Edited version of private advice

Authorisation Number: 1051881306233

Date of advice: 4 August 2021

Ruling

Subject: Education course

Question

Is the amount you invoice for a course to students 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

The amount that you invoice to the students for the course, you are collecting as agent on behalf of the Registered Training Organisation (RTO), is not consideration for a supply that you make.

As the agent of the RTO your supply is of agency services to the RTO and is a taxable supply. Therefore, you are liable to pay 1/11^th of the total amount of the consideration that you receive from the RTO as GST.

The specified course is an education course as defined under section 195-1 of the GST Act and hence, a GST-free supply by the RTO to the student as per section 38-85 of the GST Act.

This ruling applies for the following period periods:

Period ending 30 June 20XX

Relevant facts and circumstances

You are registered for GST.

You have entered into a partnership arrangement (the Agreement) with an RTO, to deliver Vocational Education and training (VET) qualifications. The Agreement allows you, who is not an RTO, to deliver and assess training as an agent for the RTO.

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

Student Assistance Act 1973

Reasons for decision

GST is payable on a taxable supply. Section 9-5 of the GST Act states:

You make a taxable supply if:

a)    you make the supply for *consideration; and

b)    the supply is made in the course or furtherance of an *enterprise that you *carry on; and

c)    the supply is *connected with the indirect tax zone (Australia); and

d)    you are *registered or *required to be registered.

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

(*denotes a defined term in section 195-1 of the GST Act)

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

As per the Agreement, the RTO is the principal and you are an agent for the principal, ultimately the RTO is the entity supplying the course to the student.

Paragraph 15 of Goods and Services Tax Ruling (GSTR 2000/37) Goods and services tax: agency relationships and the application of the law states:

15. When an agent uses his or her authority to act for a principal, then any act done on behalf of that principal is an act of the principal...

Therefore, when you invoice the students for the course, you are collecting as agent on behalf of the RTO and this amount is not consideration for a supply that you make. Therefore, when you supply a tax invoice to the student you are issuing it on behalf of the RTO. As per the Agreement the supply you are making is of agency services to the RTO.

From the facts provided, the supply of agency services by you to the RTO in Australia satisfy paragraphs 9-5(a) to 9-5(d) of the GST Act, as follows:

a)    you make the supply of agency services in return for consideration by way of payment;

b)    the supply is made in the course of your business;

c)    the services are provided in Australia or made through an enterprise that you carry on in Australia (and therefore the supply is connected with Australia); and

d)    you are registered for GST in Australia.

However, section 9-5 of the GST Act also provides that the supply is not taxable to the extent that it is GST-free or input taxed.

Your supply of agency services to the RTO does not satisfy the GST-free or input taxed provisions under the GST Act. Therefore, you are liable to pay 1/11^th of the total amount of the consideration that you receive from the RTO as GST.

The price of your agency services is the amount that you retain from the fee you collect from the students. This would be contractually determined. Whatever the amount is that is agreed that you retain, you are required to remit 1/11^th of this.

RTO supply

It is the RTO's responsibility to determine the GST status of any supplies that they make. In this case, you are acting as their agent and issuing the invoice and collecting the fees on their behalf. The invoice should be the total fee that is being charged to the student and should be in the name of the RTO with the RTOs ABN. This supply is likely to be a GST-free supply. See below for further information about GST-free education courses.

GST-free education courses

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;

•         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.

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 2019 (SAA Determination).

Section 11 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) that is:

                             i.                specified in Column 1 of the table in Schedule 2 to this instrument and provided by an education institution specified for that course in Column 2 of that table; and ...

(2) Without limiting subsection (1), a course that meets the requirements of paragraph (1)(a), (b) or (c) and is not a full-time course is a tertiary course for the purposes of section 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 course is listed in item 4 in Schedule 2 of the table, in that it is a VET course that is not a VET course specified in item 5 (Column 1). The corresponding education institution listed in Column 2 of the SAA determination is an RTO (Column 2).

The course is a VET course which is within its scope of the RTO's registration, therefore, the VET course is a tertiary course which is an education course for the purpose of section 38-85, and a GST-free supply.

Accordingly, as you are the agent of the RTO, when you supply a tax invoice to the student you are issuing it on behalf of the RTO as its agent. The specified course that you provide as an agent for the RTO is an education course as defined under section 195-1 of the GST Act and hence, a GST-free supply to the student as per section 38-85 of the GST Act.