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Back to "Community & Associations Newsletter - June 2024"


Changes to School Building Funds

Proposed revisions to the tax rules for charitable contributions could affect the fundraising capabilities of some of Australia’s independent and private schools, targeting their multi-million-dollar infrastructure funding efforts.

Across Australia, private schools might face challenges due to the ACNC’s Productivity Commission’s proposal to refine the deductible gift recipient (DGR) regulations, potentially excluding certain educational expenditures.

Currently, significant contributions towards modern sports complexes, auditoriums, and uniquely designed libraries benefit from tax deductions. However, a preliminary report to the Albanese administration critiques this benefit, highlighting a diminished justification as government funding for private and independent schools increases.

School building funds, following public benevolent institutions, represent the second most significant category for tax-deductible entities, surpassing the number of health, cultural, museum, and environmental organisations eligible for such incentives. The report argues the lack of a clear policy reason for this discrepancy in tax deductibility.

The recommended adjustments could enable an additional 10,000 to 20,000 charities to qualify for some donor deductions, simultaneously restricting funding mechanisms for new school constructions and religious education within public schools. The Commission emphasised the risk of donors, often closely associated with the schools, receiving private benefits (in particular, lower school fees) from their contributions, which contradicts the charitable intent of the deductions.

These proposals aim to refine the distribution of tax-deductible gifts, maintaining eligibility for formal higher education and research activities within the educational charitable category, while re-evaluating the inclusion of primary and secondary education projects.

The Commission’s final report is due to the Treasurer by Saturday, 11 May 2024. We are monitoring this inquiry with interest. Please contact Josephine Heesh, Grace Brophy, or Samuel Chu if you wish to discuss any of these matters.

Josephine Heesh, Partner

Grace Brophy, Associate

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