Course materials - GST Fact sheet 5
In accordance with section 38-95 of the GST Act, the supply of reading guides and printed materials that are sold to students by the University will be GST- free. This will be the case if it is a supply of course materials for a subject undertaken in a GST free education course.
Section 195-1 states “course materials” in relation to an education course means materials provided by the entity supplying the course (i.e. RMIT University) that are necessarily consumed or transformed by the students undertaking the course for the purposes of the course. This section also defines “education course” which among other things, include a tertiary courses, Masters or Doctoral courses, professional or trade courses, and tertiary residential college courses.
Thus, to be GST-free, the course materials must be supplied by the University and transformed (or consumed) by students as part of their course. Examples of course materials given in the Explanatory Memorandum include photocopied educational materials, art supplies and ingredients used in a cooking class.
Goods sold, leased or hired to students (other than “course materials”), and the supply of membership of a student organization are specifically stated by the legislation not to be GST-free. The Explanatory Memorandum gives examples of supplies that are not GST-free, such as the sale of food in a tuck-shop, the hire of a musical instrument or the sale or hire of textbooks and computers. The Explanatory Memorandum further points out that goods or property that are provided for students to use whilst undertaking a course, such as textbooks, computers, sports equipment and school buildings are GST-free, unless there is a hire charge separate from the course fee.
2.0 What are course materials
The sale or provision of “course materials” as defined for a subject undertaken in a GST-free education course is GST-free. To be GST-free, the course materials must be supplied by RMIT University, 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” means that where materials are used up (i.e. 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.
3.0 GST-free only if University sells the Course Materials
Course materials will only be GST-free if they are supplied by the RMIT University which means that the course materials will be GST-free when supplied to students of RMIT University.
It must be noted that the bookshop at RMIT’s Bundoora campus is NOT owned or managed by RMIT University. RMIT Union manages it. Therefore, course materials sold at that bookshop, and any other bookshops, which may be situated on campus grounds, will be subject to GST.
4.0 Sale of textbooks
Sale of textbooks is specifically a taxable supply and RMIT Union 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. However, the sale of the textbook may be eligible for an 8% textbook rebate.
4.1 8% textbook rebate
The Government will fund an 8% subsidy for educational textbooks from 1 July 2000, which will be paid to RMIT Union, to reduce the retail price of textbooks for students.
To be eligible for the subsidy, the textbooks must be on a designated reading list for an Australian educational institution. To participate in the scheme, RMIT Union must register as a participant and are required to maintain the same records of sales, as retail booksellers, to substantiate claims for the subsidy payment.
The subsidy will not be available to those eligible textbooks, which sold to other educational institutions, lecturers and teachers (unless they are also students). An RMIT student card must be produced to allow the student the entitlement of the subsidy.
4.2 What are the GST impacts in relation to the textbook rebate?
The GST payable by students who are entitled to the 8% discount of textbooks will be based on the actual price of the textbook, before the discount is provided to the student. Payments received from Department Education Science Technology (DEST) will not be subject to GST.
5.0 Sale of materials that are not textbooks
The workbook or tutorial note component of the package would be GST-free. If textbooks are included in the price of “course materials”, it is advisable to un bundle the cost of the package to show the price of the workbook and textbook separately because textbooks are not GST-free. Refer to Appendix 1 (Appendices tab) for types of purchases a student would require for their course and its GST status.
6.0 How RMIT Union’s Bundoora bookshop will make a claim
The Bundoora bookshop must sent to DEST an invoice that equals the value of the discounts provided to students. DEST will subsequently provide payment to the bookshop within 14 days via electronic means to Bundoora bookshop’s nominated bank account. The bookshop must indicate, during the registration process, the frequency that they will require reimbursement ie. either monthly or quarterly, from DEST.[Next: Appendices]