As Australians approach tax time, many may be overlooking a valuable opportunity to reduce their tax burden. A little-known deduction could be hiding on your school fee statement, offering families a chance to claim back money they didn’t realize was eligible for a tax break.
This tax deduction, available through the Australian Taxation Office (ATO), can be a game-changer for parents who voluntarily contribute to their child’s school building fund. Here’s what you need to know to ensure you don’t miss out on this hidden opportunity.
The School Building Fund Levy: A Hidden Tax Deduction
Many schools across Australia ask for donations or fees to be paid into a “school building fund” or “building levy fund” as part of their annual fee structure. While many families see this as a standard expense, accountant Anita Niaz revealed that these voluntary payments may be tax-deductible, allowing parents to claim back a portion of the amount paid during this time.
This deduction is available because the payment is considered a “gift” to the school, as long as the donation is voluntary. Niaz, a chartered accountant from Accounting Haus, explained that the payment must not be compulsory. If a school mandates the levy as part of its fee structure, it will not be eligible for a tax deduction. However, if it’s an optional payment, it may qualify as a deductible gift.
What Makes a Donation Tax-Deductible?
For a school building fund levy to be deductible, there are specific conditions that must be met. First, the school receiving the donation must be a “Deductible Gift Recipient” (DGR). This is a designation given by the ATO to organizations that are authorized to receive tax-deductible gifts.
Parents are advised to check their school fee statement to confirm if the payment to the building fund is listed as voluntary. If in doubt, contacting the school directly to verify whether the levy was voluntary or compulsory can clarify eligibility for a tax deduction. The ATO also provides a search tool on the Australian Business Register (ABR) to check whether a school is a registered DGR.
$1,000 ATO school fees tax deduction that Aussies don't realise they can claim: ‘Don’t forget’ https://t.co/6P0Aje3KW6
— Yahoo Finance Australia (@YahooFinanceAU) June 17, 2025
How Much Can Parents Claim?
The amount parents can claim for the school building fund levy varies by school, with levies typically ranging from $200 to $1,000. While this may not seem like a large sum individually, over time, these contributions can add up to significant savings at tax time.
For instance, a parent paying $850 annually into the school building fund could claim the full amount if the payment was voluntary and the school is a DGR. Depending on your tax bracket, this could result in a meaningful refund or reduction in the overall tax bill.
The Tax Office’s Rules and Restrictions
The ATO has specific guidelines regarding tax deductions for school building levies. It’s essential to understand what qualifies as a “gift” and what does not. For example, payments made as part of a fee arrangement or to secure a position on a school waiting list do not qualify for this deduction.
Additionally, if a payment to the building fund is considered an alternative to a fee increase, or if it is directly tied to a service received (such as access to school facilities), it will not be considered a genuine gift and, therefore, not deductible. The ATO outlines these exceptions clearly, and it’s important for parents to be aware of these rules when preparing their tax returns.
A Surprising Discovery for Many Parents
Many Australian parents are unaware of the eligibility for this deduction, as shown by the numerous responses from parents after Anita Niaz shared the information on social media. Comments from parents on the video reveal a mix of surprise and excitement. Some parents noted they had been paying the building levy for years without realizing they could claim it.
One parent commented, “Wish I knew this 12 years ago. My son’s school is $1,130.” Another parent noted, “Thank you! Ours is $850, and it’s DGR endorsed!” However, other parents mentioned that their levies were compulsory, disqualifying them from claiming the deduction.
This revelation has prompted many Australians to rethink their school payments and consider whether they may have missed out on deductions in past years. The news has sparked a broader conversation about how parents can be more proactive in identifying potential tax savings related to school fees and donations.
