Edited version of private advice

Authorisation Number: 1052288701544

Date of advice: 10 September 2024

Ruling

Subject: Education supplies and agent commission

Question 1

Should you charge GST on entire 'enrolment fee' amounts paid to you by the Registered Training Organisations (Schools) as an incentive?

Answer 1

If you are required to be registered for GST, you should charge GST when you invoice the Schools for your agency services.

If you are not required to be registered for GST, you should not charge GST when you invoice the Schools for your agency services.

Question 2

Should you charge GST on entire 'course materials fee' amounts paid to you by the Schools as an incentive?

Answer 2

If you are required to be registered for GST, you should charge GST when you invoice the Schools for your agency services.

If you are not required to be registered for GST, you should not charge GST when you invoice the Schools for your agency services.

Question 3

Should you charge GST on Marketing Support amounts paid to you by the Schools?

Answer 3

If you are required to be registered for GST, you should charge GST when you invoice the Schools for your agency services.

If you are not required to be registered for GST, you should not charge GST when you invoice the Schools for your agency services.

This ruling applies for the following period:

30 June 20XX to 30 June 20XX.

The scheme commences on:

XX XXX 20XX

Relevant facts and circumstances

Entity X (you) is registered under ABN XXX since XX XXX 20XX and operates a migration consulting service specialising in education services.

You are not currently registered for GST.

Your sole director is XXXX.

Your business acts as an agent promoting educational services, contracted to Registered Training Organisations (Schools) that provide GST-free educational courses to overseas students. You assist the students interested in studying in Australia by matching them with suitable schools.

You collect various fees on behalf of the Schools, including school fees, educational course enrolment fees, education course materials fees, visa fees, and insurance fees.

The Schools pay you a commission for each student you enrol. The commission amounts vary depending on the provider.

Typically, you deduct your commission for the agency services that you provide directly from the fees paid to you by the students and you charge GST on this commission.

Some Schools pay you the entire 'enrolment fee' amounts, as an incentive for enrolling more students.

You also collect course materials fees (e.g., books) from the students on behalf of the schools. Typically, no GST is charged on books.

Occasionally, some Schools pay you the entire 'course material fee' amounts, as an incentive for enrolling more students.

Some Schools pay you additional amounts labelled as 'Marketing Support.' Such payments are intended for marketing purposes; however, you can choose whether to keep these payments or to use the funds for marketing.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999section 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 23-5

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

Reasons for decision

Taxable supply

Under section 9-5 of the GST Act, you make a taxable supply if:

(a)          you make a supply for consideration

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

(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.

In your case, you receive payments (consideration) from registered education providers (Schools) to make various supplies to those Schools in your agency services role. These supplies occur in the course of your agency services business (enterprise) and take place in Australia (the indirect tax zone). You are registered under ABN XXX since XX XXX 20XX, but you are not registered for GST.

The educational courses and education course materials are GST-free supplies by the Schools to the students as per section 38-85 of the GST Act. As the Schools make these supplies to the students, it falls to the Schools to determine the taxable status of those supplies that they make to the students through you as an intermediary.

The amounts that you invoice to the students, you are collecting as an agent on behalf of the Schools. These amounts are not consideration for any supplies that you make as you do not directly supply the educational courses for which the students enrol, nor do you directly supply the education course materials associated with these.

Therefore, we need to establish whether your supplies of agency services to the Schools are taxable and whether you are required to be registered for GST.

Supplies made as an agent

Paragraph 55 of Goods and Services Tax Ruling GSTR 2000/37 Goods and services tax: agency relationships and the application of the law (GSTR 2000/37) provides that if an entity is acting in the capacity of an agent, then that entity is an agent for GST purposes.

GSTR 2000/37 provides, at paragraph 10:

         General law and agency relationships

         10. An entity may be authorised by another party to do something on that party's behalf. Generally, the authorised entity is called an agent. The party who authorises the agent to act on their behalf is called the principal. ...

         11. For commercial law purposes, an agent is a person who is authorised, either expressly or impliedly, by a principal to act for that principal so as to create or affect legal relations between the principal and third parties.

