The Australian Tax Office (ATO) released its final ruling on school building funds on 13 February 2013.
It had released a draft ruling on this topic in December 2011. The draft ruling stated that a school building fund could receive tax deductible gifts if it was constructing or maintaining buildings which were used solely as a school - any other use of the building could only be minor or occasional. This “principal purpose test” was in contrast to the “more than 50% test” which was in place prior to the issue of the draft ruling. Under this rule, a fund could receive tax deductible gifts if it was constructing or maintaining buildings which were used as a school at least 50% of the time.
The ATO received many submissions from the public in response to its draft ruling. Its final ruling, named TR 2013/2, incorporates many of the issues and ideas which were raised in the public submissions, and departs from the “principal purpose test”.
The new test described in TR 2013/2 is as follows:
The ATO also included transitional provisions which will apply to funds which existed prior to 13 February 2013.
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