Australia: Federal Budget 2013-14: Not-For-Profit and Education

Last Updated: 16 May 2013
Article by Stephen O'Flynn
Clearly the disability sector and schools are the big winners out of this budget.

Not for Profits and Education

The not-for-profit sector has clearly been an area of significant reform for the Government. Following on from the introduction of the Australian Charities and Not-for-profits Commission (ACNC) the Government has now focused on even more ambitious reforms. Clearly the Disability sector and schools are the big winners out of this budget with the funding of Disability Care and the Gonski schools reform. The Government is hoping that these two major reforms will be their legacy. With Disability Care obtaining bi-partisan support it will now be up to future governments to determine how to fund the scheme.


As previously announced schools should be one of the big winners in the budget with $26 billion being allocated over 10 years. $9.8 billion of which is allocated to increase school funding over six years along with better achievement under the National Plan for School Improvement. This commitment was previously announced in April ahead of the Prime Minister's meeting with Premiers and Chief Ministers.

Negotiations with states and territories continue and the Prime Minister's offer remains open until 30 June 2013. The Government is offering to pay around 65% of the additional investment needed to fund all schools properly to reach their goals. New South Wales has already committed to these reforms and we wait to see whether the other states follow.

There are various smaller announcements for increased funding such as:

  • $659 million to help aboriginal and Torres Strait Islander kids get to school; and
  • an extra $114 million for students with disabilities

Higher Education

This budget continues to require higher education to tighten its belt. On the back of the wide spread TAFE sector cuts last year the Federal Government is now looking for Higher Education to deliver a 2% efficiency dividend in 2014 and a further 1.25% in 2015. This is expected to produce savings of $903 million.

Whilst there was a 75% increase in funding of University places between 2007 and 2013, there will only be an additional $97 million from 2014 to 2017. This will put increasing pressure on Universities to find alternative sources of funding.

From 1 January [year?], the Government will convert the Student Start-up Scholarships (SSS) Program into an income contingent loan program for new full time higher education students, providing $1.2 billion of savings.

In an attempt to boost Australia's research capability the Government will provide funding of $135 million for 150 four year Future Fellowships to attract the best Australian and international mid-career researchers in areas of crucial national importance.

In an attempt to improve the innovation links between Higher Education and Business the Government will spend more than $500 million to establish up to 10 Industry Innovation Precincts in Australia.

Overseas aid organisations will be sadly disappointed at the deferral of Australia's growth Target.

Cap on Education Deductions

The Government had previously announced a cap on the tax deductibility of work related education expenses of $2,000. There was previously no cap. This was anticipated to have a major impact on a University's ability to attract students for a number of courses.

The Government has indicated that this will only be subject to FBT where employees enter into salary sacrifice arrangements. Otherwise it will not impact on businesses claiming a tax deduction for staff training.

Child Care

Anyone who has a child in childcare will know how difficult it is for childcare centres to attract and retain quality staff. The Government will provide $300 million over two years to help child care centres to attract and retain qualified workforce through higher wages and to improve the quality of child care.

The Government will also contribute $660 million through a new National Partnership Agreement on Early Childhood Education to facilitate the commitment by all governments to provide Universal Access to early childhood education.

Health and Ageing

Amendments to the listing under the Pharmaceutical Benefits Scheme will cost the Government $143.8 million in the 2013-14 year rising to $187.3 million in the 2016-17 year. This will largely be funded by the removal of the Out of Hospital Medicare Rebate for selected items which will save over $150 million per annum for the next four years.

Overseas Aid

Overseas Aid organisations will be sadly disappointed at the deferral of Australia's growth target for providing overseas aid. This deferral will provide $326.5 million of savings in the 2014-15 year increasing to $906.5 million in the 2016-17 year.

In Australia Special Conditions

The previously announced "In Australia Special conditions" legislation should not be progressed during the current term of parliament.

  • income tax exempt status for entities that had activities predominantly overseas; and
  • DGR status for entities whose activities are not solely in Australia other than minor and incidental.

There are still a number of concerns within the sector about this legislation and will require appropriate lobbying to ensure an appropriate outcome.

Statutory definition of charity deferral

The proposed introduction of a statutory definition of charity has also been deferred from 1 July 2013 to 1 January 2014. Once again this definition needs to be closely scrutinised.


Not-for-profits and Education - Moore Stephens Federal Budget 2013 Insights

This publication is issued by Moore Stephens Australia Pty Limited ACN 062 181 846 (Moore Stephens Australia) exclusively for the general information of clients and staff of Moore Stephens Australia and the clients and staff of all affiliated independent accounting firms (and their related service entities) licensed to operate under the name Moore Stephens within Australia (Australian Member). The material contained in this publication is in the nature of general comment and information only and is not advice. The material should not be relied upon. Moore Stephens Australia, any Australian Member, any related entity of those persons, or any of their officers employees or representatives, will not be liable for any loss or damage arising out of or in connection with the material contained in this publication. Copyright © 2011 Moore Stephens Australia Pty Limited. All rights reserved.

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