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On 5 December 2011, the ATO released for public comment by 2 March 2012 draft Taxation Ruling TR 2011/D5 entitled "Income tax: school or college building funds".

The Ruling explains the Commissioner's views on the requirements for a fund to be a school or college building fund that comes within the scope of Item 2.1.10 of the table in s 30-25(1) of ITAA 1997 (Item 2.1.10).

In particular, it discusses factors relevant to determining:

  • if a fund has been established and maintained solely for the acquisition, construction or maintenance of a school or college building; and
  • if a building is used as a school or college by an entity specified in Item 2.1.10.

The Ruling applies to persons seeking to establish or maintain a school or college building fund, and to persons seeking to claim income tax deductions for a gift made to a school or college building fund.

The main change between the draft ruling and TR 96/8 (now withdrawn with effect from 5 December 2011) is the 'more than 50% rule' provided as an administrative rule of thumb in TR 96/8 has been removed as it is not considered correct in law. This is explained in additional discussion and examples in the draft ruling and will not impact most school or college building funds.

The discussion about administration costs has also been expanded to clarify that, in certain circumstances, reasonable expenditure incurred to administer the fund can be disbursed from the fund.

The draft ruling explains specifically that community use of primary school facilities funded as part of the Australian Government's Building the Education Revolution (BER) program is unlikely to be more than minor or occasional use (even if that use is regular).

The community's use of those facilities will not prevent a school or college building fund from being a fund that is established and maintained solely for providing money for the acquisition, construction or maintenance of a building used, or to be used, as a school or college.


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