The elite schools pushed to the financial brink

Victoria is set to become the only state in the nation where private schools pay tax to the state government — and it will push many already struggling schools to the edge.

Geelong Grammar posted a $1.6m deficit in 2022 and will have to pay about $3m in payroll tax.

Dozens of struggling private schools will no longer be subsidised by the Andrews government, but must instead pay the state millions under the payroll tax, new data shows.

Many are already in deficit or barely breaking even, according to analysis by the Herald Sun.

In no other state in the country are private schools made to fund state governments rather than the other way around.

A comparison between the estimated payroll tax to be paid by nearly 60 schools and their recurrent state government funding shows many will be placed in a dire financial situation from mid next year.

On the state hit list is Andale, a special school with just 22 pupils which posted a deficit of nearly $200,000 in 2021. Andale receives $119,000 from the state but would have to pay half of it back under the payroll tax, further exacerbating its precarious financial position.

Many schools losing money will prop up state coffers by about $1m a year.

These include Eltham College, which posted a $517,000 loss in 2021 but will have to pay around $914,000 in payroll tax — well over the $659,000 it gets from the state in annual revenue.

Tintern Grammar also faces having to pay more than $200,000 to the state government than it receives. Principal Brad Fry lashed out in a letter to parents at having to pay ”the government to run our school and to educate the state’s students and helping to ease the burden on an overcrowded and under-resourced government school system”.

Sacre Coeur will have to pay the state up to $1m. Picture: Luis Enrique Ascui

Other schools recently losing money that have to pay the state up to $1m include Ivanhoe Girls’ Grammar which posted a $577,000 deficit in 2021. Sacre Coeur, which had a 2022 deficit of $1.5m, will have to pay the state around $934,000 in the new tax. Shelford Grammar is in the same situation, posting a $878,000 debt in 2021 but now having to pay the state about $645,000 in tax.

Co-ed schools similarly affected include Peninsula Grammar, which posted a $2.4m deficit in 2022 but is due to pay the state around $1.2m and The Knox School which has a $822,000 deficit but will have to pay around $790,000.

Other schools whose payroll tax liability nearly cancels out their state funding include Bialik, Billanook, Genazzano, Huntingtower, Loreto Toorak and Westbourne Grammar.

The tax is also likely to wipe out slim surpluses at Kingswood College, Lowther Hall, Preshil, St Margarets and Strathcona.

Based on employee expenses reported to federal authorities, the school that has to pay the most payroll tax is Wesley College on $4.8m, cancelling out a $3m funding from the state and further exacerbating its $2m deficit in 2021. However, the school has total assets of $182m and annual income of $127m.

Other wealthy schools with multimillion-dollar surpluses such as Brighton Grammar, Trinity Grammar, Carey Grammar, Haileybury and Ivanhoe Grammar will have to pay more than $1m to the state government than they already receive in annual funding.