Issue
Is the entity, an 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, at the end of a cabinet making course, a student takes home the cabinet they made from materials the entity supplied as part of the course?
Decision
No, the entity is not making a taxable supply under section 9-5 of the GST Act when, at the end of a cabinet making course, a student takes home the cabinet they made from materials the entity supplied as part of the course. The entity is not making a supply, as the student owns the cabinet.
Facts
The entity is an education institution. The entity supplies a cabinet making course. This course is an education course as defined in section 195-1 of the GST Act and its supply is GST-free under section 38-85 of the GST Act.
The course is a practical course where a student learns to make a cabinet. As a part of the course, the entity provides the student with materials for making the cabinet. The supply of the materials is a supply of course materials as defined in section 195-1 of the GST Act and its supply is GST-free under section 38-95 of the GST Act.
The entity provides the course materials to the student for a fee. At the end of the course, the student takes home the cabinet they made during the course.
The entity is registered for good 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. A transaction is only a taxable supply under section 9-5 of the GST Act if it also comes within the scope of the word 'supply' as discussed in section 9-10 of the GST Act.
Subsection 9-10(2) of the GST Act provides a non-exhaustive list of things that are considered to be a supply for GST purposes. Paragraph 9-10(2)(a) of the GST Act provides that a supply of goods is a supply under the GST Act.
The supply of a cabinet is a supply of goods. However, it needs to be determined whether the entity is making a supply.
The student makes the cabinet from the course materials. The entity supplies those course materials to the student for a fee. Therefore, the materials the student uses to make the cabinet are the student's materials. When the student takes home the cabinet at the end of the course, they are taking goods that they already own. Accordingly, the entity is not making a supply of the cabinet to the student.
Therefore, the entity is not making a taxable supply under section 9-5 of the GST Act when, at the end of a cabinet making course, a student takes home the cabinet they made from materials the entity supplied as part of the course.