Private ruling: GST and education course
Date of advice: 10 April 2024
Published: 20 May 2024
Ruling period: All tax periods ending on or after DD MM 20YY
Date scheme commenced: DD MM 20YY

Ruling: Q1: Are your supplies of a specified course, which was formerly accredited under the Australian Skills Quality Authority (ASQA) framework, GST-free under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)? | A1: No. Your supplies of a specified course, which is no longer accredited under the ASQA framework, is not the supply of a GST-free education course under section 38-85 of the GST Act. Your supplies of these specified courses are taxable supplies under section 9-5 of the GST Act.

Relevant facts and circumstances: You are registered for goods and services tax. You do not operate on a not-for-profit basis. You have been supplying courses to students since 20YY. You have been accredited with the Australian Skills Quality Authority (ASQA) as a Registered Training Organisation (RTO) but recently decided to no longer have this accreditation. The name and course code of the ASQA accredited course you provided which is no longer accredited was specified. The status of this course on the training.gov.au website under your RTO number is shown as 'not current'. There are no differences between the formerly accredited course and the one being provided now. You do not receive funding from a State or Territory to provide the course. You are not a member of any industry association nor affiliated with any other Australian associations. Students may enrol online at any time for the course and it is available to whoever wants to enrol. The objectives of the course were provided. You assert that participation in the course will lead to employment. The specified course curriculum is outlined on your website. Various assessments are required. The course is not provided at the request of an organisation to the members of that organisation. It is widely marketed across a variety of media platforms. Completion of the course leads to non-accredited qualifications. The certificate that is issued after completion of the course is accepted by employers in Australia, USA, UK, NZ and many other countries as suitable evidence that a person has successfully completed the relevant course. The specified course is not an essential pre-requisite for entry to, or to commence the practice of a profession or trade in Australia. It is not imposed under an "industrial instrument", by a professional or trade association that has uniform national requirements for entry into that profession or trade; nor is it imposed by a professional or trade association in a State or Territory that has requirements relating to the entry to, or the commencement of practice of, the relevant profession or trade. You are not recognised by a State or Territory authority to conduct adult and community education courses.

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

Reasons for decision: Summary: GST is payable on a taxable supply. Section 9-5 of the GST Act 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 the indirect tax zone (Australia); and (d) you are registered or required to be registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. Your supplies of a specified course to students in Australia will be taxable if all the requirements in section 9-5 of the GST Act are satisfied. The supplies of a specified course by you to the students in Australia satisfy paragraphs 9-5(a) to 9-5(d) of the GST Act, as follows: (a) you make the supplies of the course to students in return for consideration by way of payment; (b) you make the supply in the course of your business; (c) the services (courses) are performed/provided in Australia or made through an enterprise that you carry on in Australia (and therefore the supply is connected with Australia); and (d) you are registered for GST. However, section 9-5 of the GST Act also provides that the supply is not taxable to the extent that it is GST-free or input taxed. Your supplies of a specified course to the students in Australia do not satisfy the input taxed provisions under the GST Act. However, the GST-free provisions need to be considered. | Detailed Reasoning - GST-free: A supply of an education course is GST-free under section 38-85 of the GST Act. Relevant to your circumstances, an education course is defined in section 195-1 of the GST Act to include, among other things: • a tertiary course; • a professional or trade course; and • an adult and community education (ACE) course. | Detailed Reasoning - Tertiary course: Section 195-1 of the GST Act defines tertiary course to mean: (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 this 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 of the purposes of this Act. The Student Assistance (Education Institutions and Courses) Determination 2019 (SA Determination) has been made under subsections 3(1) and 5D(1) of the Student Assistance Act 1973 and defines tertiary courses as follows: | Detailed Reasoning - 11 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 (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; or (c) to which section 12 of this instrument applies. (2) Without limiting subsection (1), a course that meets the requirements of paragraph (1)(a), (b) or (c) and is not a full-time course is a tertiary course for the purposes of section 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 and 5 which 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 The SA Determination provides, under item 4 of the table in Schedule 2, that a VET course that is not a VET course specified in item 5 (which specifies VET courses at the diploma, advanced diploma, graduate certificate and graduate diploma level) is a tertiary course where the educational institution providing it is a Registered Training Organisation. VET course is defined in section 5 of the SA Determination to have the meaning that the term is given in section 3 of the National Vocational Education and Training