Edited version of private ruling

Authorisation Number: 1011509220758

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Ruling

Subject: School building fund - eligibility of expenditure

Question 1 (a)

Can school building fund monies be spent on the maintenance, repairs, capital improvements, etc. of our administration building?

Answer

Yes

Question 1 (b)

Can school building fund monies be spent on maintenance, repairs, capital improvements, etc. of our on-site accommodation (Residence A/1)?

Answer

No

Question 2

Can school building fund monies be spent on the maintenance, repairs, capital improvements, etc. of our on-site accommodation (Residence B/2)?

Answer

Yes

This ruling applies for the following period:

Year ending 30 June 2011

Year ending 30 June 2012

Year ending 30 June 2013

The scheme commenced on

1 July 2010

Relevant facts and circumstances

This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it.

The fact sheet has more information about relying on your private ruling

The Church is an endorsed deductible gift recipient (DGR) under item 2.1.10 for a school building fund it operates.

The Church has queried eligibility for expenditure on various buildings under the school building fund provisions

The Church has provided the following information with their private ruling request:

The main campus comprises 4 buildings with associated car park, gardens and playground. The 4 buildings are:

1. Main building: comprised of auditorium, hall, classrooms, toilets, kitchen and foyer

2. . Administration Building: comprised of offices, library, print & equipment room, kitchen, toilet, reception and administration areas

3. . Residence 1: four bedroom villa style dwelling, and

4. Residence 2: four bedroom villa style dwelling

Use of each building

· The Church has assessed that 76.6% of the time the administration building is used for Christian education purposes.

· Residence 1/A is used by a staff member primarily involved in operating the Church.

· Residence 2/B is used by a staff member primarily involved in Christian education.

Assumptions

Assumption 1

For the purpose of this ruling it is assumed that the religious education offered by the Church meets the requirements of the term 'school' or 'college' as per paragraphs 43 to 50 of TR 96/8.

Assumption 2

It is assumed for the purposes of this ruling that the expenditure undertaken by the Church is eligible expenditure under the school building fund rules.

Reason for decision

Question 1(a)

Summary

Expenditure on the administration building meets ATO requirements for expenditure under the school building fund provisions.

Detailed reasoning

Paragraph 46 of TR 96/8 states:

For the purpose of item 2.1.10 of table 2 in subsection 78(4), the meaning of the words 'school' and 'college' is narrower than their ordinary meaning. The collocation of 'school' and 'college' in item 2.1.10 requires a narrower meaning in that the method of instruction, study or training must be organised or systematised, and given or a regular and continuing basis. The term "school" would usually connote a place where instruction is given by qualified persons in accordance with a set curriculum and there is some form of student assessment and correction.

Paragraph 49 of TR 96/8 states:

The instruction provided could include religious as well as secular instruction. The concession therefore applies to funds for buildings used as theological seminaries or colleges.

Paragraph 13 of TR 96/8 states:

To qualify as a school or college building for the purposes of item 2.1.10 of table 2 in subsection 78(4), the building or group of buildings must be used for a purpose which is connected with the curriculum of the school or college.

Paragraph 14 of TR 96/8 states:

A multi-purpose building is taken to be used as a school or college if the primary and principal use of the building is as a school or college. In the case of a proposed building, the test is satisfied if the building is proposed to be used as a school or college more than 50% of the time. Where a school or college building fund is maintained for an existing school or college, the building must be used as a school or college for more than 50% of the time.

The Church has calculated the administration building is being used 76.6% of the time for school/educational purposes. As the building's primary use is for school or college purposes, all eligible expenditure on the administration building qualifies as being for school or college purposes.

Question 1 (b)

Summary

Expenditure on Residence A/1 does not meet ATO requirements for expenditure under the school building fund provisions.

Detailed reasoning

Paragraph 58 of TR 96/8 states:

It is also accepted that a building which forms an integral part of the school or college and is used to provide residential accommodation or facilities for students and/or staff is a building used as a school or college.

Paragraph 14 of TR 96/8 states:

A multi-purpose building is taken to be used as a school or college if the primary and principal use of the building is as a school or college. In the case of a proposed building, the test is satisfied if the building is proposed to be used as a school or college more than 50% of the time. Where a school or college building fund is maintained for an existing school or college, the building must be used as a school or college for more than 50% of the time.

As Residence 1/A is used by a staff member whose dominant role is not educational, expenditure for Residence 1/A does not qualify under the school building fund provisions.

Question 2

Summary

Expenditure on Residence B does meets ATO requirements for expenditure under the school building fund provisions.

Detailed reasoning

Paragraph 58 of TR 96/8 states:

It is also accepted that a building which forms an integral part of the school or college and is used to provide residential accommodation or facilities for students and/or staff is a building used as a school or college.

Paragraph 14 of TR 96/8 states:

A multi-purpose building is taken to be used as a school or college if the primary and principal use of the building is as a school or college. In the case of a proposed building, the test is satisfied if the building is proposed to be used as a school or college more than 50% of the time. Where a school or college building fund is maintained for an existing school or college, the building must be used as a school or college for more than 50% of the time.

As Residence B/2 is used by a staff member whose dominant role is educational, expenditure for Residence B/2 qualifies under the school building fund provisions.