Private ruling: GST and supply of language courses to primary and secondary school aged students
Date of advice: 12 December 2017
Published: May 2018

Ruling: Q1: Is your supply of language courses to primary and secondary school students GST-free under section 38 - 85 of the A New Tax System (Goods and Services Tax) Act 1999 GST Act? | A1: Yes, your supply of language courses to primary and secondary school students are GST-free under section 38-85 of the GST Act.

Relevant facts and circumstances: You are registered for goods and services tax (GST) and are income tax exempt. You are incorporated association under the Associations Incorporation Act 1987 operating on a not-for-profit basis but you are not registered with the Australian Charities and Not-for-profits Commission.

Relevant legislative provisions: 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 | A New Tax System (Goods and Services Tax) Act 1999 Division 142

Reasons for decision: Summary: Unless stated otherwise all legislative reference are to the A New Tax System (Goods and Services Tax) Act 1999 . The supply of an education course is GST-free under section 38-85. The term ‘education course’ is exhaustively defined in section 195-1 to include amongst other things, a primary course and a secondary course. In this case, you supply language courses to primary and secondary school aged students on after school hours and weekends. | Detailed Reasoning - Primary or secondary education course: The A New Tax System (Goods and Services Tax) (Language Other Than English – LOTE – courses offered by ethnic schools) Determination 2017 (LOTE Determination) is the latest Determination issued by the Federal Education Minister in relation to LOTE courses. The LOTE Determinations states that a LOTE course that is provided to primary or secondary school students by an ethnic school is a primary course or secondary course for the purposes of the GST Act respectively. Under the LOTE Determination, a LOTE course that is provided to primary or secondary school students by an ethnic school is a primary or secondary course respectively for GST purposes where the LOTE course is provided by, or on behalf of, a school that: ● is a body corporate that operates on a not-for-profit basis ● has as its principal aim the teaching of languages other than English ● has close links with a community whose first/heritage language is not English, and ● is licensed, recognised, accredited, or in any way approved to provide such courses by a State or Territory authority responsible for that approval, in the manner applicable within the relevant State or Territory. Of relevance is that these eligibility criteria include two of the four criteria that determine whether a course is a primary or secondary course under the LOTE Determinations, namely that a LOTE course if provided by an ‘ethnic school’ if it is provided by, or on behalf of, a school that: ● is a not-for-profit with legal ‘incorporated association’ status, and ● have a constitution or school charter stating that the organisation’s purpose is to provide language education. Paragraph 31 of Miscellaneous Taxation Ruling MT 2006/1 provides that a body corporate may be created by registration pursuant to a statute, for example, incorporated associations. As such, you are a body corporate that operates on a not-for profit basis. Your principal aim is also to teach language courses and you have close links with the community of that specific culture as evident in your Constitution and services provided to maintain regular cultural connections with the community of that specific culture and the general community. In addition, the receipt of funding from the OMI means that you satisfied the relevant eligibility criteria established in relevant government, the relevant State authority for the approval of Community Language School, and are recognised by them to as language education provider. Therefore, provided you continue to receive funding from the relevant Office for the language courses provided to primary and secondary school students, such supplies are respectively GST-free primary courses and secondary courses under section 38-85.