Regulator Act 2011 . Section 3 of the National Vocational Education and Training Regulator Act 2011 defines VET course to mean: (a) the units of competency of a training package that is endorsed by the Ministerial Council; or (b) the units of competency or modules of a VET accredited course ; or (c) the units of competency or modules of a course accredited by a VET Regulator of a non-referring State. VET accredited course is defined in section 3 of the National Vocational Education and Training Regulator Act 2011 , to mean: (a) if the National VET Regulator has delegated to a body the function of accrediting a course-a course accredited by the body under the delegation; or (b) in any other case-a course accredited by the National VET Regulator. National VET Regulator is defined in section 3 of the National Vocational Education and Training Regulator Act 2011 , to mean the person appointed under subsection 162(1) of that Act to the position of the National Vocational Education and Training Regulator referred to in subsection 155(1) of that Act. Through the operation of sections 155 and 162 of the National Vocational Education and Training Regulator Act 2011 , the Chief Executive Officer of the Australian Skills Quality Authority (ASQA) is the National VET Regulator. Although the specified course was previously a GST-free tertiary education course, as the course is no longer accredited by the ASQA, it no longer satisfies the requirements to be a tertiary course. However, the supply of the course may still be GST-free under section 38-85 of the GST Act if it meets the requirements to be a professional or trade course or an adult and community education course. | Detailed Reasoning - Professional or trade course: A professional or trade course (PT course) is defined in section 195-1 of the GST Act as: 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 as follows: '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.' Industrial instrument is defined in section 995-1 of the Income Tax Assessment Act 1997 . The Goods and Service Tax Ruling, Goods and services tax: supplies that are GST-free as professional trade courses (GSTR 2003/1) explains the meaning of 'professional or trade course' in section 195-1 of the GST Act. Paragraph 13 of GSTR 2003/1 states that a reference in the Ruling to a 'qualification that is an essential prerequisite' is a reference to a qualification that is an essential prerequisite for entry to, or to commence the practice of, a particular profession or trade'. Paragraph 16 of GSTR 2003/1 explains that this means if a person cannot enter, or commence practising in, a profession or trade without a particular qualification, a course that leads to that qualification is a professional or trade course. To decide whether the course being supplied is a professional or trade course, paragraph 17 of GSTR 2003/1 provides that you need to ask whether there is a sufficiently direct link between the course, and a qualification that is recognised and imposed for admission to a particular profession or trade. If a sufficiently direct link does exist, then the course is a professional or trade course. You advised that the specified course you provide is not an essential pre-requisite for entry to, or to commence the practice of a profession or trade in Australia. It is not imposed under an "industrial instrument", by a professional or trade association that has uniform national requirements for entry into that profession or trade; nor is it imposed by a professional or trade association in a State or Territory that has requirements relating to the entry to, or the commencement of practice of, the relevant profession or trade. Accordingly, the course does not satisfy the definition of a professional or trade course in section 195-1 of the GST Act. | Detailed Reasoning - Adult and community education course: 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. For a course to satisfy the definition of an ACE course, the first requirement to be satisfied is that it must be a course of study or instruction that is likely to add to the employment related skills of people undertaking the course. The Commissioner's view in regard to an ACE course is outlined in the 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). Paragraphs 15 and 16 of GSTR 2000/27 state: | 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. (b) 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. (c) Whether the course is similar to an accredited vocational education and training (VET) program. (d) 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. (e) The outcomes of the course. (f) 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". Based on the facts, the specified course you supply is likely to add to the employment related skills of people undertaking the course. For instance, it is our view that the marketing material 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. Under subsection 5(1) of the ACE Determination, for paragraph (a) of the definition of ACE course in section 195-1 of the GST Act, a course of study or instruction of the kind mentioned in subsection 5(2) of the A New Tax System (Goods and Services Tax) (Adult and Community Education Courses) Determination 2016 (ACE Determination) is determined to be an ACE course. Subsection 5(2) of the ACE Determination states: 5(2) For subsection 5(1) of this determination, the course of study or instruction must: (a) not be a course mentioned, in paragraph (a), (b), (c), (d), (f), (h), (i), (j) or (k) of the definition of education course in section 195-1 of the Act; and (b) be a course that is available to adults in the general community; and (c) not be a course that is provided by, or at the request of an employer to the employees of that employer; and (d) not be a course that is provided by, or at the request of an organisation to the members of that organisation, except an organisation for which membership is open to adults in the general community; and (e) not be a course that is