Private ruling: GST and education – professional or trade course
Date of advice: 29 November 2018
Published: March 2019

Ruling: Q1: Is your course a GST-free supply under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No

Relevant facts and circumstances: You are registered for GST. You provide courses which lead to a qualification in an allied health area. All the skills and knowledge required to practice in the area are covered in the course. The qualification is evidenced by a course certificate which is required to practice in the area. Insurance providers offer indemnity insurance for practitioners in the area, as one modality of allied health. The course certificate may be used by a person to work as an employee in a private practice or to run their own practice on a self-employed basis. You have a professional code of conduct and the authority to remove a qualification and prevent a person from practicing in the field. The qualification is not imposed by or under an industrial instrument or by a professional or trade association. There is no registered professional or trade association in Australia related to the occupation or field.

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 s ection 195-1

Reasons for decision: Summary: Division 38 of the GST Act outlines supplies that are GST-free. Under paragraph 38-85(a) 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 professional or trade courses for the purposes of the GST Act if they lead to a qualification that is essential prerequisite for entry to, or to commence the practice of, a particular profession or trade. The definition of ‘essential prerequisite’ in section 195-1 of the GST Act is as follows: | Detailed Reasoning - 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. 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 48 of GSTR 2003/1 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. 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. | Detailed Reasoning - Trade or professional association: There is no registered professional or trade association for your type of practice. While you have some similar de facto functions to those of a professional or trade association, such as setting the required qualification to practice, maintaining a member’s directory and creating and imposing a code of conduct, you yourself are not a professional or trade association in a formal or legal sense. A professional or trade association would normally be a separate, independent, non-profit body registered with ASIC or the relevant state or territory-level authority (such as a department of fair trading). Members (for example) would normally have a right to vote at the association’s meetings. While the qualification from you is mandatory in a practical sense in order to work in the field, it is not imposed or endorsed under an industrial instrument, or by a professional or trade association registered with a state, territory or national authority. Therefore the qualification is neither an ‘essential prerequisite’ nor a ‘professional or trade course’, as defined in the GST Act and is not a GST-free ‘education course’ for the purposes of the GST Act.