Issue
Is the entity, a secondary school, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it arranges home stay accommodation for overseas students and does not charge a fee for the service?
Decision
No, the entity is not making a taxable supply under section 9-5 of the GST Act when it arranges home stay accommodation for overseas students and does not charge a fee for the service.
Facts
The entity is a secondary school that does not have student boarding facilities. The entity provides tuition to overseas students for short-term periods of approximately three months. The entity also arranges for the overseas students to be provided with home stay accommodation. The entity does not charge a fee for this arranging service.
The home stay accommodation is provided by the families of resident students attending the school, and includes meals and entertainment etc.
The entity charges a fee to the overseas students for their tuition. The entity also collects a fee from the overseas students on behalf of the home stay families for the accommodation.
The families providing the home stay accommodation are not registered or required to be registered for goods and services tax (GST). The entity is registered for GST.
Reasons for Decision
Under section 9-5 of the GST Act, an entity makes a taxable supply if: • the supply is made for consideration; • the supply is made in the course or furtherance of an enterprise that the entity carries on; • the supply is connected with Australia; and • the entity is registered, or required to be registered for GST.
However, a supply is not a taxable supply to the extent that it is GST-free or input taxed.
Under section 9-10 of the GST Act 'supply', for GST purposes, includes any form of supply whatsoever including a supply of services. The entity arranges for the supply of accommodation by the home stay family to the overseas student. This is a supply of services that falls within the definition of 'supply' in section 9-10 of the GST Act. Although the entity also collects consideration from the overseas students for the supply of the home stay accommodation, the entity does not make the supply of accommodation. The entity merely collects this money on behalf of the families that are making the supply of the accommodation.
The entity's arranging service is made in the course of its enterprise and is a supply that is connected with Australia. However, as the entity performs this service for no consideration, the supply does not satisfy all of the positive limbs of section 9-5 of the GST Act. Therefore, the entity is not making a taxable supply under section 9-5 of the GST Act when it arranges home stay accommodation for overseas students and does not charge a fee for the service.
[Note: The supply of accommodation by the home stay families is an input taxed supply of residential premises where the requirements in section 40-35 of the GST Act are satisfied. If those families are registered for GST, the supply of meals and entertainment etc as part of the home stay is not a taxable supply unless the supply is made in the course or furtherance of an enterprise that the entity carries on and the remaining requirements in section 9-5 of the GST Act are met.]