Edited version of your written advice

Authorisation Number: 1051429243248

Date of advice: 13 September 2018

Ruling

Subject: Goods and services tax (GST) and a supply of commercial pilot licence training course

Question

Is the supply of a commercial pilot licence training course by an Australian entity (you) a GST-free supply of a professional or trade course under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?

Answer

Yes, the supply of the commercial pilot licence training course by you is GST-free education course under section 38-85 of the GST Act.

Relevant facts and circumstances

You are an Australian entity which is registered for goods and services tax (GST).

You hold a relevant flight training certificate issued by the Civil Aviation safety Authority (CASA).

You conduct commercial pilot licence (CPL) training course under your Flight Training Certificate.

Under the Civil Aviation Safety Regulations (CASR) 1988, Commercial Pilots are trained under the provisions of CASA Certificate which requires applicants achieve a pass in seven CPL theory examinations. These examinations are conducted by an independent CASA approved organisation and are the same subjects to be passed by an applicant undertaking an integrated course of CPL training.

You conduct the CPL training course according to syllabus approved by CASA.

Successful completion of the following examinations is required prior to or during the course:

Exam code Subject Pass standard %

CNAV CPL Navigation 70

CMET CPL Meteorology 70

CHUF CPL Human factors 70

CLWA CPL Flight rules and 80

air law- aeroplanes

CADA CPL Aerodynamics 70

Aeroplane

CSYA CPL Aircraft general 70

Knowledge- aeroplane

CFPA CPL operation 70

performance and planning

To achieve the knowledge required to pass the above subjects, your students are required to purchase seven text books. Ground training in the above subjects is achieved by self-study, attendance at a course run by a third party provider or available to individual students in classes conducted by your Head of Operations (HOO).

One of the requirements to complete your CPL training course is the students must have minimum of 200 hours of aeronautical experience which includes at least 190 hours of flight time as a pilot, 100 hours of flight time as pilot in command, 20 hours of cross-country flight as pilot in command and 10 hours of instrument time, 5 hours of which need to be in a workplace.

Further requirements in your approved CPL syllabus are:

● Satisfactory complete the flying training syllabus contained in your Part 141 CASA approved CPL syllabus. This syllabus contains all the flying sequences required by CASA for the completion of a CPL training course to the level of competency required by the legislation.

The CPL course provided by you is not simply an accumulation of hours. All your CPL training is conducted to the level of competency required by CASA. The level of competency for a 200 hour CPL is identical to that for a student who undertook an integrated CPL training course. The difference is only that the students may have undertaken some training independently of an integrated course and accrued some flying hours in private operation.

● Pass a CPL flight test conducted by CASA or a CASA delegate: All CPL students trained by you are required to be flight tested by CASA or CASA delegates in accordance with CASA Flight Test Form 61-1490 Commercial Pilot Licence (Aeroplane). This is the same form that is used by CASA and their delegates to flight test a CPL student who has completed an integrated course. All training is conducted by flying instructors who hold the same CASS rating as those employed by an integrated school.

The students are required to achieve the same level of competency as required by CASA in all aspects before being recommended by their training organisation for a flight test.

On successful completion of CPL training course, CASA will issue a CASR certificate to the student which leads to entry into the profession of a commercial pilot.

Relevant legislative provisions

A New Tax System (Goods and Services Tax) Act 1999, Section 9-5

A New Tax System (Goods and Services Tax) Act 1999, Section 38-85

A New Tax System (Goods and Services Tax) Act 1999, Section 195-1

Reasons for decision

GST-free

A supply of an education course is GST-free under section 38-85 of the GST Act.

Section 195-1 of the GST Act defines:

education course means … (j) a *professional or trade course

professional or trade course means a course leading to a qualification that is an *essential prerequisite

(a) for entry to a particular profession or trade in Australia; or

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

essential prerequisite: a qualification is an essential prerequisite in relation to the entry to, or the commencement of the practice of, a particular profession or trade if the qualification is imposed;

(a) by or under an *industrial instrument

industrial instrument has the meaning given by section 995-1 of the *ITAA 1997

ITAA 1997 means the Income Tax Assessment Act 1997

Section 995-1 of the ITAA 1997 defines:

industrial instrument means:

(a) an *Australian law

Australian law means a *Commonwealth law, a *State law or a *Territory law.

Commercial pilot licence

A person not holding a CASR Part 61 CPL for aeroplane (a commercial pilot licence) is not authorised to pilot or co-pilot any aircraft.

A CASR Part 61 CPL is issued by CASA under Part 61 of the Civil Aviation Safety Regulation 1998 which is an Australian law dealing with licensing of pilots of aircraft.

The penalty for a person not holding a CASR Part 61 CPL for aeroplane to pilot or co-pilot an aircraft is imprisonment for 2 years.

Qualification – an essential prerequisite

GSTR 2003/1 Goods and services tax: supplies that are GST-free as professional or trade courses states:

45. Documents that are qualifications or that provide evidence of a qualification include … a licence

It is mandatory for a person to hold a CASR Part 61 CPL for aeroplane before they can enter into, or commence the practice of, the profession or trade of a commercial pilot of aircraft.

The penalty for a person not holding a CASR Part 61 CPL for aeroplane operating a commercial aircraft as a pilot (or co-pilot) is imprisonment for two years.

Therefore, for GST purposes, a CASR Part 61 CPL for aeroplane is a qualification which is an essential prerequisite in relation to the entry to, or the commencement of the practice of, the profession or trade of a commercial pilot of aircraft.

CPL course conducted by you

You conduct a CPL course to train a student to obtain a CASR Part 61 CPL for aeroplane.

Your HOO and other flying instructors conducting the CPL course are qualified and competent instructors under the CASR Flight Training Certificate.

Your CPL course syllabus contains all the flying sequences required by CASA for the completion of a CPL training course.

Ground theory is achieved by self-study, attendance at a course run by a third party provider or available to individual students in classes conducted by your HOO.

Before you would recommend a student for a flight test conducted by CASA, the student must pass the CASA examinations of the seven subjects and achieve a full CPL theory credit. For each examination, CASA assesses the student against defined competency standards.

CASA will issue a CASR Part 61 CPL to the student upon passing the flight test.

The CASR Part 61 CPL is the qualification showing the student has successfully completed the CPL course.

Professional or trade course

Based on the facts provided, you supply the CPL course to a student. Upon the student successfully completing the course and passing the flight test, CASA issues to the student a CASR Part 61 CPL.

The CASR Part 61 CPL is a qualification that is an essential prerequisite for the student to enter to, or commence the practice of, the profession or trade of a commercial pilot of aircraft.

Accordingly, the CPL course delivered by you will be the supply of a professional or trade course under the GST Act. The supply of CPL training course by you will therefore be a GST-free supply of an education course under section 38-85 of the GST Act.