1 Are the entity's supplies of the courses to overseas students GST-free supplies under section 38-190 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
1 Yes, the entity's supplies of the courses to overseas students are GST-free supplies under table item 2 in subsection 38-190(1) of the GST Act. Question 2 Are the entity's supplies of the courses to Australian students GST-free supplies under section 38-85 of the GST Act? Answer 2 No, the entity's supplies of the courses to Australian students are not GST-free supplies under section 38-85 of the GST Act. These are taxable supplies subject to GST. This ruling applies for the following period : 28 October 20xx to 28 October 20xx The scheme commences on: 28 October 20xx
The entity (you, entity) is an Australian-based education provider. You are registered for GST from a certain date. You intend to enter in an Agreement with overseas universities where you will deliver courses. The Agreement provides that you acquire a licence to use the intellectual property in relation to courses provided by that university. The overseas universities (universities, university) are based in countries other than Australia and are fully accredited as higher education (HE) institutions in those countries. The universities have no presence in Australia. The courses meet internationally accepted HE standards. The Agreement between the university, as the Licensor, and you, the Licensee, gives you among other things the right to: • use the licensed material, being the university's course curriculum, including course content and assessments • use the university's brand in promoting the course, and • the university awarding the relevant qualification upon the student successfully completing the course.
That is, you will provide the courses, using the material licenced by the university. The university will issue the relevant qualification to students who successfully complete the course. The Agreement sets out the terms and conditions upon which you both agree to enter into the arrangement, including the licence fee you agree to pay to the university, the intellectual property being acquired, and marketing the arrangement. The course fees are set by negotiation between you and the university. You invoice the student for the course fees and collect them. You are responsible for delivery of your courses including teaching, marking of assessments and student support. You will deliver each course in English and entirely online to Australian students and overseas students. You are responsible for the recruitment, admission and administration of students, and students are governed by your policies and procedures. Student enrolment is managed via your software program. The Agreement provides that successful students are eligible to be awarded a qualification and will receive an official certification.
Once the student has successfully completed the course, the university awards the qualification to the student. You are not registered, or taken to be registered, as a HE institution with the Tertiary Education Quality and Standards Agency (TEQSA), the national regulatory and quality assurance agency for HE in Australia. You are not a non-government HE institution under the law of an Australian State or Territory, nor are you registered by an Australian State or Territory HE recognition authority. None of the courses are available to adults in the general community. None of the course qualifications are an 'essential prerequisite', as defined in section 195-1 of the GST Act, for entry into, or to commence the practice of (but not to maintain the practice of) a particular profession or trade in Australia. The overseas universities and overseas students are non-residents for Australian tax purposes.
A New Tax System (Goods and Services Tax) Act 1999 section 38-85 A New Tax System (Goods and Services Tax) Act 1999 subsection 38-190(1) Table Item 2
GST and education courses Question 1 reasoning All legislative references are to the A New Tax System (Goods and Services Tax) Act 1999 , unless otherwise stated. Generally, a supply is subject to GST if it is a taxable supply under section 9-5. However, a supply that is GST-free is not a taxable supply and is not subject to GST. Section 38-190 provides that certain supplies of things other than goods or services for consumption outside of Australia are GST-free. Under the Agreement, each university grants a license to its courses to enable you to provide those courses to students. Under the Agreement you are the entity that supplies the courses to the students, regardless of the university awarding the qualification to the successful student. Supplies of education courses for consumption outside Australia The table in subsection 38-190(1) provides a list of circumstances in which supplies of things, other than goods or real property, for consumption outside Australia are GST-free. Table item 2 in subsection 38-190(1) (Item 2) provides that a supply made to a non-resident, who is not in Australia when the thing supplied is done, is GST-free if:
