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Industry Guide:

Pre-tertiary Education

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1. Are administrative services subject to GST?

If the education provider supplies administrative services directly related to the supply of a childcare, pre-school, primary or secondary course of study, the supply is not subject to GST as these services are treated as out of scope supply for public school and as an exempt supply for private school. In both cases, no GST is charged to the students.

2. What are course materials and the GST treatment on course materials?

Course materials are materials that are directly used, utilised and expended by students undertaking the course of study. If a public school provides the course materials directly to students then the GST treatment is out of scope and exempt if it is provided by private school. Sales of materials directly to the students and where those materials are necessarily used up by the students in undertaking the course of study will be subject to GST. Though it may be necessary in order to teach the curriculum but the act of selling constitute a business activity and therefore is subject to GST. 

3. Are activities supplied by third party that do not form part of any primary or secondary extra curriculum, subject to GST?

Activities that do not form part of primary or secondary extra curriculum under the National Curriculum or approved curriculum by Ministry of Education such as swimming, dancing and piano lessons are subject to GST. 

4. Will the school canteen operator or cafeteria that operates in primary or secondary schools charge GST to the students?

Any canteen operator or a cafeteria of a public or private primary or secondary school that supplies food primarily to the students including staff of that school is making an exempt supply. The supplies of food to students are not subject to GST. However, the canteen or cafeteria operators are not able to claim input tax on any taxable goods charged to them.

5. In order to provide service of transporting students to and from the school, School A rents a school bus from a transportation company. Is the school bus rented by School A subject to GST?

The supply of school bus services is a supply of public transportation and it is an exempt supply. The rental of a school bus to School A or the supply of school bus services by a private transportation company to School A is a standard rated supply and School A will have to pay GST on the rental of the bus which school A cannot claim the input tax credits. The subsequent supply of transportation to students by school A is an exempt supply and not subject to GST.

6. Should GST be chargeable on supply by Students Cooperative Bookshop (Kedai Buku Koperasi Pelajar) situated at the school?

The Students Cooperative Bookshop is not an educational institution as defined under the GST (Exempt Supply) Order 2014. Thus, if the Cooperative is registered under GST, supplies made by it are either subject to GST at standard rate (6%) or zero rate. 

7. What is the GST treatment on Parents Teachers Association (PIBG) activities?

The establishment of PIBG is required under the Education Act 1996 and must be registered under the Ministry of Education. The purpose of the establishment is for the enhancement of education and maintaining good relationship between parents and teachers and not for doing business. PIBG activities in relation to the purpose of its establishment are treated as related to education services. Supply by PIBG in relation to education services for both government and private school is not subject to GST.

On the other hand, if the PIBG is making any business activity such as selling of goods to the students and the taxable threshold reaches RM500,000.00, then PIBG must be registered and charge GST like any other normal business.

8. Is GST be chargeable on fund raising activities arranged by PIBG e.g. sales of tables for an Annual Dinner?

Under GST, PIBG is not considered as a charitable organisation. In this case, the fund raising activity can be given relief under GST (Relief) Order 2014 given relief from charging GST subject to conditions as mentioned in paragraph 57 of this guide. 

9. What is the GST treatment for a company who donates or sponsors an award to a school or student in a form of monetary or goods?

Sponsorship is a taxable supply if there is benefit in return. Sponsorship payment which involves the sponsor receiving clearly identifiable benefit in return, example either in terms of advertising or publicity is a consideration for this supply. If the sponsorship does not involve any identifiable benefits in return, then the sponsorship payment is not a consideration for the supply and no GST is chargeable. 

10. What is GST treatment on tuition fee by post such as Adabi Gaya Post?

Tuition centre is registered as a private educational institution which provides extra classes and involves teaching of subjects in school either by attending classes at a premise or by post. It is a business entity providing education services to students. However, this service is excluded from being an exempt supply under the GST (Exempt Supply) Order 2014 neither it is included in the GST Relief Order 2014. The tuition centre charges fees for every subject which a student takes and the course materials are sent by post for home tuition. The fees charged are subject to GST at standard rate. 

