Financial Services

GST Applicability to University Transactions - Education Policy

Although in most circumstances education is GST-free, it is not so in every case.

Policy statement

Generally education provided by the University is GST-free. Education is specifically defined in the legislation and includes the following courses under s.195-1 of the GST Act:

  • tertiary courses
  • master's or doctoral courses
  • adult and community education courses
  • English language courses for overseas students
  • professional or trade courses
  • other GST-free courses including first aid or life saving courses and tertiary residential college courses
  • units that have been 'audited'.

Tertiary course

For a course to qualify as a tertiary course for GST purposes, and thereby be GST-free, the course must be a course of study or instruction that is a tertiary course determined by the Education Minister under subsection 5D(1) of the Student Assistance Act 1973, or any other course of study or instruction that the Education Minister has determined is a tertiary course for the purpose of the Act.

An education course that is an 'approved tertiary course', will be GST-free regardless of whether the student is:

  • an Australian resident or overseas full-fee-paying student
  • a part-time or full-time student.

However, a course provided under contract specifically designed for non-resident students, and not available to resident students, is not an 'approved tertiary course' under the Education Minister's Determination GSTR 2001/1.

Master's or doctoral course (award course)

A course of study or instruction supplied by the University (as a higher education institution) and accredited at master's or doctoral level is GST-free.

GST-free fees are:

  • Commonwealth-supported fees
  • course fees paid by students enrolled in a single unit of an award course (an approved tertiary course).

Adult and community education course

For a course supplied by the University to be a GST-free adult and community education course, the following requirements must be satisfied:

  • the course must be a course of study or instruction that is likely to add to the employment-related skills of people undertaking the course
  • the course must be of a kind determined by the Education Minister to be an adult and community education course
  • the course cannot be any other education course (such as a tertiary course)
  • the course must be available to adults in the general community
  • the course cannot be provided by, or at the request of an employer for its employees or by, at the request of an organisation for its members, and cannot be a course provided by way of private tuition to an individual.
Employment-related skills

It is important to note that the Education Minister is not responsible for determining whether an adult and community education course is likely to add to the employment-related skills of people undertaking the course. This criterion is separate from the Minister's Determination, and will depend on the facts of each case.

A course satisfies the test as to whether an adult and community education course is likely to add to the employment related skills of people undertaking the course if it meets the following requirements:

  • it is directed at people who want to add to their employment related skills
  • the 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
  • there is a 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.

Adult and community courses that are GST-free include:

  • "computer courses" designed to increase and improve computer skills of students
  • "job-seeking courses" designed to assist participants to market their skills.

Adult and community courses that are taxable supplies would include:

  • belly dancing courses
  • cooking classes
  • picture framing courses.

For more details see Australian Taxation Office (ATO) ruling on ACE courses (GSTR 2000/27) and ATO Interpretative Decision ID2003/776.

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English language course for overseas students

A course of study or education supplied by the University to overseas students that includes study or education in the English language is GST-free, as long as the students enter Australia on a student visa.

An overseas student (as per ATO Interpretative Decision ATO ID 2004/853) is a student who is part of the overseas student program and is in possession of the relevant student visa, being the DIMIA visa classes 570-576. An overseas student, for the purposes of an English language course for overseas students, does not include an individual who is in Australia on a tourist visa, working holiday or other type of visa who decides to undertake some type of study or education.

GST is charged on placement fees. These include placement fees for homestay and accommodation.

Transactions out of the scope of GST include those outputs where the University is merely acting as an agent collecting money from the students and handing it over to the service provider. The amounts collected are not treated as revenue and the payments are not treated as costs. Receipts and payments are merely passed through a clearing account.

These transactions include:

  • private health insurance fees collected on behalf of the provider
  • accommodation fees collected on behalf of homestays/colleges/hostels.

Professional or trade course

A course is GST-free if it leads to a qualification that is an essential prerequisite. To be an "essential prerequisite" under s.195(1) of the GST Act, it must:

  • be imposed under an industrial instrument
  • imposed by the relevant profession or trade association
  • if these do not apply, a profession or trade

The qualification must be for:

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

Therefore continuing professional development courses are not GST-free. For more details on Professional or Trade Courses, refer to GSTR2003/1 - GST: Supplies that are GST-free as Professional and Trade Courses.

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Other GST-free courses

Under the GST legislation, the Education Minister may determine other courses supplied by the University to be a GST-free tertiary course. Under the Minister's Determination of the Student Assistance Act (SAA) 1973 – Determination 2002/1, a GST-free tertiary course includes:

  • preparatory courses for tertiary education
  • an accredited higher education course or accredited vocational education and training under RATE or AQF guidelines (excluding master's and doctoral degrees)
  • an associate degree course for which the completion of Year 12 or a higher education course is the normal entry requirement
  • combined courses including double bachelor degrees and combined bachelor degree / postgraduate diploma courses
  • graduate degree courses
  • master's qualifying courses.

