ATO ID 2002/1075: GST and general research services supplied by an education institution
Date of decision: 17 July 2002
Business line: Indirect Tax

Issue
Is the entity, a supplier of GST-free education courses, 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 makes a separate supply of general research services to a student undertaking a GST-free course?

Decision
No, the entity is not making a GST-free supply under section 38-85 of the GST Act when it makes a separate supply of general research services to a student undertaking a GST-free course. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts
The entity is a supplier of GST-free education courses. The courses are GST-free under paragraph 38-85(a) of the GST Act. The entity makes a separate supply of general research services to a student undertaking a GST-free course. The general research service involves undertaking research on behalf of the student, retrieving relevant information and providing it to the student. This service is a general research facility and the information retrieved is not in relation to the student's enrolment. The entity is registered for goods and services tax (GST) and the supply satisfies the other positive limbs of section 9-5 of the GST Act.

Reasons for decision
Summary: Section 38-85 provides that a supply is GST-free if it is a supply of: Although the supply of the entity's education courses is GST-free under paragraph 38-85(a) of the GST Act, the supply of the general research services is separate from the supply of the GST-free course. Therefore, the general research services are not GST-free under paragraph 38-85(a) of the GST Act as part of the education course. Paragraph 38-85(b) of the GST Act provides that the supply of administrative services directly related to the supply of a GST-free education course is GST-free, if supplied by the supplier of the course. The term 'administrative service' is not defined in the GST Act and therefore, takes on its ordinary meaning. The Macquarie Dictionary (1997) defines 'administrative' as 'relating to administration' and 'administration' as 'the management or direction of any office or employment'. Therefore, for a service to be an administrative service for the purposes of paragraph 38-85(b) of the GST Act, the service must pertain to the management or direction of an education course. The entity is supplying a general research service. This service is general in nature and does not pertain to the management or direction of the entity's education courses. Therefore, the entity's general research service is not an administrative service and the supply of the service is not GST-free under paragraph 38-85(b) of the GST Act. The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is not GST-free under any other provision in Division 38 of the GST Act, nor is it input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it makes a separate supply of general research services to students undertaking the GST-free education courses.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 Division 38 section 38-85 paragraph 38-85(a) paragraph 38-85(b) Division 40
Related public rulings and determinations: GSTR 2000/30 | GSTR 2001/1
Other references: The Macquarie Dictionary, 1997, 3rd edn, The Macquarie Library Pty Ltd, New South Wales
Subject references: Goods and services tax GST free GST education Education course administrative services GST supplies and acquisitions Taxable supply