Edited version of private advice

Authorisation Number: 1052180379575

Date of advice: 13 October 2023

Ruling

Subject: GST - education courses

Question 1

Do the 'Open Courses' as defined in this ruling, supplied by XXXX (You) and provided by independent instructors to their respective students, qualify as GST-free supplies of education courses under section 38-85 of A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer 1

No. The supply of Open Courses by You and provided by independent instructors to their respective students is considered a taxable supply under section 9-5 of the GST Act.

Question 2

Are the 'Other Courses' as defined in this ruling, that are supplied by You and provided by independent instructors to their respective students, considered to be taxable supplies under section 9-5 of the GST Act?

Answer 2

Yes. The supply of Other Courses by You and provided by independent instructors to their respective students is considered a taxable supply under section 9-5 of the GST Act.

Question 3

Do the XXXX vouchers (Vouchers) supplied for the Open Courses qualify as a GST-free supply for the purposes of the GST Act?

Answer 3

No. The supply of the Vouchers as part of is considered a taxable supply under section 9-5 of the GST Act.

This ruling applies for the following periods:

1 July 2022 to 30 June 2023

1 July 2023 to 30 June 2024

1 July 2024 to 30 June 2025

The scheme commenced on:

30 June 2023

Relevant facts and circumstances

•                     You are focused on XXXX training and research, with your primary activity being the development, evaluation and provision of courses designed to teach XXXX and practical early intervention skills to members of the public.

•                     You are a not-for-profit company limited by guarantee, which is a registered charity and deductible gift-recipient.

•                     You are registered for GST.

•                     You have not been refused recognition or disqualified by any State or Territory authority as a provider of courses.

•                     XXXX Courses are facilitated by Licensed Instructors (Instructors).

•                     The Courses are delivered in workplace, community and school/education settings.

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 9-10

A New Tax System (Goods and Services Tax) Act 1999 section 9-30

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

A New Tax System (Goods and Services Tax) Act 1999 section 38-95

A New Tax System (Goods and Services Tax) Act 1999 section 100-5

A New Tax System (Goods and Services Tax) Act 1999 section 100-25

A New Tax System (Goods and Services Tax) Act 1999 section 177-10

A New Tax System (Goods and Services Tax) Act 1999 section 195-1

Reasons for decision

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 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.

Section 38-85 of the GST Act discusses the supply of education courses. In particular, it states:

A supply is GST-free if it is a supply of:

(a)          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.

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

The supply of an 'education course' is GST-free under section 38-85 of the GST Act. 'Education course' is defined in section 195-1 of the GST Act to include, amongst other things, an ACE course.

Paragraph 10 in GSTR 2000/27 Goods and services tax: adult and community education courses; meaning of "likely to add to employment related skills" (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.

The Education Minister has determined courses of study or instruction that are ACE courses in the A New System (Goods and Services Tax) (Adult and Community Education courses) Determination 2016 (ACE Determination).

GSTR 2000/27 applies to adult and community education courses.

Paragraphs 11-13 of GSTR 2000/27 state:

11. For a course to be a GST-free adult and community course under paragraph (a), the following three requirements must be satisfied:

i.              The course must be a course of study or instruction that is likely to add to the employment related skills of people undertaking the course; and

ii.             The course must be of a kind determined by the Education Minister to be an adult and community education course; and

iii.            The course must be provided by a body that is either a higher education institution or by a body that is recognised or funded by a State or Territory authority to conduct adult and community education courses as described in the Education Minister's determination

12. It is important to note that the Education Minister is not responsible for determining whether an adult and community education course is likely to add to the employment related skills of people undertaking the course. This criterion is separate from the Minister's Determination, and will depend on the facts of each case.

13. Paragraph (b) of the definition of adult and community education course allows the Education Minister to determine, independently of the requirements set out in paragraph (a) that a course is an adult and community education course as defined in section 195-1. In these circumstances, for such a course to be GST free, it must:

i.              be determined by the Education Minister to be an adult and community education course; and

ii.             be likely to add to the employment related skills of people undertaking the course.

Paragraph (a) of the ACE definition in section 195-1 of the GST Act adds:

At subsection 5(2) of the ACE Determination, the Education Minister states that an ACE course must:

(a)          not be any other education course defined in section 195-1 of the GST 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 for which membership is open to adults in the general community; and

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

The courses are not of a kind mentioned in any other paragraph of the definition of education courses in section 195-1 of the GST Act. The courses are not one of the following courses (that are defined separately and may be GST-free in their own right):

•                     secondary, tertiary, or special education

•                     an English language course for overseas students

•                     a professional or trade course

•                     a first aid or lifesaving course

•                     a tertiary residential college course

You have stated that all the courses are available to the general public.

