Private ruling: GST and supply of professional course
Published: July 2012

Ruling: Q1: Is the Australian entity required to charge the goods and services tax (GST) on the supply of a professional course they make to registered individuals of a specific profession? | A1: Yes, the Australian entity is required to charge GST on the supply of professional course they make to registered individuals of a specific profession as the supply is a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act).


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 38-85; and | A New Tax System (Goods and Services Tax) Act 1999 section 195-1.

Reasons for decision: Summary: GST is payable on a taxable supply. Under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) a supply is a taxable supply if: · you make the supply for consideration; · the supply is made in the course of an enterprise that you carry on; · the supply is connected with Australia; and · you are registered or required to be registered for GST. However, the supply is not a taxable supply to the extent that the supply is GST-free or input taxed. From the information received, you satisfy paragraphs 9-5(a) to 9(d) of the GST Act when you supply the professional course as: · you make the supply for consideration; · the supply is made in the course of an enterprise (business) that you carry on; · the supply is connected with Australia as it is done through a business that you carry on in Australia; and · you are registered for GST. However your supply of professional course is not a taxable supply to the extent that it is GST-free or input taxed. There is no provision under the GST Act that will make your supply of professional course input taxed. The next step is to consider whether the supply is GST-free. GST-free Relevant to your supply of professional course is section 38-85 of the GST Act which provides that a supply of education course is GST-free. The term education course is defined in the GST Act to include a number of different courses that are also defined in the GST Act. In particular an education course is defined to include, amongst other things a tertiary course, a professional or trade course and an Adult and Community Education (ACE) course. Tertiary course To be GST-free as a tertiary course, a course must satisfy the Education Minister's determination under subsection 5D(1) of the Student Assistance Act 1973 . The determination provides that an accredited vocational education and training program delivered by an RTO is a tertiary course. From the facts given, the professional course is not a course as specified in the Education Minster's Determination No 2002/1 and therefore does not come within the definition of a GST-free tertiary course though it is delivered by an RTO. The supply of professional course is not GST-free as a tertiary course. Professional or Trade courses To be GST-free as a professional or trade course, a course must: · lead to a qualification; and · that qualification must be an essential prerequisite for entry to, or to commence the practice of a profession or trade in Australia. Goods and Services Tax Ruling GSTR 2003/1 (available at www.ato.gov.au) provides guidance on what constitutes a supply of a course in the context of a professional or trade course. 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 (paragraph 48 of GSTR 2003/1). 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 (paragraph 49 of GSTR 2003/1). A course that leads to a qualification that is an essential prerequisite for maintaining or progressing within the practice of a profession or trade is not a professional or trade course (paragraph 15 of GSTR 2003/1). Paragraph 99 of GSTR 2003/1 explains that maintaining the practice of a profession or trade includes such things as: · undertaking continuing professional development; · re-licensing; · re-accreditation; · renewal of annual practising certificates; and · refresher courses. The purpose of your professional course is to enable the registered individuals continue practising their duty in that profession. Since the professional course leads to a qualification that is an essential prerequisite for maintaining the individual's profession, it does not come within the definition of a professional or trade course. The supply of professional course is therefore not GST-free as a professional or trade course. ACE course To be GST-free as an ACE course, a course must: · be likely to add to the employment related skills of people undertaking the course; and · be of a kind determined by the Education Minister to be an ACE course; and · be provided by, or on behalf of, a body that is recognised or funded as a provider of ACE courses or a body corporate operating on a non-for-profit basis that has not been refused recognition or disqualified by a state or territory authority as a provider of ACE courses for failing to meet or maintain the standards required by that authority. To satisfy the definition of an ACE course, the course must meet the requirements of the Education Minister's Determination A New Tax System (Goods and Services Tax) (Adult and Community Education Courses) Determination 2000. At paragraph 5(2) of the determination, the Education Minister states that an adult and community education course must: · not be any other education course defined in section 195-1 of the GST Act; and · be available to adults in the general community; and · not be provided by or at the request of an employer to employees of that employer; and · not be provided by or at the request of an organisation to members of that organisation, except an organisation for which membership is open to adults in the general community; and · not be a course that is provided by way of private tuition to an individual. From the information given, the professional course is aimed and targeted to a specific group in the community (registered individuals) rather than at adults in the general community. Further you are providing this course for profit and this ongoing professional development course is not being provided by or on behalf of a body that is recognised or funded as a provider of an ACE course. Accordingly, the professional course does not satisfy all the requirements for an ACE course and is therefore not GST-free as an ACE course. Accordingly, on the facts provided, the supply of the professional course satisfies all the requirements of a taxable supply and as such GST is payable on the supply.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You are an approved provider of professional courses for registered individuals of a specific profession ('registered individuals') and are registered for the GST. | You own a registered training organisation and you offer these professional courses nationally. | The registered individuals are mandated to complete annual professional development to hold their legal status of registration for that profession. | You offer these ongoing professional development courses only to registered individuals and these courses are offered in a classroom learning environment or by distance education. The registered individuals receive recognition of their completion of the mandatory required hours after completing the course. | Information about these professional development courses is displayed on your webpage and promotional emails and letters are also distributed to the registered individuals. | You operate this activity for profit and this ongoing professional development courses are not being provided by or on behalf of a body that is recognised or funded as a provider of an Adult and Community Education (ACE) course.