11. Qawiey Child Development Centre is an educational institution registered under the Education Act 1996 that caters care and education services for new born to 5 years old. The services include music, arts and sports classes. Children attend classes at the Centre on a weekly basis. Besides providing child development, the centre also sells products such as books to the students. What is the GST treatment on the services provided by this centre?

Child development services are not considered as education services under the GST (Exempt Supply) Order 2014. For GST purpose, the requirement to be registered under the Education Act 1966 is not the only condition to qualify as an exempt supply. In order to qualify as an exempt supply, the education services provided by the educational institution must be listed in the GST (Exempt Supply) Order 2014. In this case, the services of child development is excluded as an exempt supply. Therefore, the services provided by this company is subject to GST at standard rate of 6%.

12. ABC Sdn. Bhd. imports text books and scuba diving equipment from Australia to teach scuba diving courses. Is Scuba diving course an exempt supply and are these imports exempted from GST?

Education services provided by private educational institutions which are exempted from GST are specified under the GST (Exempt Supply) Order 2014. In this case, teaching scuba diving courses are not course of study in accordance with the National Curriculum and therefore are subject to GST at standard rate. Only books described specifically in the GST (Zero Rated) Order 2014 are subject to GST at zero rate. For the text books and scuba diving equipment imported by ABC Sdn. Bhd., GST has to be paid upon importation.

13. Is a private tuition centre whether registered or otherwise falls under the category of exempt supply? Generally, a tuition centre operates on “semester” basis. Before a new semester begins, the tuition centre will collect either 100% tuition fee or 60% tuition fee in advance. In this regard, will the collection in advance before 1st April, 2015 subject to GST?

The supply of education services by tuition centres are excluded under the GST (Exempt Supply) Order 2014 and the services are not exempt supplies. This means the supply by tuition centres are taxable supplies and subject to GST. If the tuition centre is a GST registered person, GST must be charged to the students and any GST incurred in providing the services is claimable by the tuition centres as its input tax credit.

If the tuition fees are collected before the effective date of GST (1 April 2015) and part of the supply will take place after 1 April 2015, the payment made would be inclusive of the GST chargeable after 1 April 2015. There is a need for the tuition centre to apportion the amount that should be subject to GST.

14. Is subscription of Electronic Database (database of Electronic Books and Electronic journals) is subject to GST? This is a non-annual subscription where a fee payment is charged in order to allow access. Once the subscription fee is not paid the access is stopped. Is purchase of Electronic books like e-book similar to buying a printed book subject to GST?

Subscription of Electronic Books and journals are subject to GST at standard rate as they are not under the GST (Zero rated) Order 2014.

15. Maha Music Sdn. Bhd. is an educational institution that provides music lessons for example piano, violin, cello, dance & arts. The students enrol the exams under the Malaysian Examination Syndicate. Are the services provided by the company taxable and subject to GST? Do we need to be registered under GST?

The education services provided by Maha Music Sdn. Bhd. are not listed as exempt supplies under the GST (Exempt Supply) Order 2014 therefore the services provided are taxable and subject to GST.

If the supplies of music lessons by Maha Music Sdn. Bhd. exceeds the threshold of RM500,000.00, it is mandatorily required to be registered under GST. Once registered, GST must be charged at standard rate and any input tax incurred is claimable.

The Malaysian Examination Syndicate, Ministry of Education as the controlling body, provides examinations of music on behalf of Associated Board of the Royal Schools (ABRSM). As a federal ministry, Malaysian Examination Syndicate supplies of examinations are out scope and no GST will be charged to students taking the examinations. 

16. Are services provided by a company registered with Companies Commission of Malaysia (SSM) under Company Limited by Guarantee operating as training centres for public servants subject to GST?

For GST purpose, such companies are regarded as any other business entity. Thus, the services provided are taxable and subject to GST even though it is operating as training centres for public servants.
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Johor, Malaysia.

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Penang, Malaysia
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