Private ruling: Goods and services tax (GST) and educational courses
Published: August 2013

Ruling: Q1: Is GST payable on your supply of the courses? | A1: Yes. However, note that part of the tuition fee that a student pays which represents a payment for the issuing of the accreditation by the other education institution is not consideration for a supply that you make to the student.

Relevant facts and circumstances: You are registered for GST. You have developed, manage and deliver a number of courses under the auspices of the other education institution. The courses form part of the learning requirements for a specified certificate course. The courses in question cover some accredited competencies from a specified nationally accredited training package. Successful completion of the courses in question leads to credits in the specified certificate course. You are operating these training courses in conjunction with the other education institution because you are not an RTO. You recruit the students. Marketing of the course is done predominantly by you. Marketing is co-branded to show that the other education institution is underlying the accreditation. The training is delivered by an employee of yours at the other education institution's campus. You provided a copy of the information that you provide to the students on how to enrol with the other education institution, in which you advise the students to enrol with the other education institution in order to receive a result for the competencies delivered in the course and an industry recognised qualification. The other education institution is responsible for issuing a statement of attainment, communicating student results and conferring the appropriate award for the program. The other education institution sends these directly to you. You issue these with a cover letter to the student. You have provided sample copies of a statement of attainment and a transcript of results issued by the other education institution to a student. You stated that the other education institution has a contract with the students for issuing of the accreditation after you conduct assessment and deem the students competent. The students are required to enrol independently with the other education institution in order to obtain a result for an accredited competency. You see this as a contract between the student and the other education institution as: · The other education institution is taking the responsibility to comply with AQTF requirements to give a statement of attainment. · The students access the other education institution's internet link to complete the first stage of the enrolment process. Once this is completed, the other education institution generates an enrolment form linked to the relevant competencies being delivered and students sign this form. · This enrolment process acknowledges that the other education institution is a registered RTO that students can access vocational training and achieve a result that is nationally recognised. You also provided copies of the other education institution's forms that a student needs to complete when enrolling at the other education institution as well as a copy of a confirmation of enrolment advice issued by the other education institution to the student. All student results are recorded by the other education institution as per AQTF requirements. The other education institution maintains the electronic student management system. Once the students have successfully completed the course, you issue them with a certificate of participation and an industry recognised qualification. The industry recognised qualification identifies that the person has participated in the course and lists the competencies that have been completed. You provided a copy of the industry recognised qualification. The other education institution's logo also appears on the industry recognised qualification. This qualification is not a permit that one needs to be legally employed or licensed to work in the specified industry. The students do not have to undertake the courses in question in order to be legally employed or licensed to work in certain occupations or a certain industry or industries. These courses are recognised by certain organisations as being best practice for dealing with specified situations. Certain organisations recommend in their contractual agreements that personnel undertake this training or an equivalent course. There is no professional or trade association or law that imposes the qualifications as a requirement for entry to, or to commence the practice of, a particular profession or trade in Australia. You stated that you set the course fee. You have a contract with the student in the form of a tax invoice and booking form for a specified amount plus GST (the specified amount) for the management and delivery of the accredited course. The other education institution charges you certain fees per course participant. You provided us with a sample of a tax invoice that the other education institution has issued to you. The invoice shows a 'tuition fee' of a specified amount (GST exclusive) per participant for the course .You advised that the 'tuition fee' is an auspice fee. You stated that the auspice fee is charged by the other education institution for issuing accreditation and your use of their facilities. The other education institution has treated this charge as entirely GST-free. The invoice also shows that the other education institution charges a 'catering fee' of a specified amount (GST inclusive) per student and the trainer per day. You stated that the students cannot achieve a nationally recognised accredited competency without paying the 'qualification' fee. They enrol in this course to meet internal job environmental audit processes and attend this nationally accredited course to achieve competence. You collect