Private ruling: GST and the supply of online education courses
Date of advice: 31 January 2019
Published: May 2019

Ruling: Q1: 1. Is supply of each non-accredited Certificate Course that is delivered by you, GST-free under paragraph 38-85(a) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? 2. Is the supply of each accredited Diploma course that is delivered by you GST-free under section 38-85(a) of the GST Act? 3. Is the supply of an extension granted to students to complete the Certificate Courses GST-free under either paragraphs 38-85(a) or 38-85 (b) of the GST Act? 4. Is the supply of an extension granted to students to complete the Diploma Courses GST-free under either paragraphs 38-85(a) or 38-85 (b) of the GST Act? 5. Is the supply of extension granted to students who undertake the Certificate Courses to showcase their portfolio via a portfolio website GST-free? 6. Is the supply of extension granted to students who undertake the Diploma Courses to showcase their portfolio via a portfolio website GST-free? 7. Is the supply of each of the advanced modules under the Certificate Courses and the supply of a Video tutorial GST-free? 8. Is the supply of each of the advanced modules under the Diploma Courses GST-free? 9. Is the supply of assessing the suitability of a student (who has previously completed a non-accredited Certificate Course) to complete the Diploma Courses GST-free under section 10. 38-110 of the GST Act? | A1: 1. Yes, the supply of each non-accredited Certificate Course that is delivered by you is GST-free under paragraph 38-85(a) of the GST Act. 2. Yes, the supply of each accredited Diploma course that is delivered by you is GST-free under section 38-85(a) of the GST Act. 3. Yes, the supply of an extension granted to students to complete the Certificate Courses is GST-free under paragraph 38-85 (b) of the GST Act. 4. Yes, the supply of an extension granted to students to complete the Diploma Courses is GST-free under paragraph 38-85 (b) of the GST Act. 5. Yes, the supply of an extension granted to students who undertake the Certificate Courses to showcase their portfolio via a portfolio website is GST-free. 6. Yes, the supply of an extension granted to students who undertake the Diploma Courses to showcase their portfolio via a portfolio website is GST-free 7. No, the supply of advanced modules and the supply of a Video tutorial under the Certificate Courses are not GST-free. GST is payable on these supplies. 8. No, the supply of advanced modules under the Diploma Courses is not GST-free. GST is payable on the supply of these courses. 9. Yes, the supply of assessing the suitability of a student (who has previously completed a non-accredited Certificate Course) to complete the Diploma Courses is GST-free under section 10. 38-110 of the GST Act.

Relevant facts and circumstances: You are a registered training organisation (RTO). You deliver the following two types of courses: 1. Certificate courses These courses are non-accredited courses. However it was the course content of these Certificate Courses that were audited and assessed (by the National body who granted you the RTO status) for suitability to be delivered as Diploma Courses. The course content of these courses is very similar to the accredited Diploma Courses. Except for one course, these courses are marketed as those that provide employment opportunities. These courses are not approved courses within the meaning of the VET Student Loans Act 2016 . 2. Diploma Courses These courses are accredited courses to be delivered under your registration as an RTO. However these courses are not approved courses within the meaning of the VET Student Loans Act 2016 .

Relevant legislative provisions: Section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 | Section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 | Section 38-110 of the A New Tax System (Goods and Services Tax) Act 1999

Reasons for decision: Summary: Section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) states: A supply is GST-free if it is a supply of: (a) an * education course ; or (b) administrative services directly related to the supply of such a course, but only if they are supplied by the supplier of the course. Terms marked with asterisks (*) are defined in section 195-1 of the GST Act. Relevantly, an "education course" is further defined in section 195-1 of the GST Act to include a tertiary course and an adult and community education course. Are the Diploma Courses and Certificate Courses delivered by you Tertiary course s? A tertiary course is defined in the GST Act as follows: (a) a course of study or instruction that is a tertiary course determined by the *Student Assistance Minister under subsection 5D(1) of the Student Assistance Act 1973 for the purposes of that Act; or (aa) a course of study or instruction accredited at Masters or Doctoral level and supplied by a * higher education institution or a * non-government higher education institution ; or (b) any other course of study or instruction that the Student Assistance Minister has determined is a tertiary course for the purposes of this Act. What needs to be determined in this instance is whether the courses offered by you come within paragraph (a) or (b) of the definition of a tertiary course. The Student Assistance (Education Institutions and Courses) Determination 2009 (No. 2) made under subsections 3(1) and 5D(1) of the Student Assistance Act 1973 defines tertiary courses as follows: | Detailed Reasoning - Tertiary courses: (1) For paragraph 5D (1) (a) of the Act, a tertiary course is a full-time course: (a) that is: (i) specified in Column 1 of the table in Schedule 2 to this instrument and provided by an education institution specified for that course in Column 2 of that table; and (ii) for a course specified in item 5 or 8 of that table —an approved course