Private ruling: GST and secondary and tertiary courses
Date of advice: 14 September 2018
Published: November 2018

Ruling: Q1: 1. Is the training you provide GST-free as secondary or tertiary courses? | A1: No | Q2: 2. Are the enrolments fees that you pay on behalf of your students (the disbursement) and then pass on the costs to the students (the reimbursement) considered part of your gross turnover? | A2: No

Relevant facts and circumstances: You provide tuition to individuals. You are not a registered training organisation. You are not a secondary or tertiary education institution.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 (GST Act) sections 9-5, 9-10, 9-20, 23-5 & 38-85

Reasons for decision: Summary: 1. Section 38-85 of the GST Act provides for the supply of an education course to be GST-free. The term education course is defined in section 195-1 of the GST Act and includes a number of different types of courses. | Detailed Reasoning - Secondary course: Section 195-1 of the GST Act defines secondary course to mean: (a) a course of study or instruction that is a secondary course determined by the Education Minister under subsection 5D(1) of the Student Assistance Act 1973 for the purposes of that Act; or (b) any other course of study or instruction that the Education Minister has determined is a secondary course for the purposes of this Act. Goods and services tax: supplies that are GST-free for pre-school, primary and secondary education courses GSTR 2000/30 helps to work out which supplies of pre-school, primary and secondary education courses and which supplies related to such education courses, are GST-free under Subdivision 38-C of the GST Act. Paragraph 24 of GSTR 2000/30 has been reproduced below: 24. Under the Education Minister's determination, a secondary course can be delivered by a recognised secondary school, a registered training organisation, a higher education institution or a special school. You are not an education institution as described above at paragraph 24 of GSTR 2000/30 as you are not a secondary school, an RTO, a higher education institution or a special school. The facts available do not indicate that you are acting as an agent for the educational institutions. Further, your supplies of tuition are considered to be privately made. Therefore, your supply will not satisfy the definition of a secondary course under section 38-85 of the GST Act and will not be GST-free. | 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 *Student Assistance 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 Student Assistance Minister has determined is a tertiary course for the purposes of this Act. Goods and services tax: supplies that are GST-free for tertiary education courses GSTR 2001/1 deals with supplies of tertiary courses that are GST-free under Subdivision 38-C of the GST Act. Paragraphs 13, 15A-17 of GSTR 2001/1 have been reproduced below: | Detailed Reasoning - Requirements specified in paragraph (a) of a 'tertiary course' as defined in the Act: 13. A tertiary course includes all tertiary courses covered by the determination issued by the Education Minister under the Student Assistance Act 1973 . This determination is also used to identify those courses that students must be undertaking to be eligible for income support as full-time students. The determination lists the type of course and types of educational institutions that can deliver the course. The eligibility of courses for the Student Assistance Act 1973 is reviewed periodically by the Education Minister. | Detailed Reasoning - Requirements specified in paragraph (aa) of a 'tertiary course' as defined in the Act: 15A. A tertiary course also includes 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. 15B. A higher education institution means an entity that is a higher education provider as defined in section 16-1 of the Higher Education Support Act 2003. A non-government higher education institution means an institution that is not a higher education institution and that is either established as a non-government higher education institution under a law of a State or Territory or is registered by a State or Territory higher education recognition authority. | Detailed Reasoning - Requirements specified in paragraph (b) of a 'tertiary course' of the Act - separate determination: 16. Paragraph (b) of the definition of a tertiary course allows the Education Minister to determine, independently of the requirement set out in paragraph (a), that a course is a tertiary course as defined in section 195-1. 17. A determination made by the Education Minister under paragraph (b) requires the unanimous agreement of the Standing Council for Federal Financial Relations under the Intergovernmental Agreement on Federal Financial Relations You are not an RTO. Further, you are not a higher education institution because you are not an institution that was established by a law of the Commonwealth, a State or a Territory as a higher education institution and you are not registered or taken to be registered as a higher education provider. The facts available do not indicate that you are acting as an agent for a tertiary institution. Therefore, your course is not a tertiary course under paragraph (a) (aa) an (b) of the definition of tertiary course in section 195-1 of the Act. Consequently, the tuition you provide is not GST-free. | Detailed Reasoning - Taxable supplies: Section 9-5 of the GST Act provides that you make a taxable supply if you make the supply for consideration; in the course or furtherance of an enterprise that you carry on; the supply is connected with Australia; and 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. There is no provision in the GST Act that makes the supply you make input taxed. You are currently not registered for GST and you informed us that your turnover is below the registration turnover threshold. Entities not registered or required to be registered for GST do not make taxable supplies and do not charge GST on their supplies. Please note that when your turnover meets or is above the GST registration turnover threshold of $75,000 you will need to register for GST and your supplies will be taxable. | Detailed Reasoning - Reasons for decision: 2. Goods and services tax (GSTR 200/37) is about agency relationships and the application of the law. Paragraph 49 of GSTR 2000/37 has been reproduced below: 49. If a disbursement is made by a solicitor and incurred in the solicitor's capacity as a paying agent for a particular client, then no GST is payable by the solicitor on the subsequent reimbursement by the client. This is because the goods or services to which the disbursement relates are supplied to the client, not to the solicitor, by a third party. Also, the reimbursement forms no part of the consideration payable by the client for the supply of services by the solicitor. However, if goods or services are supplied to the solicitor to enable the solicitor to perform services supplied to the client, GST is payable by the solicitor on any reimbursement by the client of expenses incurred on those goods or services, whether the reimbursement is separately itemised or included as part of the solicitor's overall fee. This is because the reimbursement is part of the consideration payable by the client for services supplied by the solicitor. In this case the example in paragraph 49 of GSTR 2000/37 is similar to the arrangement described in the facts. You in your capacity as paying agent for the students (principals) pay the enrolments on behalf of the students’ and are subsequently reimbursed by the students. We understand that in this case you are reimbursed the whole amount paid to the relevant entities and you are not out of pocket. The enrolment services to which the payment relates is supplied by the relevant entities to the students (principals), not to you as paying agent. Therefore, the amount paid by the students to you as paying agent is a reimbursement which forms no part of the consideration payable to you for your supply of agent’s services. Consequently, the reimbursed amounts are not considered part of your GST turnover.