GST and Educational Assessments

Is entity A, a supplier of educational assessments, making a GST-free supply under section 38-110 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies an educational assessment, despite the fact that the actual assessment is conducted by entity B, an educational institution, acting as agent for entity A?

No, entity A is not making a GST-free supply under section 38-110 of the GST Act when it supplies an educational assessment, despite the fact that the actual assessment is conducted by entity B, an educational institution, acting as agent for entity A. Entity A is making a taxable supply under section 9-5 of the GST Act.

Entity A is the supplier of educational assessments. Entity A is supplying an educational assessment; however, the actual assessment is conducted by entity B. Entity B is an educational institution acting as agent for entity A. Entity A does not satisfy subsection 38-110(2) of the GST Act; however entity B does satisfy the requirements in subsection 38-110(2) of the GST Act.

Entity A is registered for goods and services tax (GST). The supply satisfies the other positive limbs of section 9-5 of the GST Act.

The assessment or issue of qualifications for the purpose of access to education, membership of a professional or trade association, registration or licensing for a particular occupation, or employment, will be GST-free provided that the preconditions in subsection 38-110(2) of the GST Act are satisfied. Namely, the supply must be carried out by : • a professional or trade association; or • an education institution (as defined in the Student Assistance Act 1973 ); or • 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 • an authority of the Commonwealth or of a State or Territory; or • a local government body.

It is considered that section 38-110 of the GST Act does not intend to cover situations where one entity makes a supply and another entity carries it out. That is, the entity making the supply must also carry it out. In an agency arrangement, the agent physically carries out the supply on behalf of the principal. However, the principal is taken to not only 'make' the supply, but also 'carry out' the supply. Therefore entity A (the principal) is 'carrying out' the supply despite the fact that the actual assessment is conducted by entity B (the agent). As entity A does not satisfy subsection 38-110(2) of the GST Act the supply of the assessment will not be GST-free.

Entity A is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, as the supply is neither GST-free under Division 38 of the GST Act nor input taxed under Division 40 of the GST Act; entity A is making a taxable supply under section 9-5 of the GST Act.