ATO ID 2003/1013 states the following:

The entity supplies the course to its members only and any woman who wishes to take the course is required to join the association. Membership is open to any woman of 18 years or over. As concluded above, the entire membership of a particular gender constitutes a sufficiently large segment of the population to be considered adults in the general community. As such, the course is a course provided by an organisation for which membership is open to adults in the general community.

We consider that the entire membership of a particular group including individuals who receive endorsements from such members of the community constitutes a sufficiently large segment of the population to be considered 'adults in the general community'.

In addition, the courses are not:

•                     provided by or for an employer to their employees

•                     provided by or for an organisation to their members, except for general community organisations with few restrictions on membership

•                     private or individual tuition

Hence the courses are of the kind described in subsection 5(2) of the ACE determination.

ACE courses delivered by an independent third party

A recognised ACE course provider may sell the rights to deliver an ACE course to an independent third party to on-sell to students.

The sale may involve, for example, the right of the independent third party to deliver the ACE course for a set period and the seller retaining some rights over the course, such as branding.

This sale is subject to GST because the ACE course provider is selling the rights and materials to deliver an ACE course.

The independent third party's sale of the ACE course to students is subject to GST because they are not a recognised ACE course provider.

The Open Courses and Other Courses are being provided by the licensed Instructors to their students and who are independent to You in a manner similar to the situation described above. Given this, the Open Courses and Other Courses do not meet the requirements under section 38-85 to be considered GST-free education courses. They are therefore considered to be a taxable supply under section 9-5.

Vouchers

Supplies of vouchers with a stated monetary value

Section 100-5 of the GST Act states:

(1)          A supply of a * voucher is not a * taxable supply if

(a)          on redemption of the voucher, the holder of the voucher is entitled to supplies up to the * stated monetary value of the voucher; and

(b)          the * consideration for supply of the voucher does not exceed the stated monetary value of the voucher.

(2)          If the * consideration for supply of the voucher exceeds the * stated monetary value of the voucher, the consideration is treated (except for the purposes of this section) as if it were reduced by that monetary value.

In GSTR 2003/5 Goods and Services Tax: vouchers (GSTR 2003/5), the Commissioner set out his views on the GST treatment of vouchers. He explains that a voucher will not meet the requirements under section 100-5 of the GST Act where it is for a specified supply.

Paragraph 76 of GSTR 2003/5 states:

76. A voucher may be for a specific type of supply such as 'dog grooming services' and state a monetary value. To come within section 100-5, the voucher must not stipulate the specific supply or be limited to a specific supply. For example, a statement on a voucher that it entitles the holder to a deluxe dog wash and clip priced at $20 would preclude the voucher from being treated under section 100-5 as it is for a specific supply.

For vouchers which do not satisfy the requirements under section 100-5, the Commissioner considers that the GST consequences are determined by applying the basic GST rules under chapter 2 of the GST Act. For example, if the voucher entitles the holder to a GST-free supply, the supply of the voucher, as a supply of a right to GST-free supplies is also GST-free.

The Vouchers map to a specific course and will therefore not meet the requirements under section 100-5. Given that the Vouchers are a supply of a right to receive the content for Open Courses and Other Courses which are taxable supplies under section 9-5 of the GST Act, the vouchers would not be a GST-free supply when the basic GST rules under chapter 2 of the GST Act are applied.

Course materials

A supply will be GST-free if it is a supply of course materials within the meaning of Subdivision 38-C of the GST Act. Section 38-95 provides 'A supply of *course materials for a subject undertaken in an *education course is GST-free'.

The Vouchers are not supplied in conjunction with a GST-free supply of an education course under section 38-85 of the GST Act, as the Open Courses and Other Courses are not a GST-free supply of an education course under section 38-85 of the GST Act. The Vouchers are therefore not considered a GST-free supply of course materials under section 38-95 of the GST Act.

Given that the Vouchers are neither a GST-free supply of a voucher under section 100-5 of the GST Act or a GST-free supply of course materials under section 38-95 of the GST Act, they are considered a taxable supply under section 9-5 of the GST Act. The Vouchers meet the requirements under section 9-5 of the GST Act as they are supplied for consideration which is incorporated into the course fees, they are supplied in the course or furtherance of an enterprise that you carry on, the supply is connected with the indirect tax zone and you are registered for GST.