the other education institution's fees and pay it directly on their behalf. You are contractually liable to pay the other education institution the total price shown on the tax invoice. If the other education institution's fees are not paid, the other education institution will pursue you for payment. You issue an invoice to each student for the specified amount for the supply of the course. The amount that you charge each student covers course delivery, materials, the other education institution's tuition fee and the other education institution's catering fee. The students pay the total amount to you. You retain the fees you collect from the students apart from the other education institution's tuition fees and catering fees that you pass on to the other education institution. The other education institution does not make any payment to you and you do not issue an invoice to the other education institution. You are not an institution that was established by a law of the Commonwealth, a State or a Territory as a higher education institution. You are not registered by a tertiary education agency as a higher education provider. You have never been registered under a State or Territory law relating to higher education as a higher education provider. You are not recognised by a State or Territory training authority as a provider of Adult and Community Education courses. You are not funded by the government on the basis that you are a provider of Adult and Community Education courses. You are not listed in Division 16 of the Higher Education Support Act 2003 (HESA). You are not a non-profit body. You have provided a copy of the agreement between you and the other education institution (the Agreement). The Agreement commenced on a certain date and ends on a certain date. Under the Agreement, you are required to · complete student forms and provide certain details to the other education institution · provide the appropriate course material for all students and contractor staff attending the campus · request authorisation from the other education institution's marketing department prior to the use of the other education institution's logo on any qualifications, documents or web pages · request authorisation from the other education institution's marketing department prior to the use of the other education institution's logo for any co-branded qualifications, documents or web pages. Under the Agreement, the other education institution is required to provide: · access to certain facilities and equipment · access to certain premises · a statement of attainment to students on the day of completing their training · storage · safety training material for classroom delivery to all students and training staff · induction training to your staff · an invoice to you on a monthly basis for catering and tuition fees incurred by you · assistance to you to seek authorisation from the other education institution's marketing department for the use of the other education institution's logo on qualifications, documents, or web pages · assistance to you to seek authority from the other education institution's marketing department to co-brand documents for the use on any qualifications, documents or web pages. Under the Agreement you are required to take out and maintain the following insurance policies: · a comprehensive public liability policy to cover all sums which you may become legally liable to pay as compensation for death of, or bodily injury (including disease or illness) to any person and loss of, or damage to, property, arising out of, or in connection with, this agreement. · insurance in respect of all claims and liabilities arising, whether at common law or under statute, relating to workers' compensation or employer's liability, from any accident or injury to any person employed by you in connection with the services. A clause of the Agreement deals with limitation of liability and indemnities and provides that you and your representatives acknowledge that if you enter on to any of the other education institution's premises, you do so at your own risk. Under a clause of the Agreement you acknowledge and agree that the other education institution remains the owner of all intellectual property associated with materials provided to you by the other education institution under the Agreement. You are permitted to use the intellectual property only for the purpose of fulfilling the Agreement. The Agreement provides that the other education institution will make no payment to you for the purposes of the Agreement. A clause of the Agreement provides that all marketing, publicity or advertising material directly or indirectly relating to the other education institution or the program is subject to prior written approval by the other education institution. Student recruitment and marketing is at your expense. A clause of the Agreement provides that administering recruitment is your responsibility. A clause of the Agreement provides that both you and the other education institution are responsible for administering student enrolment. A clause of the Agreement provides that the intellectual property rights in all course materials already developed and any other materials which are developed by you and your employees, agents or contractors in connection with or as a result of this Agreement shall vest in you. The other education institution, its employees, agents or contractors shall not, without your prior written approval, use, reproduce adapt or modify the course materials (or such materials developed by you) except in the performance of its obligations under this agreement.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 subsection 7-1(1) | A New Tax System (Goods and Services Tax) Act 1999 section 9-5 | A New Tax System (Goods and Services Tax) Act 1999 section 9-40 | 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 | Income Tax Assessment Act 1997 section 995-1

