Australian resident students – GST fact sheet 2

Fact sheet

1.0 Introduction

There is no specific GST legislation or rulings in respect of Higher Education. However, the GST legislation does provide that some education courses will be GST free. Discussed below are some expenses and their GST implications, which international students may incur whilst studying in Australia.

2.0 Tuition fees

Any fees charged by RMIT for an accredited tertiary course will be GST free. An accredited tertiary course is one, which is of a kind determined by the Education Minister under subsection 5D(1) of the Students Assistance Act 1973. English language courses for overseas students are also generally GST-free.

2.1 HECS liability

HECS liability will be treated like any other loan and will therefore be input taxed. However, it is expected that students will face an increase in HECS repayments due to the inflationary effect of introducing GST (not because it is subject to GST).

2.2 Studying an extra subject

The AVCC received a ruling dated 6 March 2000, which states that:

“Where the student enrols in a single subject which forms a part of a course which leads to the conferring of an eligible tertiary degree, ie a GST free tertiary course, the fee charged in respect of that subject will also be GST-free. Where the student merely audits the unit or subject any fee charged is subject to GST.”

The interpretation of “merely audit” involves the student attending lectures and tutorials etc. without undertaking any assessments involved and is not issued with a certificate acknowledging the studying of the subject. Where this is the case, GST will be charged on the tuition fee to the student

2.3 Student fees

Compulsory Non-Academic Fee (CNAF) and Student Services Academic Fee (SSAF) is levied by RMIT to provide facilities, amenities and activities by the Student Unions and is of direct benefit to the students of RMIT University.

It will not be subject to GST based upon the decision of the ATO Private Ruling Number 8117 dated 29 October 2001.

2.4 Administrative fees

If the student enrols in a GST-free course, any enrolment (administrative) services provided by RMIT will also be GST-free. These include the processing of enrolments, any examination arrangements, provision of testamurs or transcripts to students, and lecture notes or course guides provided to students.

2.5 Penalty for late payment of fees

Any penalties imposed on students by RMIT, for late payment of fees will not incur any GST liability, as the fees would not be considered a supply for GST purposes.

2.6 Other University expenses which students may incur

A summary of the fees and charges that may be incurred by students and its GST treatment are as follows:

Fee charged

GST status

Enrolment services

GST free

Photocopying by student

Taxable supply

Printing and laminating for students

Taxable supply

Examination arrangements

GST free

Internet and E-mail services

Taxable supply

Counselling services

Taxable supply

Graduation ceremonies (conducted in Australia)

Taxable supply

Graduation dinner

Taxable supply

Hire of academic dress

Taxable supply

Library charges

GST free

Provision of testamurs and transcripts to students

GST free

Lecture, course notes and guides provided to students

GST free

Recognition of prior learning

GST-free

3.0 Library fines

Library fines imposed by the University will not be taxable under the GST Act ie. there is no GST charged on such fines. The reason for this is similar to that of late payment of fees. Thus, the issuance of a library fine does not attract GST because it does not constitute a supply for GST purposes. Where there is no taxable supply, no GST will be payable on such fines.

4.0 Books and stationary

All stationary purchased by the student will be subject to GST. The sale of textbooks to students will constitute a taxable supply and the University will accrue a GST liability, even where the textbooks are for a GST-free education course. This is because textbooks are not “necessarily consumed or transformed” and therefore fail the requirements for GST-free “course materials”. The GST Legislation specifically states that the sale of textbooks will be taxable.

Some textbooks prescribed as recommended reference books for students may allow The student to be entitled to a textbook rebate of 8%. This rebate allows the students to be at a lesser disadvantage after the introduction of GST

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4.1 Course materials

The sale or provision of “course materials” as defined for subject undertaken in a GST-free education course is GST-free. To be GST-free, the course materials must be supplied by UMIT University or RMIT Training, and the course materials must be necessarily consumed or transformed by the students undertaking the course for the purpose of the course.

The words “necessarily consumed or transformed” may mean that where materials are used up (ie. where they cannot be re-used) such as where there are notes which have places for students to add information, such items would be considered to be necessarily consumed for the purposes of the GST legislation.

For example, chemicals used in scientific experiments will be GST-free where they are used as part of the GST-free education course. This is because they are “transformed” and take on a new form. However, equipment sold to students would not be considered as “consumed” or “transformed” and therefore would not receive GST- free treatment.

Course materials may include photocopied educational material, art supplies and ingredients used in a science lecture or cooking class, however would not include textbooks or the hire of equipment such as musical instruments.

GST-free only if University sells the Course Materials

Course materials will only be GST-free if they are supplied by the same entity that supplied the GST-free education course. This means that the course materials will only be GST-free when supplied to the end user.

It must be noted that only bookshops owned by RMIT University will have the chance of providing GST-free course materials. Any other bookshops, which may be situated on campus grounds but are owned by Student Associations or other associations will not be able to provide those same course materials, GST-free.

4.2 Photocopying charges

The supply of a photocopying card is subject to GST. When a student first purchases a photocopying card, eg. $2, there may be two separate values in the photocopy card. The first value is $0.50 for the actual card and the second is for $1.50 worth of photocopying credits.

Using the above example, there will be two supplies for GST purposes, the first being the supply of the card itself, and the second being the supply of a future right to photocopy. When a student recharges the photocopying card, eg. 45, there will only be one supply, that of the future right to photocopy. Where a photocopy card is purchased or recharged after 30 June 2000, the GST on the photocopying card is attributed to the day of purchase, regardless of which accounting method is used, as the consideration has been received on that day.

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