GST and international students

Officials recently released an issues paper dealing with the GST treatment of immigration services provided to non-residents.  While this does not have direct implications for educational institutions, it does serve as a timely reminder that supplies to non-residents must be considered carefully when determining whether GST applies or not. 

The general rule regarding supplies of services to non-residents is that if the non-resident receives the supply in New Zealand, GST will apply. Conversely, if the supply or services physically takes place outside New Zealand, or if it is made to a non-resident who is not in New Zealand when the services are performed, the supply will be subject to GST at 0 percent.

In relation to international students, where they come to New Zealand for their education GST must be charged. If the international students are enrolled in distance learning and do not come to New Zealand for the purpose of the course being provided, the supply will be zero-rated. 

However, there may be situations where the international student completes most of the course via distance learning from offshore, but attends for example block courses in New Zealand as part of the course. In this situation part of the course delivery will be received by the student in New Zealand which makes the supply subject to GST at 15 percent rather than 0 percent. 

Based on the comments in the immigration services issues paper, potentially all of the course fee could become subject to GST at 15 percent in this scenario, although depending on the detailed arrangements the GST liability may be able to be limited to a portion of the total course fee.

If you offer any courses where the supply is received by students both within and outside New Zealand, we recommend that you seek tax advice regarding your GST liability.

Andrea Scatchard is an Associate Director in the Hamilton office of Deloitte, and Allan Bullot is a Partner in the Auckland office.  Andrea can be contacted on 07 838 4808, and Allan can be contacted on 09 303 0732.

While care has been taken in the preparation of this article, it has been prepared to provide general information only and should not be taken as a substitute for seeking professional advice. 

Deloitte does not accept any liability for any loss that may arise as a result of any person relying on the information or views expressed in this article.