Tax Office Targets School Funds
30 August 2004 at 1:08 pm
The Australian Tax Office is about to target School Building Funds in its latest compliance investigations.
The ATO’s says it will be looking at the operation of school building funds (SBFs) as part of its 2004-05 compliance activities around reviewing entitlement to endorsements.
Organisations selected for review will receive a letter in coming weeks.
Pro Bono Australia reported in June that a study by the public interest think tank The Australia Institute called “Tax Deductibility of Donations to School Building Funds” revealed that payments into some private and public school building funds may not meet the conditions required by the Australian Tax Office and that claims for tax deductions are not legitimate.
The Institute says 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.
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.
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’.
The Tax Office says it is required to carry out regular reviews of endorsed organisations and their operations to ensure they continue to meet the requirements of endorsement.
He ATO will be reviewing endorsed SBFs to confirm their status as deductible gift recipients and the tax deductibility of donations made to them, including examination of:
– whether gifted money has been used for purposes other than the acquisition, construction and maintenance of a school building, and
– practices in relation to soliciting donations and whether accepted gifts satisfy the requirements for tax deductibility.
The ATO points out that a school building fund is solely for providing money for the acquisition, construction or maintenance of the school or college buildings. It cannot be used for any other purpose.
To be tax deductible, gifts to the SBF must:
– be made voluntarily, and
– not provide any material benefit to the donor such as a reduction in school fees.
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