provided by way of private tuition to an individual. The specified course is not a tertiary course, professional or trade course or any of the other courses referred to in paragraph 5(2)(a) in the ACE Determination. Therefore, paragraph 5(2)(a) of the ACE Determination is satisfied. Additionally, the course is available to adults in the general community, is not provided by or at the request of an employer to employees of that employer, is not a course provided by or at the request of an organisation to the members of that organisation and is not a course that is provided by way of private tuition. Therefore, all the requirements of subsection 5(2) of the ACE Determination are satisfied and the course is determined to be an ACE course. Is the course provided by a higher education institution, a body recognised by a State or Territory authority or a body that is funded by a State or Territory? | Detailed Reasoning - (i) Higher education institution?: Higher education institution is defined in section 195-1 of the GST Act to mean an entity that is a higher education provider as defined in section 16-1 of the Higher Education Support Act 2003 . Section 16-1 of the Higher Education Support Act 2003 defines higher education provider as: 16-1 Meaning of higher education provider (1) A higher education provider is a body corporate that is approved under this Division. (2) Despite subsection (1), a body other than a body corporate may be approved under this Division as a higher education provider if the body is covered by an exemption under subsection (3). (3) The Minister may, in writing, exempt a body for the purposes of this section if the body is established by or under a law of the Commonwealth, a State or a Territory. (4) If the Minister exempts a body under subsection (3), references in this Act, other than in this section, to a body corporate are taken to include the body. (5) An exemption given under this section is not a legislative instrument. 16-5 When a body becomes or ceases to be a higher education provider (1) A listed provider is taken to be approved as a higher education provider from the commencement of this Act. (1A) A Table C provider is taken to be approved as a higher education provider from the commencement of the provision that included the provider in Table C in section 16-22. (2) A body corporate: (a) that is not a listed provider or a Table C provider; or (b) that is a listed provider or a Table C provider that has previously ceased to be a higher education provider; becomes a provider if approved by the Minister under section 16-25. (3) A higher education provider ceases to be a provider if the provider's approval is revoked or suspended under Division 22 or the notice of the provider's approval ceases to have effect under Part 2 of Chapter 3 (parliamentary scrutiny of legislative instruments) of the Legislation Act 2003 . You are not a listed provider under Subdivision 16-B of the Higher Education Support Act 2003 . Accordingly, you are not a higher education provider under the Higher Education Support Act 2003 . Therefore, you do not satisfy the definition of higher education institution in section 195-1 of the GST Act. (ii) Provided by or on behalf of a body recognised by a State or Territory authority, as a provider of courses of a kind described in the determination? You advised that you are not recognised by a State or Territory authority as a provider of ACE courses nor do you provide courses on behalf of such a body. Accordingly, this requirement is not satisfied. | Detailed Reasoning - (iii) A body funded by a State or Territory on the basis that it is a provider of courses of a kind described in the determination?: You advised that you do not receive funding by a State or Territory for providing ACE courses nor do you provide the courses on behalf of such a funded body. Accordingly, this requirement is not satisfied. Since you are not one of the specified bodies who can provide the course, your course does not satisfy paragraph (a) of the definition of an ACE course in section 195-1 of the GST Act. | Detailed Reasoning - Paragraph (b) of the definition of ACE course in section 195-1 of the GST Act: Pursuant to subsection 6(1) of the ACE Determination, for paragraph (b) of the definition of adult and community education course in section 195-1 of the GST Act, a course of study or instruction mentioned in subsection 6(2) of the ACE Determination is determined to be an adult and community education course. Subsection 6(2) of the ACE Determination provides: 6(2) For subsection 6(1) of this determination, the course of study or instruction must: (a) be a course of the kind described in subsection 5(2) of this determination; and (b) be provided by, or on behalf, of a body that: (i) is a body corporate that operates on a not-for-profit basis; and (ii) has not been refused recognition, or disqualified, by a State or Territory authority as a provider of courses of the kind described in subsection 5(2) of this determination on the basis of failing to meet or maintain the standards required by that authority. As explained above, the course is of the kind described in subsection 5(2) of the ACE Determination. However, paragraph (b) of the definition of ACE course in section 195-1 of the GST Act is not satisfied in this case as you do not operate on a not-for-profit basis. Since neither paragraph (a) nor (b) of the definition of ACE course in section 195-1 of the GST Act are satisfied, your supply of the specified course is not the supply of an ACE course. | Detailed Reasoning - Conclusion: Since your supplies of the specified course, which is no longer accredited with ASQA, does not satisfy the requirements to be a tertiary course, professional or trade course or ACE course, the supply of these courses do not meet the requirements for being the supply of a GST-free education course under section 38-85 of the GST Act. Therefore, your supplies of the specified course are taxable supplies under section 9-5 of the GST Act.