Private ruling: GST and skills assessment services
Published: July 2014

Ruling: Q1: Is V making a taxable supply when it supplies skills assessment services for the purposes of the Migration Regulations 1994? | A1: V is making taxable supplies when the applicant being assessed is in Australia. When the applicant is overseas V's skills assessment services are GST-free supplies.

Relevant facts and circumstances: V is a Registered Training Organisation (RTO) for the purposes of providing training, assessments and credentials in vocational education and training. V has entered into a deed with an Australian government to provide services in the form of assessment of skills against relevant Australian qualifications for applicants trained overseas. V provides these services for applicants who reside within and outside Australia. The applicants undertake a skills assessment of their overseas qualification for the purposes of migration only; this does not guarantee the likely success of obtaining Australian residency status, licensing or registration or employment. In respect of assessments done overseas V has appointed overseas based agents and at times sends its own staff to perform this function.

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 9-25 | A New Tax System (Goods and Services Tax) Act 1999 section 38-110 | A New Tax System (Goods and Services Tax) Act 1999 section 38-190

Reasons for decision: Summary: V's supplies are connected with Australia and drawn into the GST system. V's supplies to Australian based applicants are subject to GST as the requirements for GST-free status afforded for recognition of prior learning cannot be met. V's supplies to overseas based applicants are GST-free as GST-free status is afforded to certain types of consumption outside Australia. | Detailed Reasoning - Detailed reasoning: A supply of skills assessment services for the purposes of the Migration Regulations 1994 will be a taxable supply where the requirements of section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) are met: 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. For the purposes of this ruling we will assume that V's supply satisfies the requirements of paragraphs 9-5(a), 9-5(b) and 9-5(d) as you have not taken issue with those paragraphs. You have indicated however that you believe that V's supplies are not connected with Australia as required in paragraph 9-5(c) above. Subparagraphs 9-25(5)(a) and 9-25(5)(b) of the GST Act (section 9-25 sets the requirements for 'connected with Australia') state that a supply of anything other goods or real property is connected with Australia if: (a) the thing is done in Australia; or (b) the supplier makes the supply through an *enterprise that the supplier *carries on in Australia; or V carries out its assessment services in Australia through its enterprise in Australia; therefore the supply of skills assessment services is connected with Australia. In examining whether V's supplies can be GST-free, sections 38-110 and 38-190 of the GST Act are relevant. Recognition of prior learning Section 38-110 of the GST Act deals with recognition of prior learning, it states: 1) A supply is GST-free if the supply is the assessment or issue of qualifications for the purpose of: a) access to education; or b) membership of a professional or trade association; or c) registration or licensing for a particular occupation; or d) employment. e) However, a supply is no t GST-free under subsection (1) unless the supply is carried out by: a) a professional or trade association; or b) an *education institution; or c) an entity that is registered by a training recognition authority of a State or Territory in accordance with the Australian Recognition Framework to provide skill recognition (assessment only) services; or d) an authority of the Commonwealth or of a State or Territory; or e) a local government body. (*denotes a defined term in section 195-1 of the GST Act). The assessment services are only provided for migration purposes rather than to ascertain access to education, membership of a professional or trade association, registration or licensing for a particular occupation or employment as required by the GST law. Therefore section 38-110 of the GST Act does not apply and V is required to charge GST on these supplies. Services supplied to non-residents outside Australia Broadly, services provided to non-residents who are not in Australia in relation to the supply can be made GST-free under certain circumstances. We take the view that the arrangements between V, the government and applicants having skills assessed can be characterised as a contract between V and the applicants with the assessment services being supplied by V to the applicants directly. The deed, under this synopsis, is for governance and also authorises V to carry out the task. In this case V's supplies are initially drawn into the GST system as the supplies are connected with Australia by virtue of subparagraph 9-25(5)(b) of the GST Act (see above). However when the skills assessment is done overseas it is supplied to a non-resident who is not in Australia. Item 2(a) in subsection 38-190(1) of the GST Act confers GST-free status to this exact situation. Item 2 provides that a supply of a thing (other than goods or real property) made to a non-resident is GST-free if it is a supply that is made to a non-resident who is not in Australia when the thing supplied is done, and: (a) the supply is neither a supply of work physically performed on goods situated in Australia when the work is done, nor a supply directly connected with *real property situated in Australia; or (b) the *non-resident acquires the thing in *carrying on the non-resident's *enterprise, but is not *registered or *required to be registered for GST. (* denotes a term defined in section 195-1 of the GST Act.) Therefore the skills assessments done for overseas based applicants are GST-free supplies. This remains the case whether the assessor is in-situ overseas or working remotely from Australia.