‘This tax will break them’: The private schools about to be slugged with huge bills

Three more Melbourne private schools will be hit with the state’s government controversial new payroll tax next week, and another 10 will be paying the controversial charge within three years.

Alphington Grammar, Deutsche Schule Melbourne in North Fitzroy and Luther College in Croydon face new tax bills in the coming financial year of $966,000, $147,000 and $2.4 million respectively.

The tax threshold is not linked to inflation.Credit: Nathan Perri

All three schools will pay the state government more in payroll tax than they receive from it in education funding, with Luther College nearly $900,000 behind.

Parents at Alphington Grammar and Deutsche Schule have already begun paying special levies on top of tuition fees to help soften the financial blow.

The threshold for the tax – school income of $15,000 per student – is not linked to inflation, or “indexed”, meaning that more and more schools will be caught by the tax each year until at least 2029, when a review of the charge is due. The three schools will join 58 private schools that already pay the tax.

Private schools lobby group Independent Schools Victoria says mid-market institutions are now being forced to pay the charge, which the government argued was supposed to target only the state’s “wealthiest private schools”.

Among the schools set to be hit in the coming years, according to analysis by the independent Parliamentary Budget Office, is Hawthorn’s Rossbourne specialist school, and the state opposition warns that the Labor government should prepare for a fight over what the Liberals call taxation of the education of children with special needs.

The government had to back down in the face of a community and political backlash two years ago when the initial list of schools slated to pay the tax included the tiny Andale specialist school in Kew – with 22 students – alongside some of Australia’s wealthiest and most prestigious schools, such as Geelong Grammar and Scotch College.

Opposition education spokeswoman Jess Wilson said: “Year after year, Labor’s insidious schools tax continues to make life harder for more students, families and school communities.

“Even specialist schools such as Rossbourne are in danger of being hit with this tax – denying students with learning difficulties the tailored education they need and deserve.”

Alphington Grammar principal Vivianne Nikou said on Thursday that families at her school were far from “elite” private school parents.

“We’re low to middle-cost compared to other independent schools,” Nikou said.

“It’s a small school that has a specialisation in catering for multicultural kids, from mixed marriages and new families, looking to give their kids an opportunity. They’re aspirational families and buying an independent school education for the first time.

“This kind of tax will break them.”

Nikou said the school had formed a partnership ahead of the tax hike with financial services company Edstart, which offers deferred payment plans on school fees at commercial interest rates, and that every family with children at Alphington had signed up.

Independent Schools Victoria chief executive Rachel Holthouse, who wants what she calls the “fundamentally unfair” tax scrapped altogether, said she had recently written to Education Minister Ben Carroll with several suggestions for indexing the threshold to protect mid to low-cost schools from financial shock.

But the government remained steadfast that there would be no review of the tax until a scheduled review in 2029, Holthouse said.

“Without indexation, the pace at which some of those small schools find themselves liable for the tax is faster,” she said.

“Many schools that don’t fit the profile of the expensive 150-year-old sandstone school are looking at the runway, and they’re already on it for payroll tax.”

Carroll’s office was contacted for comment.

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