Parents in the Exclusive Brethren avoid paying tax on the bulk of their children's school fees in an arrangement that would be illegal if sought by other Australian parents.
Independent senator Nick Xenophon has called for a tax office investigation into the arrangement which he said looked''at first blush like a tax lurk of biblical proportions''.
When most parents pay school fees,they are paying it from income which has already been taxed. If they sought to avoid tax by paying it via tax-deductable donations,or through a family trust,they could be prosecuted for tax evasion.
But figures released on the MySchool website show the Exclusive Brethren,a radically separatist Christian sect with about 15,000 members in Australia,gets around this law.
The website reveals that,at their Victorian school,Glenvale,54 per cent of the income is tax-free because it is paid by parents through distributions from family trusts as well as donations. Because a school is a tax-free entity,Brethren families who arrange their business in this way do not need to pay tax on that money.
This tax-free money makes up the majority of the Brethren schools'income,with another 28 per cent at Glenvale coming from government hand-outs,and the rest from modest fees paid from Brethren families'post-tax income.
At the Meadowbank Education Trust,the Exclusive Brethren school in Sydney,government funding (state and federal) totals almost $9000 per student,fees paid by parents from post-tax income are just $2700,and the rest,$14,300 per student,comes from tax-free donations and distributions.
This means that,though the government funding is on par with the most disadvantaged schools,the controversial Christian sect has $26,000 per student to spend — more than some top flight private schools such as Xavier College,Scotch College and Wesley College.
The pattern is replicated at the six Exclusive Brethren schools around Australia. In 2009,the sect raised $32.4 million in tax-free money to send its 2537 students to school.
This dwarfs the tax-free component of any other private school in Australia,and acts as a de facto second government subsidy to Exclusive Brethren schools. At other comparable small Christian schools,tax-free payments by parents make up between about 1 and 4 per cent of income.