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School building funds

Explains the characteristics of a school building fund for endorsement as a deductible gift recipient.

Last updated 12 December 2021

Some school building funds may be eligible to be deductible gift recipients.

This information will help you to understand the characteristics needed for a school fund to be eligible. If you're eligible, you can apply for DGR endorsement.

The word 'school' in this section refers to either a school or college.

Characteristics of a school building fund

A school building fund has the following characteristics:

You can use the checklist to work out if your fund has the characteristics of a school building fund.

Definition of a school

A school provides organised instruction or training on a regular and continuing basis. The instruction is generally provided in class form.

It includes people assembling for regular study of some area of knowledge or activity that is not recreational in character.

A school must be an institution and have a real, separate, institutional existence (which may be within or part of another institution).

Factors that are relevant in deciding whether there is a school include:

  • a set curriculum
  • instruction or training by suitably qualified persons
  • enrolment of students
  • some form of assessment and correction
  • the creation of a qualification or status that is recognised outside of the organisation.

If the primary function or essential purpose is not instruction or training, it is not a school. This will depend on the facts and circumstances of each case.

Bodies that have been accepted as schools include:

  • adult religious education centres
  • theological colleges
  • Bible study centres
  • pre-school kindergartens that are not primarily for child-minding
  • film and television schools
  • vocational schools for opera, ballet and drama.

Bodies that are not schools include:

  • those where the primary function is recreational, for example, yoga schools, riding schools, woodturning centres, dressmaking, ceramics and cookery workshops
  • childcare centres.

Definition of a building

The term 'building' has its ordinary meaning and includes one building, a group of buildings, a part of a building or additions to a building.

A building should be a permanent structure, roofed and usually with walls and flooring that provides protection from the elements. Therefore, structures such as an outdoor swimming pool, sports oval or a tennis court are not buildings as they are not enclosed and do not provide protection against the elements.

A permanent structure, such as a covered outdoor learning area that does not have walls is capable of being a building if it is fixed to the ground and has a roof.

Fixtures are accepted as part of a building. They are affixed to a building and are unable to be detached without substantial damage to the item itself or that to which it is attached. Fixtures include ducted heating systems, fixed air conditioning systems and carpets permanently fixed to the floor.

Non-fixtures such as computers, furniture, training equipment and laboratory equipment do not form part of the building.

A building must be used as a school by a qualifying body

For a building to be a school building, a qualifying body needs to control the use of the building in its capacity as operator of the school.

A qualifying body is a government, a public authority or a non-profit society or association.

The building or group of buildings must be used to provide instruction for a purpose connected with the curriculum of the school. The building’s use for school purposes must be substantial. It also must be of a kind that enables the building to be characterised as being ‘used as a school’. This term means the same as in everyday language.

If there is non-school use, whether the building is a school building will depend on how much it limits, detracts from or is incompatible with the provision of instruction connected with the curriculum of the school.

Where a building's uses are incidental or ancillary to the provision of instruction, it may also be used as a school.

Incidental or ancillary buildings include:

  • school tuck-shops
  • toilet blocks
  • school assembly halls
  • school administration office
  • residential accommodation of a boarding school
  • residential accommodation for teachers.

Any other use of the building must be either integral to its use as a school or be so minor or occasional that it does not interfere with its use as a school.

A building is not a school building where a person, organisation or institution outside of the school organisation will be able to determine how the building is used.

A multipurpose building is designed to be put to a variety of different uses. To be a school building it must satisfy the same requirements as any other building before it can be characterised as a building used as a school.

When it is characterised as a school building, the school building fund can use its funds to contribute towards the cost of any common area (for example, an area put to both school and non-school use such as a hallway or toilet).

Factors relevant in deciding whether a building is used as a school include the:

  • amount of time the building is put to school use relative to time put to non-school use
  • number of people involved in the school use relative to number of people involved in its non-school use
  • physical area of the building put to school use relative to physical area put to non-school use
  • extent building has been adapted or modified to accommodate its school or non-school use.

However, if the common area has been adapted or designed specifically for non-school use, the school building fund cannot provide the money to pay the cost of the adaption or design.

Use of the school building fund

A school building fund is solely for providing money to acquire, construct or maintain the school buildings for the purposes of using that building as a school. It cannot be used for any other purpose.

To determine the purpose of the fund, objective circumstances are considered, including the constituent documents of the fund and what the money is provided for. Expenditure on capital improvements and maintenance, as well as installing and maintaining fixtures, are accepted outlays of a school building fund.

Costs payable from a school building fund include:

  • purchase of land to the extent that it reasonably relates to the area of land occupied by the building to be used as a school
  • building purchase and construction expenses
  • incidental costs relating to planning, negotiating, financing and obtaining approvals for acquisition or construction
  • fixtures including security related features such as security alarms and lighting and window and door security such as grilles
  • initial repairs
  • additions or extensions to existing buildings such as additional floor, room or permanent structure as well as replacement, addition of walls, doors or windows
  • lease payments that relate to the building or land occupied by the building
  • conditions of construction imposed by a local governing body or public authority
  • repairs, painting, plumbing and general maintenance of school buildings, including costs of purchasing associated equipment
  • cleaning expenses including cleaning the building floor coverings, fixtures and windows
  • building insurance
  • security monitoring costs that directly relate to the preservation or protection of a school building and
  • administration costs of establishing or promoting the fund, including bank fees, accounting and audit costs, fundraising expenses and reasonable remuneration for the fund’s administrator and staff.

A school building fund cannot provide funds for

  • a non-school building
  • the non-school use of a school building
  • other facilities that are not buildings.

Costs that cannot be paid include:

  • construction of non-school building like a wing of a building designed to be used as a church
  • maintenance costs that relate to the non-school use of a building, like the costs of hiring a cleaner to clean school buildings following weddings unless the fund is fully and promptly reimbursed
  • running expenses of the school that don’t relate to buildings such as water, gas, electricity, sewerage, contents insurance, teaching staff salaries or the general upkeep of furnishings
  • costs of maintaining facilities which are not buildings including sports fields, sports equipment, playgrounds, landscaping and open-air carparks.

A school building fund may invest or lend its money if this is a bona fide and temporary arrangement and is consistent with achieving the fund's objects with all reasonable speed. To be a bona fide arrangement, the investment or loan must enable or facilitate the provision of money to acquire, construct or maintain a school building for school purposes.

For more information, see Taxation Ruling TR 2013/2 Income tax: school or college building funds

School building fund checklist

Use our checklist to work out if your fund has the characteristics of a school building fund.

  • Your fund is a public fund.
  • Your fund's constituent or governing documents clearly show it was established solely to provide money for acquiring, constructing or maintaining a building used, or to be used, as a school.
  • The building is used, or to be used, as a school by a government, public authority or non-profit body.
  • Actual payments made by the fund are only for acquiring, constructing or maintaining the building (including acceptable administration costs of the fund).
  • Your organisation operating the fund is an Australian government agency or is registered with the ACNCExternal Link.

If you have worked out that your fund is a school building fund, it also needs to meet other conditions for DGR endorsement.