Education - GST fact sheet 8

Fact sheet

1.0 Summary

RMIT University has a policy, that only accredited Higher Education or VET Courses will be included on the central enrolment system. All of these courses are GST free and all of these courses require assessment. It is feasible that any subjects with Assessment will be able to be mapped to an Accredited course and will be GST free. Any subjects that cannot or have not been mapped to a Higher Education or VET Course will be taxable unless they are an English Language course, Trade or Professional course or an Adult and Community education course.

Tip

  • If the course is not Tertiary, English language for overseas students, or Trade or Professional course, then RMIT should look at marketing the Course to see if it can be classified as an Adult and Community Education Course.
  • Businesses will not be concerned by GST charges as they are entitled to claim An input tax credit. More care will be required in the marketing and organizing of a course aimed to be provided to individuals where GST is charged.

2.0 What education courses are GST-free

An education course will be GST-free where it falls within one of the following

Categories of an education course:

  • A pre-school course; or
  • A primary course; or
  • A secondary course; or
  • A tertiary course; or
  • A Masters or Doctoral course; or
  • A special education course; or
  • An adult and community education course; or
  • An English language course for overseas students; or
  • A first aid or life saving course; or
  • A professional or trade course; or
  • A tertiary residential college course

It is understood RMIT University only provide education under the following categories

  • Secondary course
  • Tertiary course
  • Masters or Doctoral course
  • English language course for overseas students
  • Professional or trade course
  • An adult and community education course

2.1 Tertiary course

A Tertiary course would have to be a course of study that has been determined by the Education Minister under subsection 5D(l) of the Students Assistance Act 1973. The procedure for a course to achieve accreditation at RMIT is as follows:

Accredited Higher Education course - The Commonwealth has handed over its accreditation responsibilities to RMIIT University. The RMIT Academic Board will register a course. All subjects that make up that course will be included on RMITs register. A subject will only be included as part of a course if there is assessment.

Accredited Vocational Education and Training (VET) - courses are GST-free. For a VET course to be accredited, it must be on the National register or a State register Subjects in a VET course will be listed on the National or State register. The subjects will only be included as part of a course on the National or State registers if there is assessment.

Therefore, as you can see, assessment is a critical factor in courses being accredited as a higher education course or VET course. Assessment is a concept that has been debated extensively in the past by the academic world and is still contentious issue.

2.2 Masters or Doctoral course

Masters or Doctoral course is a course of study or instruction, accredited at the Masters or Doctoral level and provided by RMIT University.

2.3 English language course for overseas students

English language course for overseas students is a course of study or education supplied to overseas students that:

  • includes study or education in the English language; and
  • is supplied by an entity that is accredited to provide such courses by a State or territory authority responsible for their accreditation.

RMIT University is an entity that is accredited to provide English language courses for overseas students.

2.4 Professional or trade course

Professional or Trade courses will be GST-free if it leads to a qualification that is an essential pre-requisite:

  • For entry into a particular profession or trade; or
  • To commence the practice of (but not to maintain the practice of) a profession or trade in Australia.

2.5 Adult and community education

2.5.1 Key factors

To be classified as an Adult and Community Education course, it must be a course that:

  • adds to employment related skills of the student;
  • is of a kind determined by the Education Minister to be an adult and community education course;
  • provided by either:
    • a higher education institution; or
    • is recognized by the State or Territory authority that is a provider of courses of a kind described in the determination; or
    • is funded by the State or Territory on the basis that it is a provider of courses of a kind described in the determination; or
  • is determined by the Education Minister to be an adult and community education course.

2.5.2 Education Minister’s Determination

The Education Minister has released an Adult and Community Education (ACE) Determination. The Determination has specified (in subsection 5(2)) that the course of study must be available to adults and the general community, not a course provided by or requested by an employer for their employees and not a course provided by or requested by an organization for their members only.

2.5.3 Employment related skills

Goods and Services Tax Ruling GSTR 2000/27 Adult and Community Education Courses adds light to the definition of ‘add to employment related skills’. The GST Act does not define ‘employment related skills’. However, the ATO has relied upon the definition in the Training Guarantee (Administration) Act 1990.