(a) the supply is neither a supply of work physically performed on goods situated in Australia when the work is done nor a supply directly connected with real property situated in Australia, or (b) the non-resident acquires the thing in carrying on their enterprise but is not registered or required to be registered for GST. Where the requirements of paragraphs (a) or (b) of Item 2 are satisfied, the supply will be GST-free. The supplies of courses that you make to the overseas students are not supplies of work physically performed on goods situated in Australia when the work is done, nor are they supplies directly connected with real property situated in Australia. Therefore, the requirements of paragraph (a) in Item 2 are met. Accordingly, the supplies of the courses, made by you to the overseas students who are non-residents, are GST-free under table item 2 in subsection 38-190(1). Question 2 reasoning Generally, section 38-85 provides that a supply of an education course is GST-free. An 'education course' is defined in section 195-1 to include a number of different types of courses. Relevant to your case is a 'tertiary course' which is defined in section 195-1 as:
(a) a course of study or instruction that is a tertiary course determined by the Student Assistance Minister under subsection 5D(1) of the Student Assistance Act 1973 (SA Act)for the purposes of that Act (aa) a course of study or instruction accredited at Masters or Doctoral level and supplied by a HE institution or a non-government HE institution, or (b) any other course of study or instruction that the Student Assistance Minister has determined is a tertiary course for the purposes of the GST Act. Paragraph (a) of 'tertiary course' definition The Student Assistance Minister (the Minister) has issued the Student Assistance (Education Institutions and Courses) Determination 2019 (Determination 2019) under subsection 5D(1) of the Student Assistance Act 1973 (SA Act). It lists the type of course and types of education institutions that can deliver the course to be determined as a 'tertiary course'. In subsection 3(1) of the SA Act: • an 'education institution' means, among other things, a 'HE institution', and
• a 'HE institution' means an educational institution in Australia that, in accordance with a determination by the Minister, is to be regarded as a HE institution for the purposes of the SA Act. Section 6 of Determination 2019 provides that for the definition of 'HE institution' in subsection 3(1) of the SA Act, the following are to be regarded as HE institutions for the purposes of the SA Act: (a) an institution that is established by a law of the Commonwealth, a State or a Territory as a HE institution, or (b) an institution registered or taken to be registered by TEQSA as a HE provider. You are not an institution established by a law of the Commonwealth, a State or a Territory as a HE institution, nor are you an institution registered or taken to be registered by TEQSA as a HE provider. Therefore, you are not a HE institution as defined for the purposes of the SA Act because you do not satisfy section 6 of Determination 2019. As such, Determination 2019 does not apply to you. Consequently, you do not satisfy paragraph (a) of the definition of 'tertiary course' for your supplies of courses to Australian students. Paragraph (aa) of 'tertiary course' definition
For paragraph (aa) of the definition of 'tertiary course' to be satisfied, the course must be supplied by a HE institution or a non-government HE institution. A 'HE institution' is defined in section 195-1 to mean an entity that is a HE provider as defined in section 16-1 of the Higher Education Support Act 2003 (HES Act). Section 16-1 of the HES Act provides that an 'HE provider' is: • a body corporate, or • a body other than a body corporate, covered by an exemption under subsection 16-1(3) of the HES Act that is approved as a HE provider under Division 16 of that Act. The HE providers approved under the HES Act are identified by name in Subdivision 16-B of that Act. You are not cited in Subdivision 16-B of the HES Act so you are not a HE provider under that Act. Consequently, you do not meet the definition of HE institution in section 195-1 for the purpose of paragraph (aa) of the definition of 'tertiary course'. For paragraph (aa) to apply, the course may also be supplied by a non-government HE institution. Under section 195-1 a 'non-government HE institution' is an institution that is not a HE institution and that is:
(a) established as a non-government HE institution under the law of an Australian State or Territory, or (b) registered by an Australian State or Territory HE recognition authority. You are not established as a non-government HE institution under the law of an Australian State or Territory, nor are you registered by an Australian State or Territory HE recognition authority. Hence, you are not a 'non-government HE institution', as defined in the GST Act. As you are neither a HE institution, nor a non-government HE institution, you do not satisfy paragraph (aa) of the definition of 'tertiary course'. Paragraph (b) of 'tertiary course' definition A determination that is relevant to the supplies of courses that you make, has not been made by the Student Assistance Minister under paragraph (b) of the definition of 'tertiary course'. Therefore, you do not satisfy paragraph (b) so your courses do not meet the definition of 'tertiary course' for the purposes of the GST Act. As your supplies of the courses to Australian students are not GST-free, they are taxable supplies and are subject to GST.