, the course of study or instruction must be a course of study or instruction that is likely to add to the employment related skills of people undertaking the course and provided by, or on behalf of, a body that:

(a)  is a higher education institution; or

(b)  is recognised, by a State or Territory authority, as a provider of courses of the kind described in subsection 5(2) of this determination; or

(c)   is funded by a State or Territory on the basis that it is a provider of courses of the kind described in subsection 5(2) of this determination.

You are a higher education institution and the courses are provided on your behalf. However, as you do not meet the requirements of paragraphs 5(2)(b), (c) and (d) of the determination, it is considered you do not meet the requirements in the note after paragraph 5(2)(e).

As such, the tailored courses are not of a kind determined by the Student Assistance Minister to be an ACE course and the second requirement of an ACE course in section 195-1 of the GST Act is also not satisfied.

The third requirement of an ACE course is that the course is determined by the Student Assistance Minister to be an adult and community education course

To be a course determined by the Student Minister to be an adult and community education course, subsection 6(2) of A New Tax System (Goods and Services Tax) (Adult and Community Education Courses) Determination 2016 provides that the course must:

(a) be a course of the kind described in subsection 5(2) of this determination; and

(b) be provided by, or on behalf, of a body that:

(i) is a body corporate that operates on a not-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) of this determination on the basis of failing to meet or maintain the standards required by that authority.

As established above, the courses you supply to organisations requiring TTPs are not of a kind described in subsection 5(2) of this determination. In addition, the courses are not provided by, or on behalf of a body corporate that operates on a not-for-profit basis.

Therefore, the courses you supply to organisations requiring TTPs are not courses determined by the Student Minister to be adult and community education courses and the third requirement of an ACE course in section 195-1 of the GST Act is not satisfied.

All things considered, we do not consider that you are supplying education courses to organisations requiring TTPs as per the definition of an education course in section 195-1 of the GST Act. Therefore, you do not meet the requirements of section 38-85 of the GST Act and the training courses you supply to organisations requiring TTPs are not GST-free supplies of ACE courses.