An ‘employment related skill’ includes a skill used, or that may be used, by a person in the course of:

  • Holding any office or appointment, performing any functions or duties engaging in any work, or doing anything, that results in the person being an employee; and
  • Any business, occupation, profession or trade carried out by the person otherwise than as an employee.

The course will satisfy the test if the course meets the following requirements:

    • Directed at people who want to add to their employment related skills;
    • Objectives of the course specify the employment related skills that participants will acquire in undertaking the course;
    • The means of imparting the skills to the participants are clearly identified prior to the commencement of the course; and
    • There is reasonable expectation that the skills being developed will be used in the course of being an employee, or working in a business, occupation, profession or trade, rather than for recreational, hobby, artistic or cultural endeavours;

2.5.4 Other factors to consider

In addition to the above, RMIT University must also consider the following:

How the course is marketed - a course that markets the employment related skills that will be acquired as a result of undertaking the course;

Whether the course is similar to an accredited VET program - if RMIT can clearly demonstrate that a majority of the course content is the same as part or all of a recognised VET program, this factor will support your contention that the course is likely to add to employment related skills of people undertaking the course;

The outcomes of the course - if RMIT can provide evidence that the majority of people undertaking the course are gaining employment relevant to the skills they have acquired in the course, this will also demonstrate that the course is likely to add to the employment related skills of people undertaking the course.

2.5.5 Examples of adult and community education courses that are GST-free

These examples have been extracted from GSTR 2000/27.

Paragraph 27: Computer course 1

“RMIT University offers a course titled ‘Introduction to Computers’. The course is described as an ideal beginner’s course. The course outlines that it is designed to provide participants with basic hands-on awareness of computers and computer terminology. The course has been developed with the intention that it will increase and improve the computer skills of people undertaking the course. Computer skills are employment related skills and RIv1IT targets office workers and people retired from the .workforce who want to expand their knowledge of computer programs. The course is GST-free to all participants, regardless of the fact that some of the participants may not be currently employed.”

Paragraph 31: Computer course 2

“RMIT University offers a course titled ‘Excel 2000-Advanced’. The course outline states that the applicants must have completed Excel - Intermediate or equivalent. The course is designed to teach the more advanced features of Excel 2000. An intermediate knowledge of Excel is stated as a prerequisite. The course objectives demonstrate that it is a course designed to add to the employment related skills of people undertaking the course and it is GST free.”

2.5.6 Example of adult and community education courses that are GST Taxable

This example has been extracted from GSTR 2000/27

Paragraph 37: Belly dancing

“RMIT University offers a belly-dancing course. The course is promoted and targeted at people who want to undertake a leisure type of activity and the aims of the course do not list any skills that relate to participants gaining or using the skills in any form of employment.

As the course is not directed at people who want to add to their employment related skills and the aim of the course is to teach people to belly-dance for recreational purposes, the course is a hobby course and subject to GST.

Tania recently completed the belly-dancing course and has obtained employment as a belly-dancer at the local Turkish restaurant. It is irrelevant that a participant gained employment after completing the course. The course is a recreational course and the intended outcome was not to develop employment related skills in this area.”

3.0 Recognition of prior learning

Subsection 38-110 of the GST Act states that the supply of assessment will be GST-free if it is for the purpose of access to education.

Example: A student will be able to enrol for a particular course if they can initially pass an English test. To sit this test, a fee must be paid by the student. The fee applicable will be GST-free.

4.0 Short courses

Short courses will be GST-free if it includes assessment criteria and if it can be mapped to an accredited course (refer to section 2.0 this fact sheet for accreditation details).

Short courses do not gain GST-free status by allowing the student to qualify for employment. ‘Qualification for employment’ will only be the critical factor if the course, is to be classified as a ‘Professional or Trade course’. Where a course is an accredited VET course it will automatically be GST-free. Therefore, ‘Qualification for employment’ is not a factor that will be required to be consideration.

5.0 Course materials / administrative services / field trips

Separate fact sheets are available in relation to course materials, administrative

services and field trips.

6.0 GST-free or Taxable – no difference for business

Entities carrying on an enterprise (eg. Charities, businesses, Government) will be in the same net position whether they are charged for courses on a GST-free or GST taxable basis. because they are entitled to claim an input tax credit

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