Australia: Do you manage a School Building Fund? Taxation Ruling 2013/2 is a must read!

Last Updated: 24 February 2013
Article by Anna Lewis and Bill D'Apice

Summary - Taxation Ruling 2013/2 clarifies the way in which s 30-15 and Item 2.1.10 of the Table in s 30-25(1) of ITAA1997 apply to persons who make a gift or contribution to a public fund which purports to be a school building fund.

Last week the ATO on behalf of the Commissioner of Taxation released TR 2013/2 regarding school building funds.

In particular, the ruling discusses factors relevant to determining:

  • What a school or college is for the purposes of Item 2.1.10;
  • Whether a building is used as a school or college by an entity; and
  • Whether a fund has been established and is being maintained solely for providing money for the acquisition, construction or maintenance of a building used as a school or college.

What is a School (or College)?

A school must be an educational organisation with a distinct identity (ordinarily have its own name, have a quality of permanence and a governing body) and provide regular, ongoing and systematic instruction amounting to the creation of a qualification or status which is recognised outside of the organisation.

Practical examples of what may qualify as a school are provided in paragraphs 130-145. For example, a child care centre is not a school as it lacks regular, ongoing and systematic instruction imparting a course of education, however, a preschool kindergarten may qualify as a school if it involves regular and systematic instruction and this is its primary function or essential purpose.

What is a School Building?

A school building is a permanent structure, which provides protection from the elements. Importantly, a "school building" may be part of a building so long as it is separately identifiable. General principles are set out in paragraphs 30-35.

In order for a building to be a school building its school use must be substantial. Factors in determining whether the school use is substantial include:

  • The amount of time the building is put to school use relative to the amount of time it is put to non-school use;
  • The number of people involved in the school use relative to non-school use;
  • The physical area of the building put to school use relative to non-school use; and
  • The extent to which the building has been modified on order to accommodate its school or non-school use.

Where a church (or other group) carries on a school, it is necessary to have regard to the extent to which the school organisation is able to control the use of the building.

What if the School Building is also used for other purposes?

The view of the Commissioner in regards to whether a building is a "school building" if it is also used for other purposes has changed over the last few years and it is important to note this difference.

Prior to TR 2011/D5 (draft) the Commissioner's view was that as long as other use constituted less than 50% of the use of the building on a time basis, this was permissible. However, this was revised in TR2011/D5 which stated that the previous 50% rule was incorrect and that any other use of the building must either be integral to its use as a school or be only minor or occasional. This position has been relaxed in the current taxation ruling which requires that the use as a school building must be substantial (see above) and its "non-school use" must not materially limit, detract from or otherwise be incompatible with its school use.

Guidance on multipurpose buildings and complexes is provided commencing at paragraph 254.

Payments from the School Building Fund

The Ruling confirms that a school building fund must be established and maintained solely to provide money for the acquisition, construction or maintenance of a building used as a school by a qualifying body. This sole purpose test is set out in paragraphs 58-73 of the Ruling.

Disbursements from the School Building Fund

The fund can make disbursements for:

  • acquiring or constructing a school building for school use;
  • maintaining a building for school use;
  • investing or lending money for the acquisition, construction or maintenance of a school building; or
  • administering the fund.

The investment or lending of money was not part of the draft TR2011/D5, and details regarding when a school building fund can undertake an investment (including a loan) are set out in paragraphs 86-88. Specifically, any loan made by the school building fund must be commercial (at arm's length) and we advise that any interest free loans should be considered carefully before they are entered into to ensure they comply with the ruling.

Transitional Arrangements

Because the old '50% rule' will no longer apply, if a fund has committed to acquisition or construction arrangements prior to 13 February 2013, they will not be subject to the new ruling. Additionally, gifts or contributions to a school building fund are able to be paid on the old basis up to 1 July 2013 where there is such a commitment prior to 13 February 2013. For more information on transitional arrangements see paragraphs 114-119.

Practical Examples

Practical examples of the above are provided in the Ruling in order to assist with compliance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.