Tax probe on private school donations
Tax deductions for parents donating money to private schools will be investigated by the Australian Tax Office following concerns the subsidies are being rorted.
The Australian reports today that the crackdown on compliance coincides with the release of a Newspoll, commissioned by the Australia Institute, that found 57% of those surveyed did not agree that policies encouraging the growth in private schools were good for the nation.
The polling was contained in a report by the Institute that found many parents send their children to private schools reluctantly because of the failure to provide public schools with adequate funding.
The report, The Accountability of Private Schools to Public Values, finds that the total value of tax breaks for private schools can be worth up to half of the funding provided by the federal Government -- dramatically boosting the resources available to independent schools.
A comparison of total fees and taxpayer grants, excluding donations, reveals a dramatic funding gap between comparable public and private schools.
To qualify for tax deductability, donations to private schools must be made voluntarily, provide no material benefit to the donor such as a reduction in school fees and be made to a public fund established solely for the purposes of the construction or maintenance of a building.
However, the Australia Institute claims parents are being misled by schools that suggest the donations are compulsory or play a role in limiting tuition fee increases.
In response to the think-tank's concerns that tax breaks are being rorted and misleading information is being provided to parents, the Deputy Commissioner of Tax Mark Konza has indicated the ATO "will again take action on this particular issue".
Fees and donations are not currently taken into account when determining commonwealth funding.
Tax probe on private school donations (The Australian 25/8/04)
Schools warned on coercive donations (CathNews 24/5/04)
The Australia Institute | Tax Deductibility of Donations to School Building Funds (The Australia Institute)
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25 Aug 2004