What affect will the introduction of GST have upon supplies of education, training and childcare?

Division 38 in the GSTA sets out the supplies that are GST-free. If a supply is GST-free then:

• No GST is payable on the supply;
• An entitlement to an input tax credit for anything acquired or imported to make the supply is not affected.

The supply of an education course is a GST-free supply. The ATO has issued a ruling GSTR 2000/28 for comment on pre-school, primary and secondary education courses. Also, a final ruling, GSTR 2000/27, on the meaning of "likely to add to employment skills" as it applies to adult and community education courses has been issued by the ATO.

Specific Questions and Answers

1. Will the provision of first-aid kits and books issued as part of a first-aid course be considered GST-free?

   First aid or life saving courses are included in the definition of an 'education course' and are therefore GST-free. Course materials (photocopied education materials, art supplies or ingredients in a cooking class) that are consumed or transformed in an 'education course' would be GST-free.

   First-aid kits and books that are issued as part of the course will be subject to GST. Supplies of kits and books are taxable supplies for GST purposes and consequently GST should be remitted on the portion of the course fee that relates to the supply of those items.

2. To what extent will the provision of life saving courses other than resuscitation courses be considered GST-free? For example, the instruction of people in the use and manoeuvring of inflatable rubber boats?

   If the instruction of people to use inflatable rubber boats was part of an overall life-saving course as stated in the legislation then this aspect of the course would be part of a course that is GST-free. If this type of instruction was separate to the life-saving course then it would not be an education course and would be taxable.

3. How will "Life Education" courses that are conducted in primary and secondary schools be treated with respect to GST. Life education exists as a complementary health and drug education resource for schools. Clarification is sought as to:

• whether the course would be considered GST-free?
• how a market value can be established for these types of services?

A supply of an education course is GST-free. The ATO has issued a draft Public Ruling GSTR 200/D? on what constitutes an education course for the purposes of GST.

All recognised preschool, primary school, secondary school and tertiary courses are GST-free. All courses covered by the determination of education courses under the Student Assistance Act 1973 are GST-free. The determination also covers secondary and tertiary courses provided they are accredited with the relevant State or Territory accreditation authority and are not considered to be "hobby" course.

The Education Minister may determine that any primary, secondary or tertiary course not covered by the determination is a GST-free course.

Where a course is not an education course that is GST-free the market value and the cost of supply are the two tests which can be applied to an activity to decide whether it is GST-free. Where a charity makes a supply for consideration less than 50% of the GST inclusive market value or less than 75% of the cost of supply then that supply will be GST-free.

4. How will GST apply to a neighbourhood centre when it offers low cost courses/programs aiming to create opportunities for socialisation, development of life skills, or aim to increase active participation in community life or increase health etc?

   Some of these courses are facilitated by volunteers, others by professionals visiting from another organisation. In all cases the neighbourhood centre will bear the cost of administering bookings, promotion, venue maintenance, insurance, utilities etc., and usually the cost of purchasing and maintaining equipment.

   Anything supplied by a charity (if registered for GST) is GST-free if the consideration for the supply is less than 50% of the GST inclusive market value or less than 75% of the cost of supply. Where the supplies are GST-free or taxable the charity is entitled to full input tax credits for all their acquisitions that relate to these supplies, including all the administration costs mentioned above.

5. Childcare Assistance (CCA) is paid by Centrelink to a Scheme, to be paid to the carers on behalf of the parents. Parents pay their portion of the childcare direct to carers. The balance is then paid by the Scheme to the carer withholding that portion called the parent levy that is used by the scheme for administration purposes. Will the parent levy attract GST?

Supply of child care will be GST-free under Div 38-D if these services are provided at facilities that receive Government funding or if the child care provider is a registered carer for the purposes of the Childcare Rebate. Provided the childcare qualifies, the supply is GST-free irrespective of whether the payment is from Child Care Assistance or the parents.