Private ruling: GST and education course
Date of advice: 8 July 2015
Published: July 2015

Ruling: Q1: Are you making a GST-free supply of an education course to students? | A1: No.

Relevant facts and circumstances: You are registered for GST. You are not a Registered Training Organisation. You provide a number of courses. You have entered into a training partnership with a Registered Training Organisation (RTO) in the form of an Agreement. You have provided a copy of the Agreement. You have written the training and assessment material used in the courses. The material has been audited by the RTO to ensure it meets their training conditions. You advise the RTO when you have a competent student and the RTO provides you with a Certificate for the student. You pay a fixed fee to the RTO for each certificate. The RTO conducts an annual audit of a selection of student material to ensure the appropriate standards are met. The RTO does not supervise the training or provide any regular guidance or support. You do not consider that you are an agent for the RTO. You entered into the agreement with the RTO over other Registered Training Organisations as the other organisations required you to be an agent. You bear all the commercial risk, set your prices, sell the course and enrol students. You act in your own name however you list the RTO and their accreditation. You do not pay any commission to the RTO. The training material you have written is not listed on any national register. You supply students with a workbook, manual, USB and training templates. You are not funded by a State or Territory authority.

Relevant legislative provisions: A New Tax System (Goods and Services Tax) Act 1999 Section 9-5, and | A new Tax System (Goods and Services Tax) Act 1999 Section 195-1.

Reasons for decision: Summary: In this reasoning, please note: • all legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) • terms marked with an asterisk are defined in section 195-1 of the GST Act • all reference materials, published by the Australian Taxation Office (ATO), that are referred to are available on the ATO website ato.gov.au You have entered into an Agreement with a Registered Training Organisation (RTO). It is necessary to determine whether you are supplying the courses or if the RTO supplies the courses through you as their agent. Paragraph 28 of Goods and Services Tax Ruling GSTR 2000/37 Goods and services tax: agency relationships and the application of the law provides a list of factors that may show that you are an agent under an agency relationship. Taking these factors into consideration we do not consider you to be an agent as: • there is no description in the agreement of you as an agent or having authority to act for the RTO • you bear all the commercial risk of your operation • you act in your own name (although you list the RTO's accreditation) • you set the price for the course and keep any payment you receive (although you pay the RTO to issue a certificate). In addition, although you describe your relationship with the RTO as a partnership, we consider you to be a separate entity and not in a partnership for GST law purposes. Therefore, you are the supplier of the course. Section 38-85 provides that a supply of an education course is GST-free. An education course includes various courses, including of relevance to your situation, an adult and community education course (ACE) and a professional or trade course. | Detailed Reasoning - Adult and community education course: An 'adult and community education course' is defined in the GST Act as: adult and community education course means 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. The A New Tax System (Goods and Services Tax) (Adult and Community Education Courses) Determination 2000 (ACE Determination) determines the kinds of courses, and the courses, that are ACE courses for the purpose of the definition of an ACE course in section 195-1 of the GST Act. You have advised the courses are likely to lead to the employment related skills of the people undertaking the course. However, it must also be determined whether the courses satisfy either paragraph (a) or (b) of the definition of an ACE course. Your courses do not satisfy paragraph (a) of the definition of an ACE course. You are not a higher education institution as defined in the GST Act. A 'higher education institution' is an entity that is a higher education provider approved under, and is listed in, the Higher Education Support Act 2003 . You are not listed as an education provider in that Act. You are not recognised or funded by a State or Territory authority to conduct adult and community education. Paragraph (b) of the definition of an ACE course is not relevant to your situation. Under the ACE Determination, to satisfy paragraph (b) the ACE course must be provided by, or on behalf, of a body that is a body corporate that operates on a not-for profit basis. Your supplies of the courses are not GST-free supplies of ACE courses as the courses do not satisfy the requirements of an ACE course. | Detailed Reasoning - Professional or trade course: The term 'professional or trade course' is defined in section 195-1 as follows: 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 Goods and services tax: supplies that are GST-free as professional or trade courses (GSTR 2003/1) provides guidance on the meaning of 'professional or trade course'. It must be established that your course satisfies the following three criteria: • it is a course • it leads to a qualification • it is an essential prerequisite for entry to a particular profession or trade in Australia Your course is considered to be a course for GST purposes as per the general indicators outlined in paragraph 22 of GSTR 2003/1. Your course also leads to a 'qualification' and satisfies the 'qualification' requirement in the definition of a 'profession or trade course' above, as per paragraphs 42 and 43 of GSTR 2003/1. However, it must be established if the qualification is an 'essential prerequisite' for entry to a 'particular profession or trade'. The particular 'profession or trade' in this case is trainer or assessor. The term 'essential prerequisite' is defined in section 195-1 as follows: 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 48 of GSTR 2003/1 explains that a qualification must be mandatory (with risk of penalties or sanctions) to enter into, or commence the practice of the profession or trade, and 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. In summary, the qualification must be a legal requirement, for example an Australian law, regulation, award, order, determination or industrial agreement, or imposed by a professional or trade association either on a national or state basis. In addition, the qualification must be obtained before the person can enter, or commence the practice of the profession or trade. In effect, it would be impossible for a person to earn their livelihood in the particular profession or trade without the qualification. The term 'industrial instrument' has the meaning given by section 995-1 of the Income Tax Assessment Act 1997 , as • an Australian law, or • an award, order, determination or industrial agreement in force under an Australian law. There is no industrial instrument that imposes a legal requirement on a person preventing them from entering or commencing the profession or practice of trainer or assessor if they do not hold a Certificate for your course. In addition there is no national or state professional or trade association with requirements relating to the entry to, or the commencement of the practice of, the profession or trade concerned. Therefore, your course does not satisfy the definition of professional or trade course as it is not an essential prerequisite. The supply of your courses is not a GST-free supply. | Detailed Reasoning - Other relevant comments: There are other education courses that are GST-free. Of relevance to your situation is a 'tertiary course'. A 'tertiary course' is defined in the GST Act, and includes all tertiary courses covered by the determination issued by the Education Minister under the Student Assistance Act 1973. The determination lists the type of course and types of educational institutions that can deliver the course. This includes various courses including vocational education. In your case, as you are not a Registered Training Organisation, your courses are not considered to be tertiary courses. Further information is available in Goods and Services Tax Ruling GSTR 2001/1 Goods and services tax: supplies that are GST-free for tertiary education courses .