Is your RTO trustee of a trust? A quick restructure may be in
order if you want to be an Approved Course Provider of VET Student
This article is the second in a series about Vocational
Education Training sector changes in connection with the VET
Student Loans Act 2016 (the Act).
Our previous article (which you can read
here) outlined the application process for becoming an Approved
Course Provider (ACP) for VET Student Loans. This
article continues with the theme of ACP eligibility requirements. A
requirement that ACP applicants may not have picked up or
understood fully is their inability to be trustees of a trust.
Imminent organisational restructuring is on the cards for those
ACPs who fall into this category.
Prohibition on trustees
The Act prohibits persons who are ACPs from being a trustee by
stipulating that in order to meet the "course provider
requirements" an RTO must "be a body corporate that is
not a trustee". This is a blanket prohibition. No
"if's" or "but's".
Clearly if you are an RTO which is not a trustee then you can
breathe a sigh of relief and continue worrying about the other
changes you need to comply with under the Act.
However, if you are an RTO which is a trustee then you may have
a major problem on your hands. It may be that your RTO already has
provisional approval as an ACP or has applied to become an ACP. If
you have failed to properly disclose that you are a trustee,
section 36 of the Act could come home to roost as it allows the
Department to suspend, cancel or revoke your status as an ACP or
application for approval as an ACP where you do not comply with the
How can you comply with the requirements of the Act if
you are a trustee?
This will ultimately depend on the nature of your corporate, tax
and other structuring arrangements as an RTO and how you have been
operating your existing RTO business. For some it may be all too
hard to restructure. For others, there may be a range of changes
which can be considered to your existing structure to manage this
issue, including the following:
Retirement of your RTO as trustee of any trusts of which it is
trustee and appointing a replacement trustee
Establishing a new RTO entity (not a trustee) and moving all of
your RTO arrangements from the existing trustee to the new RTO
(noting that this would require approval from the relevant
regulatory authorities, including ASQA, VRQA and TAC)
In considering either of the above options or any other
structural options available to you, careful consideration will
need to be given to the following non-exhaustive list of
The terms of the RTO's funding and other material
Course material licensing and other IT and IP arrangements
Banking and other financing facilities which may contain
restrictions or other consent covenants
Taxation implications for the RTO and any trust of which it is
It is never fun to make a hasty organisational restructure, but
better to comply with the requirements now before you have your
provisional ACP status suspended or revoked or your application to
be an ACP rejected.
Stay tuned for the rest of our VET Sector series in the months
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Federal Court decision is likely to encourage the ACCC to maintain unconscionable conduct as an enforcement priority.
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