within the meaning of the VET Student Loans Act 2016 ; and (iii) for a course specified in item 10 of that table—to the extent that the course consists of study in a VET course, an approved course within the meaning of the VET Student Loans Act 2016 ; or (aa) to which section 11 of this instrument applies; or (b) that is: (i) accredited at Masters level; and (ii) specified in Column 2 of the table in Schedule 3 to this instrument; and (iii) provided by the education institution specified for that course in Column 1 of that table. (2) Without limiting subsection (1), a course that meets the requirements of paragraph (1)(a), (aa) or (b) and is not a full-time course is a tertiary course for the purposes of paragraph 1061PC of the Social Security Act 1991 . (3) For paragraph 5D (1) (b) of the Act, a unit of a course mentioned in subsection (1) or (2) is part of a tertiary course. The relevant items in Schedule 2 to consider are items 4, 5 and 8 that are as follows: | Detailed Reasoning - Education institution: 4 VET course that is not a VET course specified in item 5 Registered training organisation 5 VET course at the level of: (a) diploma; or (b) advanced diploma; or (c) graduate certificate; or (d) graduate diploma Higher education institution Registered training organisation 8 Open Learning at the level of a VET course at the level of: (a) diploma; or (b) advanced diploma; or (c) graduate certificate; or (d) graduate diploma Higher education institution participating in Open Learning Registered training organisation participating in Open Learning VET course means: (a) the units of competency of a training package that is endorsed by the Ministerial Council which has responsibility for the VET Quality Framework; (b) the modules of a VET accredited course; or (c) the modules of a course accredited by the VET Regulator of a State which is a non-referring State within the meaning of section 7 of the National Vocational Education and Training Regulator Act 2011. Diploma Courses Given that you are an RTO and the Diploma Courses are VET accredited courses, they fall within item 5 of Schedule 2 (because they fall within column 1 and column 2 of Schedule 2). However, given that the Diploma Courses are not approved courses within the meaning of the VET Student Loans Act 2016 the Diploma Courses do not meet paragraph 1(a)(ii) of the definition of a Tertiary course as outlined in The Student Assistance (Education Institutions and Courses) Determination 2009 (No. 2) made under subsections 3(1) and 5D(1) of the Student Assistance Act 1973. Further, these courses do not fall within the A New Tax System (Goods and Services Tax) (Tertiary Courses) Determination 2017 which provides under section 6 of this Determination that the following course of study or instruction mentioned in an item of the following table is a tertiary course for the purposes of the Act. Courses of study or instruction | Detailed Reasoning - Column 2: A course of study or instruction that is: and does not meet the Student Assistance Determination requirements only for one or more of the following reasons: 1 a VET course (a) the course is not an approved course; (b) the course is not full-time The A New Tax System (Goods and Services Tax) (Tertiary Courses) Determination 2017 defines VET course and approved course as follows: VET course has the same meaning as in the Student Assistance Determination. approved course has the same meaning as in the VET Student Loans Act 2016 Accordingly, even though the Diploma Courses come within the meaning of a VET course, because they are not approved under the VET Student Loans Act 2016 these courses are not tertiary courses. Certificate Courses: The Certificate Courses do not meet any of the requirements of the definition of a Tertiary course. Are the Diploma Courses and Certificate Courses delivered by you Adult and Community Education (ACE) courses ? An Adult and Community Education course (ACE course) is defined in section 195-1 of the GST Act as follows: adult and community education course means a course of study or instruction that is likely to add to the employment related skills of people undertaking the course and: (a) is of a kind determined by the *Student Assistance Minister to be an adult and community education course and is provided by, or on behalf of, a body: (i) that is a * higher education institution ; or (ii) that is recognised, by a State or Territory authority, as a provider of courses of a kind described in the determination; or (iii) that is funded by a State or Territory on the basis that it is a provider of courses of a kind described in the determination; or (b) is determined by the Student Assistance Minister to be an adult and community education course. The Commissioners’ views in regards to an ACE course are outlined in Goods and Services Tax Ruling Goods and services tax: adult and community education courses; meaning of "likely to add to employment related skills" (GSTR 2000/27). GSTR 2000/27 states the following: | Detailed Reasoning - What is likely to add to the employment related skills of people undertaking an adult and community education course?: 15. The test as to whether an adult and community education course is likely to add to the employment related skills of people undertaking the course is an objective test and not dependent on the subjective intention of the providers of the course or the recipients . However we consider a course satisfies the test if the course meets the following requirements: (a) It is directed at people who want to add to their employment related skills; and (i) The objectives of the course specify the employment related skills that participants will acquire in undertaking the course; and (ii) The means of imparting the skills to the participants are clearly identified prior to the commencement of the course; and (iii) There is a reasonable expectation that the skills being developed will be used in the course of being an employee, or working in a business, occupation, profession or trade, rather than for recreational, hobby, artistic or cultural endeavours. 