Edited version of private advice

Authorisation Number: 1052109154569

Date of advice: 21 April 2023

Ruling

Subject: Professional or trade course

Question

Is the supply of a XXX course considered to be GST-free education for the purposes of section 38-85 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

No, the course will not be GST-free under section 38-85 of the GST Act.

This ruling applies for the following period:

XX XXX XXXX to XX XXX XXXX

The scheme commenced on:

XX XXX XXXX

Relevant facts and circumstances

XXX (You) are registered with ABN XXX and have been registered for GST since XXX.

You operate an enterprise of education in XXX.

You are not a Registered Training Organisation (RTO).

Your courses are not qualifications accredited by the Federal Government's Australian Skills Quality Authority (ASQA) and do not lead to the student graduating with the recognised XXX.

Upon graduation your students are enabled to operate as "XXX".

You state the following about your course: "XXX."

You state that "XXX" is its own distinct profession.

You state your courses are aimed at and designed for a market of XXX people looking to change employment.

You supplied further information dated XX XXX XXXX which states:

•         General membership for Massage Association of Australia (MAA) does not require accreditation.

•         XXX is recognised by MAA as a Continuing Professional Education (CPE) provider on their website.

Relevant legislative provisions

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

Section 38-85 of the GST Act provides that a supply is GST-free if it is either:

(a) a supply of an education course; or

(b) administrative services directly related to the supply of such a course, but only if they are supplied by the supplier of the course.

The term 'education course' is defined in section 195-1 of the GST Act, and paragraph (j) of the definition of education course includes a 'professional or trade course'. The term 'professional or trade course' is also 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.'

For the purposes of this ruling, none of the other "education courses" mentioned in section 195-1 of the GST Act are relevant except (j).

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 of '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).

You have submitted that the supply of the Program is a GST-free supply as it has the characteristics of a professional or trade course in GSTR 2003/1.

We do not agree with this submission. Relevantly paragraph 9 of GST 2003/1 states:

9. For the purposes of the definition of a 'professional or trade course' the term 'essential prerequisite' is defined in section 195-1 in the following terms:

'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.'

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.

XXX course does not meet any of the above requirements.

Essential Prerequisite

Paragraph 48 of GSTR 2003/1 provides that 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.

It is considered your course is not a mandatory qualification that is an essential prerequisite to commence the practice of a profession or trade.

Conclusion

While some private health funds may require certain levels of qualification to receive a provider number, there is currently no requirement for an individual or student to have completed a qualification in massage to practice. While this may be a requirement to practice your branded massage treatment, it is not a national uniform standard, and the Commissioner does not accept this qualification is essential in relation to the commencement of massage therapy. This is the case even if the level of education is perceived to be of a higher quality than the current accredited courses on offer for the profession or trade.

The Commissioner also does not accept XXX is its own profession or trade.

Consequently, the course 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.