ATO ID 2004/217: GST and supply of bus service to transport students to and from school
Date of decision: 22 October 2002
Business line: Indirect Tax

Issue
Is the entity, an accredited secondary school, making a GST-free supply under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies a bus service to transport students to and from school and does not charge an additional fee to the students for the provision of the service?

Decision
Yes, the entity is making a GST-free supply under section 38-85 of the GST Act when it supplies a bus service to transport students to and from school and does not charge an additional fee to the students for the provision of the service.

Facts
The entity is a secondary school. The entity provides an accredited secondary course that is GST-free under section 38-85 of the GST Act. The school uses a global budget to determine an identical fee for each student. The fee paid includes access to a bus service, regardless of whether a student makes use of the service. The entity is registered for goods and services tax (GST).

Reasons for decision
Summary: An education course is GST-free under section 38-85 of the GST Act. The entity provides an accredited secondary course that is GST-free under section 38-85 of the GST Act. Some supplies that relate to an education course are also GST-free. The entity's supply of the bus service is a supply that may relate to its supply of a GST-free education course. Goods and Services Tax Ruling, GSTR 2000/30, sets out those supplies that relate to a GST-free education course. Paragraph 30 of GSTR 2000/30 provides that a fee for the supply of an education course that consists of tuition, facilities and other curriculum related activities, associated with a GST-free course, is GST-free. Paragraphs 34 and 35 of GSTR 2000/30 provide that the supply of facilities is part of the supply of an education course and includes such items as the provision and maintenance of buildings, grounds, sporting and musical equipment and other curriculum related items. The supply of facilities will extend to the provision of a bus service, where the service is made available to all students who have paid the same fee for the supply of the education course, regardless of whether they use the bus service or not. The entity uses a global budget and charges each student the same amount for their school fees. The entity does not charge a separate fee for the supply of the bus service. The cost of providing this bus service is one of the outlays that the entity factors into the calculation of the school fees. As such, the entity's supply of the bus service is the supply of a facility that is included in the entity's fee for the supply of an education course. Therefore, the entity is making a GST-free supply under section 38-85 of the GST Act when it supplies a bus service to transport students to and from school.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 section 38-85
Related public rulings and determinations: Goods and Services Tax Ruling GSTR 2000/30
Subject references: Goods and services tax GST free GST education Education courses Secondary course