Reasons for decision: Summary: Your supplies of the courses in question to the students are taxable supplies. The amounts that you on-charge to a student to recover your cost of using the other education institution's facilities and catering forms part of the consideration for the taxable supply of the course that you make to the student. However, to the extent that the fee paid by the student represents consideration for the issuing of the qualification by the other education institution the payment is not consideration for a taxable supply that you make to the student. | Detailed Reasoning - Detailed reasoning: GST is payable by you where you make a taxable supply. You make a taxable supply where you satisfy the requirements of section 9-5 of the GST Act, which 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 Australia; and (d) 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. (* Denotes a term defined in section 195-1 of the GST Act) The Agreement and the information that you have provided indicate that you are supplying the educational courses in question in your own right to the students. This is because, among other things, the other education institution has not contracted you to deliver the courses to the students on the other education institution's behalf, you are predominantly responsible for student recruitment and marketing at your own expense, you set the course fees, you enter into agreements with the students for the supply of the courses, the intellectual property rights in all course materials already developed (and any other materials which are developed) by you in connection with or as a result of the Agreement vest in you. Your supplies of the courses satisfy the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. This is because, you supply the courses for consideration, in the course or furtherance of your enterprise, these supplies are connected with Australia and you are registered for GST. There are no provisions in the GST Act under which your supplies of the courses are input taxed. Therefore, what remains to be determined is whether your supplies of the courses are GST-free. In accordance with paragraph 38-85(a) of the GST Act, a supply of an 'education course' is a GST-free supply. 'Education course' is defined in section 195-1 of the GST Act. The definition lists various types of education courses. Of relevance to your case are: · tertiary courses · professional or trade courses, and · adult and community education courses. | 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 *Education 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 Education Minister has determined is a tertiary course for the purposes of this Act. To be GST-free as a tertiary course, a course must satisfy the Education Minister's determination made under subsection 5D(1) of the Students Assistant Act 1973 , namely the Student Assistance (Education Institutions and Courses) Determination 2009 (No. 2) (SAA Determination). The SAA Determination provides that an accredited vocational education and training program provided by an RTO or a higher education institutions is a tertiary course. You are not an RTO. Further, you are not a higher education institution as defined in the SAA Determination 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 by tertiary education agency as a higher education provider. Therefore, your courses are not tertiary courses under paragraph (a) of the definition of tertiary course in section 195-1 of the GST Act. If the other education institution is an RTO or a higher education institution as defined in the SAA Determination, this is not relevant to determining whether your supplies of the courses in question are tertiary courses under paragraph (a) of the definition of tertiary course in section 195-1 of the GST Act. This is because you are supplying the courses in question to the students in your own right and not on behalf of the other education institution. Your courses are not tertiary courses under paragraph (aa) of the definition of tertiary course in section 195-1 of the GST Act as they are not Masters or Doctoral level courses. Your courses are not tertiary courses under paragraph (b) of the definition of tertiary course in section 195-1 of the GST Act. A determination has been made under paragraph (b) of the definition of tertiary course. However, it is not relevant to the supplies that you make. Hence, your courses are not tertiary courses as they do not fall under the definition of a tertiary course in section 195-1 of the GST Act. | Detailed Reasoning - Professional or trade course: Section 195-1 of the GST Act defines 'professional or trade course'. It states: professional or trade course means 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. Goods and Services Tax Ruling GSTR 2003/1 explains the meaning of 'professional or trade course' for the purposes of the GST Act. Paragraph 45 of GSTR 2003/1 provides that documents that are qualifications or that provide evidence of a qualification include: · a statement of satisfactory completion · a certificate (including a degree or diploma) · a licence; or · an accreditation. Students who successfully complete the courses in questions are issued with a statement of attainment by the other education institution and achieve a nationally recognised accredited competency and gain credit towards a certain course. Therefore, your courses lead to a qualification. However, your courses will only be professional or trade courses if they lead to a qualification that is an 'essential prerequisite' for entry to, or to commence the practice of, a particular profession or trade. The term 'essential prerequisite' is defined in section 195-1 of the GST Act, which states: 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. Paragraph 16 of GSTR 2003/1 provides that 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. Further, paragraph 48 of GSTR 2003/1 states: 48. 