Private ruling: GST and brokerage for education courses
Published: December 2013

Ruling: Q1: Where the supply of a course by a registered training organisation (RTO) is a GST-free supply of an education course, are you liable to pay GST on the course fees that you collect from the schools as an agent on behalf of an RTO? | A1: No.

Relevant facts and circumstances: You are registered for GST. You have a new arm which encourages a partnership approach with key stakeholders committed to improving education transition outcomes for all young people. You organise courses for school students to undertake whilst still studying at high school. Your role is to act as a broker and facilitate between the RTOs, schools and students. There are many different situations with courses and RTOs. The schools enter into an agreement with you by way of purchasing a membership. You provide a number of specified services to the member schools. In some cases, the schools do not purchase a membership. The non-member school will need to pay a non-member fee. Individual students also enter into an agreement with you by way of completing an enrolment form with you. You only enrol students supported by a school, you do not enrol students directly. You provided a copy of the enrolment form that the students have to complete. The students also complete enrolment forms with the relevant RTOs. You are not responsible for the content of the courses. You do not deliver the courses to the students. There are situations where you arrange a location for the courses to be held. The RTOs are responsible for course content and delivery in accordance with the Australian Quality Training Framework (AQTF) guidelines. The RTOs assess the students and issue the relevant statement of attainment or certificate to students who successfully complete the course. You will enter into agreements with RTOs. You are currently in the process of drafting such agreements. The RTOs will invoice you for the course fees. Some courses are GST-free and some are taxable. You then invoice the various schools that have students enrolled in the courses. The majority of these courses are GST free. There are only a handful of courses that are not GST-free and the majority are for the cost of material only. With most of these, the student pays the material cost and GST direct to the RTO, for example, XXXXX. You advised that you are acting as an agent of the RTOs and collect the course fees on behalf of the RTOs from the students. You receive a commission from the RTOs. You also stated that you purchase the courses from the RTOs on behalf of the students. You are not an RTO. You are aware that the supply of your services to the schools and the RTOs for which you receive membership fees, non-member fees, mark-ups and commissions are taxable supplies.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 section 9-40

Reasons for decision: Summary: Where the supply of a course by a registered training organisation (RTO) is a GST-free supply of an education course, are you liable to pay GST on the course fees that you collect from the schools as an agent on behalf of an RTO? You are not liable to pay GST on the course fees that you collect from the schools as an agent on behalf of an RTO. | Detailed Reasoning - Detailed reasoning: Section 9-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) provides that you are liable to pay GST on any taxable supply that you make. A supply is a taxable supply if it meets all the requirements of section 9-5 of the GST Act. This section states: You make a taxable supply if: (a) you make the supply for *consideration; and (b) the supply is made in the course or furtherance of an *enterprise that you *carry on; and (c) the supply is *connected with 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. (* denotes a term defined in section 195-1 of the GST Act) Section 9-5 of the GST Act states that 'you' make a taxable supply if certain requirements are met. Therefore, before examining the elements of section 9-5 of the GST Act, it is necessary to identify who is actually making the supply. The issue in this case is whether the RTO, or you are making the supply of the courses. Goods and Services Tax Ruling GSTR 2000/37 discusses the general law in relation to agency relationships. Paragraph 10 of GSTR 2000/37 explains that: 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 … Paragraph 15 of GSTR 2000/37 goes on to state that: 15. 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 … You stated that there are many different situations with courses and RTOs. You have not provided a copy of your agreement(s) with the RTOs. You advised that you are in the process of drafting an agreement. You stated that the students enrol with the RTO. The RTO is responsible for the course content and its delivery in accordance with the AQFT guidelines. The RTO issues the statement of attainment or the relevant certificate to the student who successfully completes the course. Further, you advised that you are merely acting as an agent of the RTO when you collect the course fees from the schools and pass it on to the RTO. Where you merely collect the course fees (collecting agent) from the schools on behalf of the RTO, you are not liable to pay GST on the course fees charged by an RTO. In this situation the RTO is supplying the course to the school/student. Also, in your private ruling application form you stated that you purchase courses from the RTOs on behalf of students . Where you acquire a course as an agent on behalf of a student you are not the recipient of the supply and are not making a supply of the course to the student. In this situation the supply of the course is made by the RTO to the student. For further information on GST an agency relationships refer to GSTR 2000/37. Any amount that you retain from the payments that you collect on behalf of an RTO or any commission that you receive from the RTO is consideration for a taxable supply of your services to the RTO. Also, any mark-up that you charge to the school for arranging the course on their behalf is consideration for a taxable supply of your services to the school. The rulings in the register have been edited and may not contain all the factual details relevant to each decision. Do not use the register to predict ATO policy or decisions.