5 June 2023
Anglican schools in Victoria will have to pay hundreds of thousands more tax dollars following a budget announcement to remove payroll tax exemptions from high fee non-government schools.
Most Anglican schools in the state will be affected by the May state budget announcement to remove the payroll tax exemption for schools charging over $7,500 in fees.
After criticism from independent school bodies, the state government has agreed to review the policy to keep more schools exempt.
Premier Daniel Andrews said on Friday the initial budget announcement had overestimated the number of schools that would be affected.
Speaking to the Public Accounts and Estimates Committee, Mr Andrews said the threshold for determining high versus low fee schools would be raised from $7,500.
A Department of Education spokesperson said the threshold had been set using 2019 data from the Australian Curriculum, Assessment and Reporting Authority and would need to be updated to reflect changes in school fees.
Independent Schools Victoria chief executive Michelle Green said she was pleased to see the government abandon the $7,500 threshold but was still opposed to the payroll tax exemption being lifted.
She said the decision had been made without consulting independent schools and that the definition of high fee was arbitrary.
A Department of Education spokesperson said the Minister for Education and the Treasurer would consult with the independent education sector and review the high fee threshold.
Mr Andrews said during budget estimate hearings that Xavier College was an example of a high fee school.
With fees ranging from $24,000 for prep to $36,000 for VCE, Xavier is comparable to several Anglican schools including Ivanhoe Grammar School, Geelong Grammar and Melbourne Grammar School.
The 4.85 per cent payroll tax would mean hundreds of thousands of dollars in extra tax for each school.
Ms Green said the imposition of the tax on independent schools could have a disruptive effect on students’ education, with fears schools would either need to raise fees or cut services.
Independent Schools Victoria said non-government schools had been exempt from the payroll tax for decades in recognition of their contribution to the community as not-for-profit organisations.
Australian Education Union Victorian branch president Meredith Peace said public schools had to pay payroll tax despite being underfunded compared to private schools.
She said removing the payroll tax exemption amounted to asking independent schools to pay their fair share.
“We would expect independent schools, many of which profess a Christian ethos, to be far more concerned about inequality in education funding and the impact this has on students in public schools,” she said.
Several Anglican schools have been approached for comment.