Private ruling: Education
Published: April 2014

Ruling: Q1: Is the supply of teaching services by you a taxable supply? | A1: Yes, the supply of teaching services is a taxable supply. | Q2: Is the supply of administrative services by you a taxable supply? | A2: Yes, the supply of administrative services is a taxable supply.

Relevant facts and circumstances: You are an entity which provides classes to the public. You are not a Registered Training Organisation (RTO). You have entered into an arrangement with another entity, who is an RTO. Both you and the other entity are registered for GST. The other entity is in the business of supplying GST-free training courses. You have entered into an Agreement with the other entity for the 2014 calendar year in which you will deliver parts of these courses on behalf of the other entity, as well as provide some administrative services to the other entity. The Agreement documents the obligations between both parties. The other entity's obligations are summarised as follows: • Provide education, training and assessment. • Meet all RTO compliance requirements. • Provide all RTO resource management requirements • Supply all product requirements for the delivery and assessment. Your obligations are to: • Provide all marketing and promotion. • Provide education, training and assessments for the parts of the course you deliver. • Provide a suitable class room area. • Supply all product requirements for the delivery and assessment. The students pay their fees directly to the other entity, and are invoiced by the other entity. You issue an invoice to the other entity for the teaching and administrative services you have provided and the other entity will pay you on a weekly basis. However, this is not documented in the Agreement. You have advised that a new Agreement will be prepared to include this arrangement in the content. You have advised that the administrative services you provide include, but are not limited to the promotion of the courses and the recruitment of students. You have also advised that the teaching services you provide include, but are not limited to the provision of learning and assessment materials, use of training facilities and equipment, training delivery, student assessments and issuing of certificates to successful students.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 7-1 | Section 9-5 | Section 9-40 | Section 38-85

Reasons for decision: Summary: The supply of both the teaching services and administrative services by you is a taxable supply. | Detailed Reasoning - Detailed reasoning: Section 7-1 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act) provides that you should pay GST on any taxable supply you make. Under section 9-5 of the GST Act you make a taxable supply when: • you make a supply for consideration, • the supply is made in the course or furtherance of an enterprise that you carry on, • the supply is connected with Australia, and • you are registered for GST. However, a supply is not a taxable supply to the extent that it is GST-free or input taxed. In facilitating the provision of education courses by the other entity to the end users, you are supplying two services to the other entity. One of these services is that of administrative services, and the other is teaching services. Your supply of the teaching services and the marketing services to the other entity is made in the course of furtherance of an enterprise that you carry on. The services are connected with Australia, you are registered for GST and you receive consideration for these services. Therefore, all of the requirements of section 9-5 have been met, and you are making a taxable supply. You contend that, because the courses provided by the other entity are GST-free, your supply of administrative services and teaching services is also GST free. We disagree with this contention. The supply of certain education courses is GST-free under section 38-85 of the GST Act. However, what you supply to the other entity under the agreement that you have with the other entity is not a supply of an education course. It is the supply of administrative services and teaching services which is not GST-free nor input taxed under any other provision of the GST Act. Section 9-40 of the GST Act provides that you must pay the GST liability on any taxable supply that you make. Therefore, you are required to pay the relevant amount of GST on the taxable supply of your administrative services and teaching services that you make to the other entity. You have advised us that the other entity is treating these courses as GST-free. Although we have not analysed this contention what we can advise you is that where all the requirements under 38-85 of the GST Act are satisfied, a supply of an accredited course made by a RTO (which may incorporate your teachings) may be treated as the supply of a GST-free tertiary education course.