Edited version of private advice

Authorisation Number: 1051938599562

Date of advice: 14 January 2022

Ruling

Subject: GST and education course

Question

Is the supply by Entity X (you) of the Program 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.

This ruling applies for the following period:

1 January 20XX till quarter ending 31 December 20XX

The scheme commences on:

10 October 20XX

Relevant facts and circumstances

You are a training organisation that is registered for GST.

You offer a training program known as Program X (the Program) to participants.

To register for the Program a participant completes an application form which is available on your website. The application process requires the participant to identify their name, e-mail address and postcode and agree to the Eligibility Terms and Conditions.

The relevant registration terms (Registration Terms) provides that a participant must pay for the Program via the Website and by any payment method stated as being accepted on our Website.

Although participants are liable to provide the payment according to the Registration Terms, in some cases where funding is available by a Government organisation or other entities, you issue the invoice to the Government organisation or other entity to receive payment.

Your Program is delivered in one of two ways being:

a)    Weekly classroom sessions. For classroom sessions participants attend either sessions at one venue or they may choose to alternate between the two venues to complete the Program in a shorter period. Homework sheets are completed by participants, and attendance forms are signed by your staff.

b)    Online sessions which are reviewed by recordings. All participants must complete a homework sheet which is reviewed by your staff.

The Program curriculum is delivered by qualified professional presenters. The curriculum covers matters of road safety and other matters which have been set out in your website. The topics covered are aimed at educating participants on the dangers of drink driving and unsafe driving for the purpose of deterring traffic offences.

You provide pens, paper, brochures, legal aid and other forms to participants that attend classroom sessions. Online participants are provided with material via email or via the online portal which is accessed through your website.

A report is produced on the participants behaviour/attendance with a Certificate of Completion issued. A copy of the certificate issued to the Participant has been provided as part of this ruling request.

You have financial agreements with the presenters you engage for their participation in the online Program. Most of the presenters for the classroom are volunteers. Non volunteers are paid on a commission basis and they invoice you once they have made the classroom presentation.

You have advised that numerous Government departments recognise the Program.

Since commencement of your GST registration, you have charged participants GST on the supply of your Program and reported the liability in your business activity statement (BAS).

Relevant legislative provisions

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

Reasons for decision

Section 9-5 of the GST Act provides that you make a taxable supply if:

a)    you make a supply for consideration; and

b)    the supply is made in the course or furtherance of an enterprise 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 for GST

However, a supply is not a taxable supply where it is considered GST-free or input taxed.

In this case you satisfy the requirements of paragraph (a) to (d) in section 9-5 of the GST Act as you are making a supply of the Program to participants, therefore what needs to be considered is whether the supply is considered a GST-free supply.

You have submitted that the supply of the Program by you to participants should be classified as an "adult and community" education course. This is on the basis that the skills learned in the Program can be easily applied in the day to day lives of all the participants. In addition, you refer to Goods and Services Tax Ruling, GSTR 2000/27: adult and community education courses; meaning of "likely to add to employment related skills" (GSTR 2000/27) which discusses courses that are "likely to add employment related skills". Relevantly you consider that the Program provided by you educates students about road safety matters for the purposes of deterring traffic offenders from re-offending as well as giving them the skills to perform their social duties as employees and business owners alike. As such you submit that the knowledge gained from the Program and the relevance it has to the participants business, occupation, profession or trade can be quantified and therefore falls withing being a GST-free adult and community education course.

We do not agree with your submission that the supply of the Program is GST-free.

Section 38-85 of the GST Act provides that the supply of an education course is GST-free. The term "education course" is defined in section 195-1 of the GST Act and of relevance to this case is that an education course includes:

•         an adult and community education course (ACE) course; and

•         a professional or trade course.

Adult and Community Education (ACE) courses

Paragraph 10 in GSTR 2000/27 sets out the definition of an adult and community education course which is in section 195-1 of the GST Act. It explains that an adult and community education course is 'a course of study or instruction that is likely to add to the employment related skills of people undertaking the course and:

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

(i)            that is a higher education institution; or

(ii)           that is recognised, by a State or Territory authority, as a provider of course 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 or a kind described in the determination; or

(b)  is determined by the Education Minister to be an adult and community education course.'

Paragraph 15 -17 of GSTR 2000/27 discusses what is likely to add to employment related skills of people undertaking an ACE and states:

15. 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. However, we consider a course satisfies the test if the course meets the following requirements:

(a) It is directed at people who want to add to their employment related skills; and

(i) The objectives of the course specify the employment related skills that participants will acquire in undertaking the course; and

(ii) The means of imparting the skills to the participants are clearly identified prior to the commencement of the course; and

(iii) 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.

16. In addition to the criteria outlined in paragraph 15, you should also consider the following:

(a) How the course is marketed.

A course that markets the employment related skills that will be acquired by undertaking the course will support your conclusion that the course will, on the balance of probabilities, add to the employment related skills of the participants.

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

If you can clearly demonstrate that a majority of the course content is the same as part or all of a recognised VET program, this factor will support your contention that the course is likely to add to employment related skills of people undertaking the course.

(c) The outcomes of the course.

If you can present evidence that the majority of people undertaking your course are gaining employment relevant to the skills they have acquired in the course, this would also demonstrate that the course is likely to add to the employment related skills of people undertaking the course. There must be a reasonable expectation that the course is going to "add to the employment related skills of people undertaking the course".

17. A course will 'add' to the employment related skills if the intended outcome of the course is to develop, increase, advance or improve the employment related skills of the people undertaking the course. This includes gaining basic skills such as literacy and numeracy, building upon existing skills and developing skills in new areas.

In this case the course goals and objectives, together with the course Program material, including the Program curriculum are not directed such that participants add or are likely to add to their employment related skills.

Consequently, the Program is not considered an Adult and Community Education course in accordance with the views in GSTR 2000/27.

Professional or Trade Course

Goods and Services Tax Ruling, GSTR 2003/1, Goods and services tax: supplies that are GST-free as professional or trade courses (GSTR 2003/1) explains the meaning 'professional or trade course' in section 195-1 of the GST Act. The supply of a course that meets the requirements of the definition is an education course that is GST-free under paragraph 38-85(a).

Paragraph 8 in GSTR 2003/1 provides that a 'professional or trade course' is defined in section 195-1 as:

'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.'

Paragraph 15 to 18 in GSTR 2003/1 states:

15. A course that leads to a qualification that is an essential prerequisite for maintaining or progressing within the practice of a profession or trade is not a professional or trade course (see paragraphs 98 to 101).

16. If a person cannot enter, or commence practising in, a profession or trade without a particular qualification, a course that leads to that qualification is a professional or trade course.

17. To decide whether the course you supply is a professional or trade course, you need to ask whether there is a sufficiently direct link between the course, and a qualification that is recognised and imposed for admission to a particular profession or trade. If a sufficiently direct link does exist, then the course is a professional or trade course.

18. The particular qualification must be imposed by an industrial instrument or, in the absence of any industrial instrument relating to that profession or trade, by a professional or trade association at the national level. In the absence of an industrial instrument or a professional or trade association at the national level, the qualification must be imposed by a professional or trade association at the State or Territory level.

In this case the course goals and objectives, together with the course Program material, including the Program curriculum do not lead to a qualification that is an essential prerequisite for maintaining or progressing within the practice of a profession or trade is not a professional or trade.

Consequently, the Program is not considered a Professional or Trade course in accordance with the views in GSTR 2003/1.

On the basis that the supply of the Program does not meet section 38-85 of the GST Act, the supply of the Program by you to participants is a taxable supply.