GST and supply of bus service to transport students to and from school

Is the entity, an accredited secondary school, making a GST-free supply under section 38-85 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies a bus service to transport students to and from school and does not charge an additional fee to the students for the provision of the service?

Yes, the entity is making a GST-free supply under section 38-85 of the GST Act when it supplies a bus service to transport students to and from school and does not charge an additional fee to the students for the provision of the service.

The entity is a secondary school. The entity provides an accredited secondary course that is GST-free under section 38-85 of the GST Act.

The school uses a global budget to determine an identical fee for each student. The fee paid includes access to a bus service, regardless of whether a student makes use of the service.

The entity is registered for goods and services tax (GST).

An education course is GST-free under section 38-85 of the GST Act. The entity provides an accredited secondary course that is GST-free under section 38-85 of the GST Act. Some supplies that relate to an education course are also GST-free. The entity's supply of the bus service is a supply that may relate to its supply of a GST-free education course.

Goods and Services Tax Ruling, GSTR 2000/30, sets out those supplies that relate to a GST-free education course. Paragraph 30 of GSTR 2000/30 provides that a fee for the supply of an education course that consists of tuition, facilities and other curriculum related activities, associated with a GST-free course, is GST-free.

Paragraphs 34 and 35 of GSTR 2000/30 provide that the supply of facilities is part of the supply of an education course and includes such items as the provision and maintenance of buildings, grounds, sporting and musical equipment and other curriculum related items. The supply of facilities will extend to the provision of a bus service, where the service is made available to all students who have paid the same fee for the supply of the education course, regardless of whether they use the bus service or not.

The entity uses a global budget and charges each student the same amount for their school fees. The entity does not charge a separate fee for the supply of the bus service. The cost of providing this bus service is one of the outlays that the entity factors into the calculation of the school fees. As such, the entity's supply of the bus service is the supply of a facility that is included in the entity's fee for the supply of an education course. Therefore, the entity is making a GST-free supply under section 38-85 of the GST Act when it supplies a bus service to transport students to and from school. Note: The supply of a bus service will not be GST-free in circumstances where school fees or a portion of school fees, charged by an entity, relate specifically to a taxable supply under section 9-5 of the GST Act or to supplies that are being made to particular students. The actual supply of transport to and from school is not GST-free if a designated group of students (for example, only those students who use a bus service), pay a higher fee than the rest of the student population or where the bus service is not made available to all students.