GSTR 2000/37 explains at paragraph 15, that 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. There is no supply by an agent when the agent forwards the fees it has collected as agent, to the principal on whose behalf the agent has acted.

In your case, the supplies of the educational courses and the education course materials are made by the Schools for which you act as an agent.

No GST is payable, or collectible by you, on payments from students that you manage on behalf of the Schools.

Direct supplies you make as an agent

Goods and Services Tax Ruling GSTR 2006/9 Goods and services tax: supplies (GSTR 2006/9) provides at paragraph 71:

71. An entity will make a supply whenever that entity (the supplier) provides something of value to another entity (the recipient). This is consistent with the ordinary meaning of 'supply', being to furnish or provide.

Section 9-10 provides, in part, under the heading 'Meaning of supply':

         (1) A supply is any form of supply whatsoever.

         (2) Without limiting subsection (1), supply includes any of these:

          (a) a supply of goods

          (b) a supply of services

          (c) a provision of advice or information

          (d) a grant, assignment or surrender of real property

          (e) a creation, grant, transfer, assignment or surrender of any right

          (f) a financial supply

          (g) an entry into, or release from, an obligation:

           (i) to do anything or

           (ii) to refrain from an act or

           (iii) to tolerate an act or situation

          (h) any combination of any 2 or more of the matters referred to in paragraphs (a) to (g).

GSTR 2006/9 explains at paragraphs 29 and 30, that a supply of services (per paragraph 9-10(2)(b) above), includes, 'anything which is not a supply of goods but is done for consideration (including, if so done, the granting, assignment or surrender of any right) ...'

In your case, separate supplies of agency services are made by you directly to the Schools, in your capacity as their agent.Amounts retained by you under agreements with the Schools, from the various fees collected from the students and forwarded by you to the Schools, take the form of commission payments paid to you for your agency services. Separate 'marketing fees' paid to you by the Schools, regardless of how those funds are ultimately used, are likewise a charge, or consideration, for your provision of agency services.

If the Schools pay you the entire amount of the educational course enrolment fees by way of a 'commission', then the entire amount is consideration paid to the agency. However, if the Schools pay you only a proportion of the fees by way of a 'commission', then only that proportion will be consideration in your hands. You would charge the Schools GST on these commissions if you were registered or required to be registered for GST.

Likewise, if the Schools pay you the entire amount of the education course materials fees by way of a 'commission', then the entire amount is consideration paid to the agency. However, if the Schools pay you only a proportion of the education course materials fees by way of a 'commission', then only that proportion will be consideration in your hands. You would charge the Schools GST on these commissions if you were registered or required to be registered for GST.

Other amounts, such as the 'marketing support payments', that some Schools pay you in exchange for your agency services, are consideration for the supply of agency services you make to them. You would charge the Schools GST on these payments if you were registered or required to be registered for GST.

As the agent of the Schools, your supply of agency services will be a taxable supply if you are registered or required to be registered for GST.

GST turnover and registration

Section 23-5 provides that you are required to register for GST if:

•          you are carrying on an enterprise, and

•          your GST turnover meets the relevant registration turnover threshold.

Information about the meaning of GST turnover is available on the ATO website and in Goods and Services Tax Ruling GSTR 2001/7 Goods and services tax: meaning of GST turnover, including the effect of section 188-25 on projected GST turnover.

Your GST turnover will meet the registration turnover threshold if:

(a)          your current turnover is at or above the turnover threshold and the Commissioner is not satisfied that your projected GST turnover is below the turnover threshold; or

(b)          your projected GST turnover is at or above the turnover threshold.

The GST regulations provide that the registration turnover threshold (other than for non-profit bodies) is $,000 (see paragraph 23-15(1)(b) of the GST Act).

In your case, you are carrying on an enterprise of supplying agency services to the Schools and you are not a non-profit body. Therefore, if your GST turnover is $75,000 or more, you are required to be registered for GST, which would satisfy section 9-5(d). You would then be liable to pay 1/11th of the total amount of any consideration that you receive from the Schools as GST.