Dec 15, 2023 Matthew Hung

What is a School?

A gift to a public fund established to acquire, construct or maintain a school is tax deductible.

In a 1996 tax ruling, the Commissioner indicated that more informal places of learning, such as a Sunday Schools, met the definition of school where they were established to provide regular and systematic instruction.  Consequently a number of faith based organisations established School Building Funds, enabling tax deductible giving to fund some building maintenance.

The ATO later replaced the 1996 ruling with a new ruling (TR 2013/2), expressing the Commissioner’s revised view that schools needed to be more structured with set curriculums, the enrolment of students, assessment and qualifications.  In light of this ruling, many faith based organisations assessed that they were no longer operating schools, and some wound up their funds.

The Buddhist Society of Western Australia used its buildings to provide religious and other teaching including yoga.  It sought endorsement of a school building fund, but the ATO determined that the buildings were not used by a school.  The Buddhist Society challenged the ATO’s view and took the case to court.  The court sided with the Buddhist Society and held that a ‘school is a place where people…assemble for the purpose of being instructed in some area of knowledge or of activity.’

This is a much broader definition than they ATO had adopted, and allows for places of recreational education to be considered schools.

As a result of this decision, the ATO has now released a Decision Impact Statement, and, in due course, will reissue TR 2013/2.

No doubt that a number of charitable organisations will await the issue of the revised ruling with great interest.

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