Goods and Services Tax: Payments made by parents to private schools

 QB 22/08 discusses the GST treatment of payments made by parents to private schools. As private schools provide taxable supplies in the form of education and education related goods/services, private schools typically charge GST at the standard 15% rate. However, there are exceptions to this rule where GST may not apply.

When is a payment made to a private school not taxable?

The first situation is where a parent makes an unconditional, voluntary gift to their child’s private school. In this situation, if and only if a parent does not require anything in return for providing the gift, the amount will not be subject to GST. The amount provided must also be voluntary and not a legal obligation.

Another area where the standard rate does not apply is to private boarding fees. When it is intended a child will stay in a boarding house for longer than 4 weeks, the parent will only be subjected to a reduced rate of 9% on the boarding fees. 

The above exceptions have been highlighted by IRD and any unique scenarios not mentioned above should be considered with a professional.

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