Where one unit of a tertiary course (eligible) is supplied by the University and the student is enrolled in that unit, the unit is GST-free. When a student enrols in a unit and elects not to be assessed (often referred to as 'auditing' a unit), provided the student is enrolled in a unit that forms part of an approved tertiary course, it is also GST-free.

Alternative entry programs

In relation to alternative entry programs, while these may fall within the definition of a "preparatory course for tertiary education", they will not be GST-free where they are contractually provided to students by a controlled entity rather than the University directly (and are not therefore provided by a higher education institution). They may be GST-free, however, if the relevant controlled entity is a non-government Registered Training Organisation.

Options program-TAFE articulation is GST-free where the student can enrol via either:

  • TAFE enrolment in a specific TAFE course, and credit is given by the University on a one-for-one basis for courses satisfactorily completed
  • university enrolment but the actual course work is done in a TAFE college and credit is given on a one-for-one basis for courses satisfactorily completed.

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Extension studies and studies abroad

It is understood that courses in these areas are really units of otherwise GST-free tertiary award courses, the difference being that the students are not enrolled as such in the 'entire' award course for a variety of reasons. The students therefore undertake isolated units that are within otherwise GST-free tertiary award courses.

Units under these areas will be GST-free if the units are from units that are within otherwise GST-free courses.

Assessment and issue of prior qualifications

Fees charged by the University (such as for a Pathways course) are GST-free for the assessment and issue of qualifications to allow:

  • access to education
  • access to employment
  • access to membership to a professional or trade association
  • registering or licensing for a particular occupation

Taxable courses

Courses not classed as education in the legislation are subject to GST and include:

  • recreational, leisure and personal enrichment courses run on a non-award basis
  • continuing professional education that maintains a level of knowledge or keeps the knowledge up to date.

Hobby and recreational courses

Hobby and recreational courses are not likely to add to the employment-related skills of people undertaking the courses. These courses are not GST-free.

For more details see ATO ruling on ACE courses (GSTR 2000/27).

Sponsored Students/Corporate Funded Students

Students occasionally have their fees paid by sponsoring organisations. This has no effect on the GST status of the transaction.

Workshops run co-operatively with other universities

The host university bears the initial cost of the facilitator. Input tax credits are available to the host on this cost.

GST-exclusive costs are split and then on-charged to other universities inclusive of GST. Input tax credits are available to the University receiving the tax invoice for this charge.

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Lunches

Lunches/meals charged with taxable or GST-free courses are subject to GST.

International students

GST-free outputs include:

  • GST-free education course fees (including those received via overseas agents)
  • course fees charged to university students on an exchange program
  • overseas students studying by correspondence.

Outputs subject to GST include:

  • commissions from private health insurance providers
  • orientation fees
  • application fees (unless it guarantees the applicant a right to receive a tertiary education course).

Private health insurance providers/visa applications

Compulsory overseas health cover premiums are collected from the students (received directly, or via an overseas agent) on behalf of the private health insurance provider. The fees collected are then paid over to the private health insurance provider. The University is paid a commission for performing this task.

Visa application fees are collected from the students on behalf of Customs. The fees collected are then paid over to Customs.

The University is merely acting as an agent collecting money from the students and handing it over to the service providers. The amounts collected are not treated as revenue and the payments are not treated as costs. Receipts and payments are merely passed through a clearing account.

The GST-inclusive amount of commission earned is deducted from the amount remitted to the private health insurance provider. The GST portion must be remitted to the ATO.

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Overseas students studying by correspondence

Fees charged to students residing overseas who complete a course at the University by correspondence will not be subject to GST. A supply outside Australia, and the enjoyment of which also takes place outside Australia, is not connected with Australia and therefore not subject to GST.

Offshore courses

Offshore courses (award or non-award) provided outside Australia will not be subject to GST, as they are not connected with Australia. This will apply to courses delivered by:

  • a non-Australian resident agent where students pay the agent and the agent pays the University
  • University staff where students pay fees directly to the University itself.
Overseas courses run jointly with a third party

Where the third party is a resident enterprise of the foreign country (and not an Australian resident) fees charged will not be subject to GST as they are not connected with Australia.

Where the third party is an Australian resident and:

  • the University provides intellectual rights to that third party who, in turn, sells the course to overseas students, then the transaction is subject to GST
  • the University provides intellectual rights to overseas students jointly with the third party, then the fees charged will not be subject to GST as they are not connected with Australia. 

Two-plus-one award course

An overseas student enrols in an award course where:

  • the first two years are completed overseas (GST-free as either an export or not connected with Australia)
  • the last year is completed in Australia (GST-free as education).

International inputs

Inputs incurred with no GST components include:

  • international flight tickets
  • commissions paid to overseas agents who are not registered for GST.

GST-taxable transactions include:

  • commissions remitted to local agents who are registered for GST.