Private ruling: GST and scholarship funding
Date of advice: 30 April 2019
Published: June 2019
Ruling period: 1 January 2018 till 31 December 2021
Date scheme commenced: 1 January 2018

Ruling: Q1: Is the payment made by Entity X to an Education Provider under the Scholarship Funding Agreement subject to GST? | A1: No. The payment made by Entity X to an Education Provider under the Scholarship Funding Agreement is not subject to GST. As the payment by Entity X is not made in connection with, in response to or for the inducement of a supply by the Education Provider, the payment is not subject to GST.

Relevant facts and circumstances: Entity X is a not-for-profit organisation that offers Secondary, Transition and Tertiary education scholarships for students from remote and regional communities. Entity X is registered for GST. Entity X receives grant funding from a Government Entity and then awards scholarships to students enrolled with an Education Provider. Entity X operates a school led model and as such makes the scholarship payments to the Education Providers twice a year in line with semester one and two. Entity X enters into an agreement with an Education Provider known as the Scholarship Funding Agreement. It is under this agreement that Entity X makes the scholarship payment (the Funding). A copy of the Scholarship Funding Agreement between Entity X and an Education Provider has been provided as part of this ruling request. This agreement is representative of the Scholarship Funding Agreement Entity X enters into with other Education Providers. The Scholarship Funding Agreement provides that the Education Provider must carry out the “Project” in the manner specified. In addition the Funding (i.e. the scholarship payment) must only be expended for the Project. The expenses that are eligible for the Funding by the nominated/eligible student recipient include: ● School fees and tuition ● Board and accommodation ● Uniforms ● Text books and stationary ● IT equipment ● School leadership and sporting camps/tours ● Touring, mentors and counsellors ● Personal expenses

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 11-5(b) | A New Tax System (Goods and Services Tax) Act 1999 11-5(c) | A New Tax System (Goods and Services Tax) Act 1999 9-5(a) | A New Tax System (Goods and Services Tax) Act 1999 9-15