Private ruling: Goods and services tax (GST) and trade courses
Published: March 2013

Ruling: Q1: Is GST payable on your supply of the trade courses? | A1: Yes.

Relevant facts and circumstances: You are registered for GST. You are supplying the trade courses. Students receive a qualification on successful completion of these courses. The duration of the courses is a small number of days. You charge fees for the courses. You provide the courses in Australia. You are not an RTO. You were not established by the government as a higher education institution. You are not registered by TEQSA as a higher education provider. You have never been registered under a State or Territory law relating to higher education. There is no legal requirement that one obtains the qualifications one receives on completion of the courses to perform work as a certain type of tradesperson in Australia. There is no professional or trade association that imposes the qualifications one obtains on completion of your courses as a requirement for beginning work as a certain type of tradesperson in Australia. The entity, an industry association for companies that sell certain sorts of products, recommends tradespeople be suitably qualified but they do not make this mandatory. You stated that the entity's clients (which include its members) make the qualifications mandatory (eg certain written standards). The written standards set out standards for certain types of business operations. This standard was created by a certain government department. There is also another set of standards, which sets out standards for certain operations. This standard was created by the entity. The entity is an industry association; not a professional association. You have not referred to any professional or trade associations in the information you have provided for this ruling. Your courses are available to adults in the general community. The courses are not provided just to your employees. Sometimes the courses are provided at the request of an employer to the employees of that employer. The courses are not provided to your members (shareholders). Sometimes the courses are provided at the request of an organisation to the members of that organisation. The courses are not provided by way of private tuition. You are not listed in Division 16 of the Higher Education Support Act 2003 (HESA). You are not funded by the government on the basis that you are a provider of Adult and Community Education courses. You are not recognised by a State or Territory training authority as a provider of Adult and Community Education courses. You are not a non-profit body.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1) | 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 | A New Tax System (Goods and Services Tax) Act 1999 section 38-85 | 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: Your courses are not GST-free education courses. GST is payable on your supplies of the courses because: · you supply the courses for consideration · you supply the courses in the course or furtherance of an enterprise that you carry on · these supplies are connected with Australia · you are registered for GST, and · your supplies of the courses are not GST-free or input taxed. | Detailed Reasoning - Detailed reasoning: GST is payable by you where you make a taxable supply. You make a taxable supply where you satisfy the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), which 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) In your case, you satisfy the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. That is, you supply courses for consideration and you make these supplies in the course or furtherance of an enterprise that you carry on. Additionally, these supplies are connected with Australia and you are registered for GST. There are no provisions in the GST Act under which your supplies of the courses are input taxed. Therefore, what remains to be determined is whether your supplies of the courses are GST-free. In accordance with paragraph 38-85(a) of the GST Act a supply of an education course is a GST-free supply. Education course is defined in section 195-1 of the GST Act. The definition lists various types of education courses, including: · tertiary courses · professional or trade courses, and · adult and community education courses The other types of education course are not relevant to this case. | Detailed Reasoning - Tertiary course: Section 195-1 of the GST Act defines tertiary course as: (a) a course of study or instruction that is a tertiary course determined by the *Education 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 Education Minister has determined is a tertiary course for the purposes of this Act. A determination has been made under paragraph (a) of the definition of tertiary course. That determination provides that vocational education and training programs provided by RTO and higher education institutions are tertiary courses. You are providing vocational education and training programs. You are not an RTO You are not a higher education institution as defined in the determination because you were not established by the government as a higher education institution and you are not registered or taken to be registered by TEQSA as a higher education provider. You are not taken to be registered by TEQSA as a higher education provider because you have not been registered under a State or Territory law relating to higher education. Therefore, your courses are not tertiary courses under paragraph (a) of the definition of tertiary course. Your courses are not Masters or Doctoral level courses. Therefore, your courses are not tertiary courses under paragraph (aa) of the definition of tertiary course. A determination has been made under paragraph (b) of the definition of tertiary course. This determination is for flying courses. Therefore, it is