Exclusive Schools Enjoy Tax Perk Most

The wealthiest families in Australia get a double dollop of benefit from school building funds; lower taxable income because donations to school building funds are tax deductible and lower school fees as a result of the donations.

A new report by the Productivity Commission on Philanthropy estimates the tax deduction costs about $100 million a year.

One researcher commented, ‘You would be hard-pressed to think of a more regressive but grimly effective method to widen infrastructural disparities, which are now bordering on obscene.’

The donations are heavily concentrated in relatively few schools. For example, seven schools out of 719 schools, or 1% of schools with tax deductible school building funds received $24.6 million in donations in 2020-21 which is 35% of all donations to building funds. Just 72 schools (10% of schools with such funds) received $58 million, representing 84% of all donations to building funds. In regard to schools with multiple funds, 74 schools out of 736 (10%) with such funds received $133 million in tax deductible donations which is 71% of all donations to such funds.

In 2020-2021 fifteen schools (or 2% of all schools with tax deductible funds) received $56.2 million and accounted for 24% of all donations and 146 schools (10% of the total with tax deductible funds) received $171.9 million which is 75% of all such donations to private schools.

Schools receiving large donations are generally high fee schools whose families have high incomes. For example, in NSW in 2021 Loreto Kirribilli received $10.5 million, Moriah College $7.9 million, Cranbrook $5.2 million, The Scots College $4 million and Shore $2.8 million. In Victoria, Wesley College raised $5.6 million, Melbourne Grammar $4.8 million, Caulfield Grammar $3.9 million, Scotch College $2.3 million and Loreto Mandeville Hall $2.3 million. In Queensland, Anglican Church Grammar raised $3.3 million and Brisbane Grammar $2 million.

These schools all serve very high income families. According to figures provided to Senate Estimates by the Commonwealth Department of Education, the median taxable income of families with students at Loreto Kirribilli is $418,000, the 6th highest of any school in Australia. Shore has a median family income of $409,000 and Cranbrook $402,000, the 7th and 8th highest respectively. The family income at The Scots College is $336,000 and $317,000 at Moriah College. The figures for the above Victorian schools are Wesley College $271,000, Melbourne Grammar $336,000, Caulfield Grammar $257,000 and Scotch College $326,000 and Loreto Mandeville Hall $335,000. The family income for Anglican Church Grammar is $295,000 and $323,000 for Brisbane Grammar. Nearly all these incomes are three or four times that of the median family income in Australia.

The Commission examined the total donations to school building funds only and to multiple funds covering donations for school buildings, scholarships and library funds as well as funds operated by private school systems. It estimated that donations to school building funds only amounted to $69.4 million in 2020-21 across 719 schools. Donations to multiple funds amounted to $160.6 million across 736 schools. In total, donations to school building funds in 2020-21 and other funds amounted to $230 million across 1,455 schools.

The Commission observed that donations to school building funds depend on the income and wealth of the school community:
‘…the capacity of schools to raise donations varies widely, depending on the wealth and income of the school community, which form the main pool of potential donors.’ [p. 191]