The surcharge is expected to return $810,720 from St Michael’s 1126 students. The school’s 2024 fees for a local year 12 student will rise to $38,172,up 6.9 per cent on 2023.
The state government shocked schools by introducing the payroll tax with no warning in its 2023 budget. The taxwas originally planned to contribute $420 million towards covering the state’s COVID-19 debts,but will deliver significantly less after the governmentlifted the threshold from $7500 to $15,000.
Sixty independent and Catholic schools were initially selected to pay the tax,but the governmentbackflipped again in August,adjusting the rules so any school that crossed the $15,000 threshold would be subject to the levy. It is not yet known how many schools will pay the tax.
Schools in the metropolitan area will pay a 4.85 per cent payroll tax. Those with at least 85 per cent of their staff in regional areas are subject to the regional rate of 1.2125 per cent.
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Caulfield Grammar School announced an $890 payroll tax charge per student in September,telling parents the levy would cost almost $7 million annually. With 3228 students enrolled,the new charge will return $2,872,920.
Caulfield Grammar has increased its fees by 7 per cent,from $37,672 in 2023 to $40,543 in 2024.
Parents were told in a letter last month that the fee rises were due to both the payroll tax and current inflationary pressures.
“The imposition of the payroll tax on Caulfield Grammar School represents an unparalleled and punitive change in the Victorian government’s support of independent education,” the letter said.
“The impact of the new payroll tax fundamentally transforms Caulfield Grammar School into a profit centre for the Victorian state government.”
Parents were already hit with thebiggest average private school fee increase in five years this year,as 20 schools raised their senior school tuition fees to more than $35,000.
Regent Consulting’s Paul O’Shannassy,who advises parents on school choice,said education was an “inelastic market”,which meant demand did not change much when fees increased.
He said while some larger schools could absorb cost rises from inflation and the payroll tax,others had no choice but to pass them on.
O’Shannassy expected primary schools to cop the brunt of fee hikes,with more families likely to delay private schooling instead of stopping altogether.
“Schools have been reasonably successful in portraying themselves as victims[of the payroll tax],” he said. “In the main,to the people at those schools,it’s small change.”
Education economist Adam Rorris said he believed the payroll tax was “absolutely the right thing to do”.
Rorris said increased subsidies by the state and Commonwealth governments had not reduced fees.
“These schools are not raising fees because they need the money. If they needed the money,they wouldn’t be generating surpluses year in and year out,” he said.
Non-government schools were exempt until now from paying payroll tax but,under rules for the government funding they also receive,must use surplus funds for educational purposes.
Victoria’s 23 highest-fee schools reported a combined surplus of about $127 million in 2021,analysis of their reports to the Australian Charities and Not-for-Profits Commission reveals.
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Jack Stevens,CEO of education payment provider Edstart,said the median fee for non-government schools in Victoria was $12,940 in 2023. The figure was expected to stay below the $15,000 payroll tax threshold in 2024.
Opposition education spokeswoman Jess Wilson said the Coalition would repeal the tax,which meant “hardworking families are now directly paying the price of Labor’s financial mismanagement through their children’s school fees at a time they can least afford it”.
A Victorian government spokesperson said fees for private schools were a matter for individual schools.
“Every government school in Victoria pays payroll tax – it’s only fair that the highest-fee private schools now also contribute,” they said.
The payroll tax threshold of $15,000 will remain in place until at least January 1,2029. It will be reviewed ahead of the 2029 school year.
St Michael’s and Caulfield Grammar were approached for comment.
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