16. In addition to the criteria outlined in paragraph 15, you should also consider the following: (a) How the course is marketed. A course that markets the employment related skills that will be acquired by undertaking the course will support your conclusion that the course will, on the balance of probabilities, add to the employment related skills of the participants. (b) Whether the course is similar to an accredited vocational education and training (VET) program. If you can clearly demonstrate that a majority of the course content is the same as part or all of a recognised VET program, this factor will support your contention that the course is likely to add to employment related skills of people undertaking the course. (c) The outcomes of the course. If you can present evidence that the majority of people undertaking your course are gaining employment relevant to the skills they have acquired in the course, this would also demonstrate that the course is likely to add to the employment related skills of people undertaking the course. There must be a reasonable expectation that the course is going to "add to the employment related skills of people undertaking the course". In this regard each of the courses supplied by you needs to be analysed separately to determine whether they fall within the definition of an ACE course. It is our view that except one type of Certificate Course, all of the other courses (both Diploma and Certificate Courses) are likely to add to the employment related skills of people undertaking these courses. For instance, it is our view that the marketing material are directed at people who want to add to their employment related skills; and (i) The objectives of the course specify the employment related skills that participants will acquire in undertaking the course; and (ii) The means of imparting the skills to the participants are clearly identified prior to the commencement of the course; and (iii) There is a reasonable expectation that the skills being developed will be used in the course of being an employee, or working in a business, occupation, profession or trade, rather than for recreational, hobby, artistic or cultural endeavours. Further, except one type of Certificate Course, the Diploma Courses are accredited VET courses and the course material of the Certificate Courses are similar to the course content of the Diploma Courses. Your marketing material also provides evidence that people undertaking your courses are gaining employment relevant to the skills they have acquired in the course. On this basis, it is our view that both your Diploma Courses and the Certificate Courses (with the exception of one Certificate course) come within the meaning of an ACE course. Accordingly the supply of these courses (except one course) is a supply of GST-free education course. The supply of one of the Certificate Course is a taxable supply as defined in section 9-5 of the GST Act and therefore GST is payable on the supply of this course. | Detailed Reasoning - Questions – 3 to 6: It is our view that the fees charged by you for the following services come within paragraph 38-85(b) of the GST Act as fees for administrative services that are directly related to the supply of the GST-free courses. ● The supply of an extension granted to students to complete the Certificate Courses other than one course. ● The supply of an extension granted to students to complete the Diploma Courses. ● The supply of an extension granted to students who undertake the Certificate Courses(except one course) to showcase their portfolio via a portfolio website. ● The supply of extension granted to students who undertake the Diploma Courses to showcase their portfolio via a portfolio website An extension granted to one of the Certificate Courses and the extension granted to showcase their portfolio for this Certificate Course are taxable supplies as defined in section 9-5 of the GST Act. Accordingly, GST is payable on the supply of this course. | Detailed Reasoning - Questions 7 and 8: Supply of the Advanced Modules and a Video for students who undertaken the Certificate Courses Given that the Advanced Modules and the video are optional and are not offered as part of the Certificate course (and also not been approved by ASQA as a VET program) it is our view that a separate supply of the Advanced modules and the Video do not meet the definition of any of the education courses (or other GST-free supplies) as provided in the GST Act. Accordingly, the supply of the Advanced modules and/or the video is the supply of a taxable supply under section 9-5 of the GST Act and therefore GST is payable. Supply of the Advanced Modules for students who undertake the Diploma Courses Similarly, because the Advanced Modules under the Diploma Courses are optional and not as part of VET program, the separate supply of these modules in their own right do not come within any of the definitions of an education course (or any other GST-free supply). Accordingly, the supply of the Advanced Modules under the Diploma Courses is a taxable supply made under section 9-5 of the GST Act and therefore is GST payable. | Detailed Reasoning - Question – 9: It is our view that the supply by you (an RTO) to an Australian resident student who has previously completed the non-accredited Certificate Course of recognition of this prior learning via the Recognition of Prior Learning process when the student undertakes in the future the Diploma Course is considered as a supply of an assessment access to education. Accordingly, this supply is GST-free under section 38-110 of the GST Act.