House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 1 - Goods and services tax amendments relating to first aid or life saving courses

Outline of chapter

1.1 Schedule 1 to this bill amends the GST Act to:

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enable the supplier of an education course that is an eligible life saving course to treat the supply as GST-free if the supplier uses instructors for the course that are suitably qualified; and

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remove the requirement that a supplier must be an entity that is a 'body' to be eligible to treat the supply of an education course that is a first aid or life saving course as a GST-free supply.

Context of amendments

1.2 Under section 38-85 of the GST Act, the supply of an education course is GST-free. An education course includes a 'first aid or life saving course' that satisfies certain criteria.

1.3 The supply of an eligible first aid or life saving course may be treated as a GST-free supply only if the supplier is registered or approved by a relevant State or Territory body or authority to provide such courses.

1.4 Currently, there are no State or Territory bodies or authorities that register or approve suppliers of life saving courses. Therefore, contrary to the intended GST treatment, the supply of a life saving course cannot be treated as a GST-free supply.

1.5 In addition, the supply of an eligible first aid or life saving course may be treated as a GST-free supply only where the entity making the supply is a body. The term 'body' is not defined in the GST Act and may inadvertently exclude other entity types that make such supplies.

Summary of new law

1.6 This bill will amend the definition of a 'first aid or life saving course' within the GST Act to:

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insert additional criteria which, if satisfied, the supplier of an eligible life saving course will be able to treat the supply as a GST-free supply; and

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to permit any entity type to be able to make a GST-free supply of an eligible first aid or life saving course.

Detailed explanation of new law

1.7 The definition of a first aid or life saving course in section 195-1 of the GST Act is amended to include three additional criteria relevant to suppliers of life saving courses.

1.8 The additional criteria are inserted into paragraph (b) of the definition of a first aid or life saving course. The criteria, if satisfied, will permit the supplier of an eligible life saving course to treat the supply as a GST-free supply. [Schedule 1, items 2, 4 and 5, section 195-1]

1.9 A supply of an eligible life saving course will be a GST-free supply if the supplier uses an instructor that holds a training qualification that was issued by either of Austswim Limited, Surf life Saving Australia Limited or The Royal Life Saving Society - Australia.

1.10 The issue of a training qualification by one of the three life saving organisations to the course instructor represents an acceptable alternative to the need for the supplier of the relevant life saving course to be registered or approved by a State or Territory body or authority to conduct the relevant course.

1.11 What constitutes a 'training qualification' is not specified in the GST Act. The three life saving organisations conduct a number of training courses that enable persons to obtain a qualification suitable to the conduct of life saving courses. An example of a relevant qualification is the Austswim Teacher of Swimming and Water Safety award issued by Austswim Limited.

1.12 The training qualification held by the instructor must directly relate to a life saving course to which paragraph (a) of the definition of first aid or life saving course in section 195-1 of the GST Act applies. For example, the supplier of an aquatic survival skill course would need to use an instructor that holds a training qualification relevant to that course in order to treat the supply of the course as a GST-free supply.

1.13 The term 'body' within the definition of a first aid or life saving course in section 195-1, is replaced with the term 'entity'. An entity is defined in section 184-1 of the GST Act and includes individuals, partnerships and others that may not constitute a body. Replacing the term 'body' with that of 'entity' means that any entity type that makes a supply of an education course that is an eligible first aid or life saving course may be able to treat the supply as a GST-free supply. [Schedule 1, items 1 and 3, section 195-1]

Application and transitional provisions

1.14 The amendments apply, and are taken to have applied, in relation to net amounts for tax periods starting on or after 1 July 2000. The application date ensures that supplies of eligible first aid or life saving courses are treated as GST-free supplies from 1 July 2000 in accordance with the original policy intent. [Schedule 1, item 6]