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. This necessarily requires the imposition of penalties or sanctions if a person enters into, or commences the practice of, the profession or trade without the relevant qualification. Paragraph 49 of GSTR 2003/1 discusses the situation where there is a requirement to hold a qualification, but the requirement is not imposed by a law or professional or trade association. It states: 49. A qualification that is imposed for reasons other than for entry to, or to commence the practice of, a profession or trade, is not an essential prerequisite for the purposes of a professional or trade course. Similarly, a qualification required by an employer or group of employers, but which is not imposed by an industrial instrument, or a professional or trade association at either the national level, or State or Territory level will not be an essential prerequisite. Based on the information that you have provided, the qualifications one receives on completion of the courses in question are not imposed as a requirement to enter or commence the practice of a particular profession or trade in Australia by a professional or trade association or a law. Hence, your courses are not professional or trade courses. | Detailed Reasoning - Adult and community education courses: Section 195-1 of the GST Act defines adult and community education course as: 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 *Education 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 *Education Minister to be an adult and community education course. Based on the information that you have provided, you are not a higher education institution, you are not recognised by a State or Territory authority, as a provider of adult and community education courses, and are not funded by a State or Territory on the basis that you are a provider of adult and community education courses. As you are not one of the types of entities set out in paragraph (a) of the definition of adult and community education course in section 195-1 of the GST Act, your courses are not adult and community education courses under paragraph (a). If the other education institution is one of the types of entities set out in paragraph (a) of the definition of adult and community education course in section 195-1 of the GST Act, this is not relevant to determining whether your supplies of the courses in question are adult and community education courses. This is because you are the supplier of the courses in question; not the other education institution. The Education Minister has made the determination A New Tax System (Goods and Services Tax) (Adult and Community education Courses) Determination 2000 (ACE Determination) under paragraph (b) of the definition of adult and community education course in section 195-1 of the GST Act. The ACE Determination provides that in addition to the course being described of a kind in that Determination, the course of study or instruction must be provided by or on behalf of a body mentioned in paragraph (a) of the definition of adult and community education course in section 195-1 of the GST Act. The ACE Determination also provides that where the course of study or instruction is provided by, or on behalf, of a body that is a body corporate that operates on a not-for-profit basis, the course of study or instruction may be an adult and community education course if the other requirements are met. You are not a non-profit body. Therefore, your courses are not adult and community education courses under paragraph (b) of the definition of adult and community education course in section 195-1 of the GST Act. There are no other provisions in the GST Act under which your supplies of the courses are GST-free. Therefore, as all of the requirements of section 9-5 of the GST Act are satisfied, your supplies of the courses are taxable supplies. Hence, GST is payable on your supplies of the courses. | Detailed Reasoning - Amounts you on-charge to the students for catering and the use of the other education institution's facilities: We consider that the amounts that the other education institution charges you for providing food to the students and the trainers and the use of the other education institution's facilities by you are consideration for supplies that the other education institution makes to you under the Agreement. These amounts are your business costs. When you on-charge these amounts to the students to recover your costs the amounts on-charged form part of the consideration for the taxable supply of your courses. | Detailed Reasoning - Amounts charged to the students for issuing qualifications: You stated that the 'tuition fee' charged by the other education institution is for the issuing of a qualification and use of their facilities. You advised that the student enters into a contract with the other education institution when he or she enrols in the course in order to achieve a nationally recognised accredited competency and that the other education institution has a contract with the student for the issuing of the course results and a statement of attainment. Based on the information provided, we consider that the other education institution is issuing the qualification to the student and not to you. Accordingly, part of the 'tuition fee' that represents consideration for the issuing of a qualification by the other education institution does not form part of the consideration for the supply of the course by you. This means that you are not liable to pay GST on the amounts that a student pays for the issuing of the qualification. You need to clarify with the other education institution as to what part of the tuition fee is consideration for the supply of the qualification.