Private School Donations

Private schools are typically registered as a charity, and thus parents will at times treat payments to the school as a charitable donation for tax purposes. Inland Revenue are making it clear on its interpretation on this subject through the release in October 2022 of QB 22/09 – Income Tax – Payments made by parents to private schools and donation tax credits. In summary, payments will qualify as a “gift” for donation tax credit purposes when all of the following apply:

• the school is a donee organisation;
• the payment is money of $5 or more;
• the parent makes the payment voluntarily to benefit the school either generally or for a specific purpose or project; and
• the parent or child gains no material benefit or advantage in return for making the payment.

Below are examples which Inland Revenue asserts will not be eligible for a donation tax credit:

• A “donation” which results in a discount on tuition fees, or the payer’s business being advertised in a school publication.
• Contributions requested by the school with reference to its operating costs, number of students and each family’s circumstances.
• A donation of a non-cash prize for the school to use in a fundraising auction.
• The purchase of a ticket for a school event (e.g. quiz night), where part of the ticket proceeds will go towards a school project.

It would be wise to assume the circumstances surrounding a payment to a school will be reviewed by Inland Revenue if a charitable donation is claimed.