Bushfire Appeals
News  | 

School Building Funds & Tax Deductions

Monday, 7th June 2004 at 1:06 pm
Staff Reporter
Demands for parents to pay into school building funds are often thinly disguised tax abuses and should be reined in by the Australian Taxation Office, according to the public interest think tank The Australia Institute.

Monday, 7th June 2004
at 1:06 pm
Staff Reporter



School Building Funds & Tax Deductions
Monday, 7th June 2004 at 1:06 pm

Demands for parents to pay into school building funds are often thinly disguised tax abuses and should be reined in by the Australian Taxation Office, according to the public interest think tank The Australia Institute.

Executive Director Dr Clive Hamilton says tax deductibility for voluntary donations to school building funds was introduced to assist private schools, in particular fund buildings such as libraries and other facilities.

But the Institute study, Tax Deductibility of Donations to School Building Funds, has revealed that payments into some private and public school building funds may not meet the conditions required by the Australian Tax Office so that claims for tax deductions are not legitimate.

According to the study there is evidence to suggest donations to some private schools are not being given freely either because parents are unaware that the payment is voluntary or because they are pressured by the school to give.

These pressures may include perceptions that their child may be disadvantaged if they fail to make a ‘donation’.

In addition, there is anecdotal evidence that some donors to school building funds receive a benefit from the gift, namely the enrolment of their children ahead of others on the waiting list. In these cases, claiming a tax deduction for a donation to a school building fund may not be legitimate.

Private school fees are not tax deductible in Australia. Nor are fees or levies paid to public schools. However, many private schools and some public schools operate building or library funds to which parents and ex-students are encouraged to make tax-deductible donations.

These donations can increase substantially the funds available to the schools and thereby permit fees to be lower than otherwise.

The study outlines contrasts between the Australian Taxation Office guidelines, which state that donations must be voluntary and that donors must expect nothing in return, with the statements of some private schools.

The study uses the example of where school fee statements actually suggest or indicate that payments to building and library funds are compulsory and that the contributions are tax-deductible.

For example, the fee statement on the website of one college in Victoria provides no indication to parents that building fund donations (which are said to be tax deductible) are optional despite explicitly informing them that bus fees are optional.

It also says that the ‘composite fee’ which, like the tuition fee, is ‘payable in advance each term’, includes a Library Levy that is tax deductible. A ‘levy’ is not usually seen as a donation.

Another college goes even further, telling parents that payments to its building fund are an essential part of the cost of educating their child.

Public policy researchers Deb Wilkinson and Richard Denniss conclude that parents should be formally notified by all private schools about the voluntary nature of all tax-deductible payments and that the ATO should investigate the practice of structuring school fee payments in order to reduce tax.

The researches say that many, perhaps most, schools scrupulously adhere to the spirit and the letter of the law in relation to school building funds. However, there is evidence to suggest that some private schools are urging or facilitating parents to claim tax deductions for contributions to building funds to which they are not entitled.

They say other schools, perhaps with the benefit of advice from tax experts, do not make false claims but nevertheless apply intense pressure on parents to make ‘voluntary’ contributions.

As a result of these practices, they say Australian taxpayers are funding additional payments to schools and tax breaks to parents of children at schools to which they are not entitled under law. There is therefore a need for the Federal Government to enforce the tax laws more rigorously.

If you would like a copy of the research paper just send us an email with “Schools & Tax deductibility ” in the subject line to probono@probonoaustralia.com.au.

Got a story to share?

Got a news tip or article idea for Pro Bono News? Or perhaps you would like to write an article and join a growing community of sector leaders sharing their thoughts and analysis with Pro Bono News readers?

Get in touch at news@probonoaustralia.com.au

Get more stories like this


Write a Reply or Comment

Your email address will not be published. Required fields are marked *


Gillard Sworn In

Lina Caneva

Thursday, 24th June 2010 at 4:06 pm

Productivity Commission to Investigate Not for Profit Sector

Staff Reporter

Thursday, 9th April 2009 at 4:30 pm

ATO Warns on Annual Review of Endorsed Charities

Staff Reporter

Monday, 1st December 2008 at 2:58 pm

NFP Promoting From Within Works When Handled With Care

Staff Reporter

Monday, 22nd September 2008 at 4:52 pm


NDIS not yet in tune with the needs of participants

Luke Michael

Monday, 20th January 2020 at 4:46 pm

What impact will the bushfire crisis have on homelessness?

Luke Michael

Wednesday, 15th January 2020 at 4:28 pm

New fund paves the way for impact investment in the charity sector

Luke Michael

Friday, 17th January 2020 at 4:34 pm

The rise (and scepticism) of Facebook fundraisers

Maggie Coggan

Thursday, 16th January 2020 at 8:49 am

Bushfire Appeals
pba inverse logo
Subscribe Twitter Facebook

Get the social sector's most essential news coverage. Delivered free to your inbox every Tuesday and Thursday morning.

You have Successfully Subscribed!