60 Richest Private Schools get Over $350 Million in Untaxed Income

Sixty private schools serving the richest families in Australia raked in over $350 million from donations, investment income and other income in 2023.

This money is ignored by governments when determining taxpayer funding of these schools. It means they are being over-funded compared to public and other private schools that do not have similar income streams.

Financial statements and reports lodged with the Charities Commission show that 50 schools with a median adjusted taxable family income of $225,000 a year or more received $354.5 million in 2023, an average of nearly $6 million per school, from donations, investment income and other income, such as from rental properties and hire of facilities. They received $110.4 million in donations, $46.3 million as investment income and $197.8 million in other income.

The big winner was Sydney Grammar which raked in $16.4 million, including $3.4 million in donations, $6.8 million from investments and $6.2 million in other income (see table below). According to school family income data released to Senate Estimates by the Department of Education, the median family income for Sydney Grammar was $380,000 and 25% of its families had an income of more than $730,000. Despite its privileged families and other income sources, the My School website shows it received $7 million in government funding in 2023, with $5 million from the Commonwealth and $2 million from the NSW Government.

Another big winner was Brisbane Grammar which raked in $11.5 million including $2.3 million in donations, $1.8 million from financial investments and $7.6 million from other sources. The median family income was $323,000 with 25% of families having an income of over $575,000. It received $12.6 million in government funding in 2023, including $8.1 million from the Commonwealth and $4.4 million from the Queensland Government.

Four other schools received over $9 million from these sources.  St Aloysius' College raked in $9.9 million including $9.1 million in donations in 2023. Its median family income was $357,000 and 25% of families had an income of more than $546,000. Its government funding amounted to a massive $17.4 million, $13.9 million from the Commonwealth and $3.5 million from the NSW Government.

Brighton Grammar raked in $9.9 million, including $4.5 million in donations, $1.5 million from investments and $3.8 million in other income (see table below). Its median family income was $302,000 and 25% of its families had an income of more than $494,000. It received $7.1 million in government funding in 2023, with $5.6 million from the Commonwealth and $1.5 million from the Victorian Government.

Melbourne Grammar collected $9.8 million, including $5.9 million in donations, $1.5 million in investment income and $2.3 million in other income. Its median family income was $336,000 a year and 25% of families had an income of over $616,000. It received $8.4 million in government funding in 2023, with $6.6 from the Commonwealth and $1.7 million from the Victorian Government.

The Scots College in Sydney received $9.5 million including $4 million in donations, $0.4 million from investments and $5 million in other income. Its median family income was $336,000 and 25% of families had an income of over $682,000. It received $9 million in government funding, $6.6 from the Commonwealth and $2.4 from the NSW Government.

SCEGGS Darlinghurst in Sydney had the highest median family income of all these highly privileged schools at $495,000 and 25% of families had an income of over $1 million a year. The school collected non-fee income of $2.9 million in 2023, including $1.3 million in donations, $0.8 million from its financial investments and $0.8 million in other income. It received $3.9 million in government funding as well - $2.8 million from the Commonwealth and $1 million from the NSW Government. It really is a case of welfare for the rich.

In this context, it is worth noting that the family income measure is adjusted taxable income which is generally far less than the total income of the wealthy because they can take advantage of an array of tax concessions such as negative gearing, capital gains discount, deductible donations and gifts to reduce their taxable income. Records show 188 millionaires had a taxable income of $18,200 or less in 2021-22 and therefore paid no income tax.

The donation stream for these schools is supported by multiple tax-exempt organisations such as foundations, building funds, scholarship funds, library and funds or trusts which have Deductible Gift Recipient (DGR) status. Donations to these funds are tax deductible for the donors. This is effectively another form of taxpayer subsidy for the schools as they would receive fewer donations without DGR status.

For example, Sydney Grammar has a foundation incorporating building, scholarship and library funds according to the DGR Register. The Scots College has a foundation and building, scholarship and bursary funds. Melbourne Grammar has a foundation, building, scholarship and library funds and an arts trust according to the DGR Register. Brighton Grammar has a foundation and building fund. Caulfield Grammar has a foundation, a building fund and a scholarship fund. Brisbane Grammar has a building, library and bursary funds.

Many exclusive private schools also receive donations from the Australian Universities & Schools USA Foundation which is incorporated in the United States. Sydney Grammar, St Aloysius’ College, The Scots College, . Melbourne Grammar, Scotch College, Geelong Grammar, Brisbane Grammar and several others are members of the Foundation. It raised about $13 million over 2019 to 2023 for its affiliates.

Apart from receiving millions in donations and dividends from financial investments, many schools obtain substantial income from rental properties and hiring out facilities such as swimming pools and theatres. In Sydney, Abbotsleigh received $1.4 million in rent in 2023 and Kincoppal-Rose Bay raised $1.4 million from hiring out its pool. In Melbourne, PLC received $1 million from the hire of its aquatic centre. Caulfield Grammar received $0.8 million from the operation of a dairy farm it uses as an outdoor education centre. During 2017-2023 it received $5 million from this source.

Prince Alfred College in Adelaide receives an annual income from its wholly owned for profit subsidiary the Royal College Hotel (RCH Operations Pty. Ltd.). The College’s Financial Statements lodged with the Charities Commission shows that the College received income of $2.8 million from the hotel in 2023 and it has received $14 million over the period 2017-2023. So, a school operating as a charity owns a hotel from which it receives a substantial income.

None of this commercially sourced income is subject to income tax because private schools are classified as charities and therefore are tax exempt. A charity can undertake commercial activities with the purpose of generating profit to fund its charitable purpose or where the activity is only incidental to the purpose of the charity.

Image by Mikael Nilov