not relevant to this case. Hence, your courses are not tertiary courses. | Detailed Reasoning - Professional or trade course: Section 195-1 of the GST Act defines professional or trade course. It states: professional or trade course means a course leading to a qualification that is an *essential prerequisite: (a) for entry to a particular profession or trade in Australia; or (b) to commence the practice of (but not to maintain the practice of) a profession or trade in Australia. Essential prerequisite' is defined in section 195-1 of the GST Act, which states: essential prerequisite : a qualification is an essential prerequisite in relation to the entry to, or the commencement of the practice of, a particular profession or trade if the qualification is imposed: (a) by or under an *industrial instrument; or (b) if there is no industrial instrument for that profession or trade but there is a professional or trade association that has uniform national requirements relating to the entry to, or the commencement of the practice of, the profession or trade concerned by that association; or (c) if neither paragraph (a) nor (b) applies but there is a professional or trade association in a State or Territory that has requirements relating to the entry to, or the commencement of the practice of, the profession or trade concerned by that association. An 'industrial instrument' is defined in section 195-1 of the GST Act as having the meaning given by section 995-1 of the Income Tax Assessment Act 1997 ('ITAA 1997'), and in accordance with that income tax provision, an industrial instrument includes an Australian law. Under section 995-1 of the ITAA 1997, 'Australian law' includes a State law. Your courses lead to qualifications. Paragraphs 48 and 49 of GSTR 2003/1 explain the essential prerequisite requirement. They state: 48. 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. This necessarily requires the imposition of penalties or sanctions if a person enters into, or commences the practice of, the profession or trade without the relevant qualification. 49. A qualification that is imposed for reasons other than for entry to, or to commence the practice of, a profession or trade, is not an essential prerequisite for the purposes of a professional or trade course. Similarly, a qualification required by an employer or group of employers, but which is not imposed by an industrial instrument, or a professional or trade association at either the national level, or State or Territory level will not be an essential prerequisite. Based on the information provided and our research, one can enter into, and commence the practice of, the specific trade in Australia without having a trade qualification. This would be the case even if it was mandatory to have qualifications to do some (but not all) types of work or to do relevant work at a more advanced level. There is no legal requirement or professional or trade association that makes it absolutely mandatory for a person to have a relevant qualification in order to work as a tradesperson or carry on business in this field in Australia. You referred to the entity and the entity. These are industry associations; not professional or trade associations. Additionally, you advised that the entity recommends that tradespeople be suitably trained, but that they do not make this mandatory. You have not referred to any professional or trade associations. Where employers require people they hire to have a relevant qualification, this is not relevant for the purposes of the definition of professional or trade course in the GST Act, because employers are not professional or trade associations. Hence, your courses are not professional or trade courses. | Detailed Reasoning - Adult and Community Education courses: Section 195-1 of the GST Act defines adult and community education course as: 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 *Education 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 *Education Minister to be an adult and community education course. Higher education institution means an entity that is a higher education provider as defined in section 16-1 of the HESA. A higher education provider is a body corporate that is approved or taken to be approved under Division 16 of the HESA. Entities taken to be approved under Division 16 of the HESA are listed in that Division. You are not listed in that Division. Higher education provider also includes a body corporate that is approved by the Minister under section 16-25 of the HESA. In accordance with section 16-27 of the HESA, the Minister must not approve a body corporate as a higher education provider unless the body is a *registered higher education provider. Registered higher education providers are entities that are registered by TEQSA as higher education providers. You are not registered by TEQSA as a higher education provider. You are also not taken to be registered by TEQSA as a higher education provider. Therefore, you would not be a higher education provider for the purposes of the definition of adult and community education course in section 195-1 of the GST Act. A determination has been made under paragraph (b) of the definition of adult and community education course. The determination specifies that courses supplied by non-profit bodies could potentially be adult and community education courses. You are not a non-profit body. As you are not one of the types of entities set out in paragraph (a) of the definition of adult and community education course or a non-profit body, your courses are not adult and community education courses. There are no provisions of the GST Act under which your supplies of the courses are GST-free. Therefore, as all of the requirements of section 9-5 of the GST Act are satisfied, your supplies of the courses are taxable supplies. Hence, GST is payable on your supplies of the courses.