Budget Update: Shock budget tax alarms Independent schools

Independent Schools Victoria is warning the decision by the Victorian Government to impose payroll tax on non-government schools means that schools may be forced to cut services or raise fees.

The Chief Executive of Independent Schools Victoria, Ms Michelle Green, has expressed alarm over the looming imposition of payroll tax on non-government schools, announced in the Victorian Government’s Budget.

‘This news is a shock to Independent schools and will be greeted with dismay by the parents who send their children to them,’ Ms Green said.

‘It was made without consultation and is based on an arbitrary definition of a “high-fee” school.

‘It is likely to have a damaging impact on the operations of many Independent schools, with the potential to disrupt the education of their students.’

Independent schools, which are not-for profit operations, have been exempt from payroll tax for decades, in recognition of their long-standing contribution to the community.

Likely to affect up to half of Victoria's Independent schools

The budget decision is likely to affect up to half of the 230 Independent schools in Victoria when it is applied from 2024.

Ms Green said: ‘The state government some years ago adopted the arbitrary definition of a ‘high-fee’ school as one charging annual fees of more than $7,500, a definition that captures schools that charge fees in the mid-range.

‘It assumes that all schools that charge more than $7,500 have the financial resources to weather this shock without cutting services or, alternatively, raising fees.

‘Either course of action will be a major cause of concern for the growing number of parents who make significant financial sacrifices to send their children to an Independent school.

ISV is seeking more detail on the rationale – and to point out the implications – of the decision, which will require legislative change.

Among other things, ISV is seeking clarity on the budget announcement that the Education Minister and the Treasurer will be able to exempt some schools from the tax.

Close to 160,000 young Victorians attend Independent schools, the fastest growing sector in the school structure, alongside Government and Catholic schools.

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