Issue
Is the entity, a non-government secondary education institution, making a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it provides a scholarship that covers secondary tuition, boarding school accommodation and music tuition to a student?
Decision
No, the entity is not making a taxable supply under section 9-5 of the GST Act when it provides a scholarship that covers secondary tuition, boarding school accommodation and music tuition to a student. The entity is not making a supply for consideration.
Facts
The entity is a non-government secondary education institution. The entity provides a scholarship to a student.
This scholarship entitles the student to: • tuition, for which the school normally charges a fee to students • accommodation in the school's boarding facilities, and • tuition for music (not a part of the school's curriculum).
The student does not provide any consideration for the tuition or accommodation.
The entity is registered for goods and services tax (GST).
Reasons for Decision
Section 9-5 of the GST Act sets out the requirements that must be met for an entity to make a taxable supply. Under paragraph 9-5(a) of the GST Act, the supply made by an entity must be for consideration. 'Consideration' is defined in section 9-15 of the GST Act to include any payment, act or forbearance, in connection with, in response to or for the inducement of a supply of anything.
The entity is providing a scholarship to the student and the student does not provide any consideration in return for the scholarship. Therefore, the entity is not making a supply for consideration and the requirement in paragraph 9-5(a) of the GST Act is not met.
Accordingly, the entity is not making a taxable supply under section 9-5 of the GST Act when it provides a scholarship that covers secondary tuition, boarding school accommodation and music tuition to a student.