ATO ID 2004/145: GST and assessment of prior learning carried out by a contracted entity
Date of decision: 11 November 2002
Business line: Indirect Tax

Issue
Is the entity, a trade association, making a GST-free supply under section 38-110 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it makes a supply of assessing a person's qualifications, for the purpose of that person gaining membership to the entity, where the assessment is actually carried out by a contracted education institution?

Decision
Yes, the entity is making a GST-free supply under section 38-110 of GST Act when it makes a supply of assessing a person's qualifications, for the purpose of that person gaining membership to the entity, where the assessment is actually carried out by a contracted education institution.

Facts
The entity is a trade association. The entity makes a supply of assessing a person's qualifications. The purpose of the assessment is for the person to gain membership to the entity. The entity engages an education institution to carry out the assessment. The education institution carries out the assessment under authority granted by the entity. The entity is registered for goods and services tax (GST).

Reasons for decision
Summary: A supply is GST-free under subsection 38-110(1) of the GST Act when the supply is the assessment or issue of qualifications for the purpose of: The entity supplies a service of assessing a person's qualifications. The entity's assessment is for the purpose of the person gaining membership to the entity, which is a trade association. As such, the supply satisfies the requirements in subsection 38-110(1) of the GST Act. However, subsection 38-110(2) of the GST Act provides that a supply is not GST-free under subsection 38-110(1) of the GST Act unless the supply is carried out by: 'Carried out by' means that the assessment must be conducted by a body that is specified in subsection 38-110(2) of the GST Act. Where the assessment is conducted by some other entity acting under a licence, franchise or authority granted by the body, and that other entity is not one of the kinds of bodies specified in subsection 38-110(2) of the GST Act, then the supply will be excluded from being GST-free. The education institution carries out the assessment under authority granted by the entity. An education institution is one of the kinds of bodies specified in subsection 38-110(2) of the GST Act. As such the supply is not excluded from being GST-free by subsection 38-110(2) of the GST Act. There are 2 supplies being made in these circumstances: (1) the education institution supplies assessment services to the trade association; and (2) the trade association supplies assessment services to the potential member. As the education institution and the trade association are both kinds of bodies specified in subsection 38-110(2) of the GST Act, each supply is GST-free as both supplies are not excluded from being GST-free by subsection 38-110(2) of the GST Act. Accordingly, the entity is making a GST-free supply under section 38-110 of the GST Act when it makes a supply of assessing a person's qualifications, for the purpose of that person gaining membership to the entity, where the assessment is actually carried out by a contracted education institution.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 38-110 subsection 38-110(1) subsection 38-110(2)
Subject references: Goods and services tax GST free GST education Recognition of prior learning