Private ruling: GST and professional or trade courses
Date of advice: 7 August 2017
Published: November 2017

Ruling: Q1: Is your supply of training courses, as required by a government authority for the issue of a licence, a supply of GST-free education courses under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: Yes, for the period that you are certified as an approved training organisation, your supply of training courses, as required by a government authority for the issue of a licence, will be GST-free education courses under section 38-85 of the GST Act.

Relevant facts and circumstances: You are registered for goods and services tax (GST) and you provide training courses. Government legislation provides that an individual needs to have a licence to undertake certain work and a government authority is the statutory authority responsible for issuing the licences. You advised that you are an approved training organisation with the government authority and the curriculum of your training courses had been approved by them. To confirm this approval you provided us with a certificate issued to you by the government authority. Upon completion of your training courses, your students will receive a certificate of completion from you. You will then submit a recommendation to the government authority that your students be issued with a licence. The government authority will issue the licence as recommended by you with no further testing required.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 38-85 | A New Tax System (Goods and Services Tax) Act 1999 Division 142 | A New Tax System (Goods and Services Tax) Act 1999 section 195-1 | Income Tax Assessment Act 1997 section 995-1

Reasons for decision: Summary: Division 38 of the GST Act outlines supplies that are GST-free. Under section 38-85 of the GST Act, a supply of an education course is GST-free. Section 195-1 of the GST Act defines an education course to include a professional or trade course. It further defines a professional or trade course to mean a course leading to a qualification that is an essential prerequisite for entry to a particular profession or trade in Australia; or to commence the practice of (but not to maintain the practice of) a profession or trade in Australia. This means that the relevant training courses you supply will only be a professional or trade course if they lead to a qualification that is an essential prerequisite for entry to, or to commence the practice of, a particular profession or trade. The Commissioner’s view on this is expressed in Goods and Services Tax Ruling GSTR 2003/1: Goods and services tax: supplies that are GST-free as professional or trade courses (GSTR 2003/1) Paragraph 43 of GSTR 2003/1 explains that in the context of the definition of a professional or trade course, a qualification is an attribute or quality that is acquired after undertaking a course. It is evidenced by some document that indicates successful completion of the course. The document would normally be accepted by a Commonwealth, State or Territory authority or a professional or trade association or an employer as suitable evidence that a person has successfully completed the relevant course. Paragraph 47 of GSTR 2003/1 provides that under the definition of essential prerequisite in section 195-1 of the GST Act, the qualification must be imposed by or under an industrial instrument or if not, by a professional or trade association that operates on a national or at a State or Territory level. An industrial instrument is defined under section 995-1 of the Income Tax Assessment Act 1997 (ITAA 1997) to mean an Australian law or an award, order, determination or industrial agreement in force under an Australian law. Australian law is further defined under the same section of the ITAA 1997 to mean a Commonwealth law, a State law or a Territory law. Paragraph 48 of GSTR 2003/1 further provides that a qualification is an essential prerequisite if it is mandatory for a person to have the qualification before he or she can enter into or commence the practice of a particular profession or trade. Based on information gathered, in order to obtain a licence to undertake certain work, a government authority requires a person to undertake certain training courses provided by their approved training organisations. It is only once the government authority has been notified of the successful completion of these training courses that it will issue the person with a licence. The facts show that you are an approved training organisation for the government authority and that you are certified to provide the relevant training courses. In addition, the curriculum of your training courses had been approved by the government authority and upon completion of your training courses a student receives a certificate of completion and a recommendation from you to the government authority for the issuance of the relevant licence. Based on your recommendation, the government authority will issue your students with the required licence. In this regard, we consider the relevant training courses you supply to students whilst certified as an approved training organisation will satisfy the definition of a professional or trade course. This is because they are essential prerequisites in order for a person to gain the qualification needed to enter into the profession or trade as mandated by an industrial instrument. Therefore, your supply of the relevant training courses will be GST-free education courses under section 38-85 of the GST Act.