New Zealand Labour Party

Fee fi fo fum…tax swindle comes undone

At the same time the Government is looking to pump more cash into private schools the IRD is investigating several over a tax swindle which allows parents to falsely claim private school fees as donations and claim a rebate, Labour’s Education spokesperson Chris Hipkins says.

“Inland Revenue warned against this practice – where fees paid to private education providers or the charitable trust that owns them are being incorrectly categorised as gifts or donations - two years ago. 

“While it appears there has been little actual follow up action since that then, other than a couple of individual taxpayer investigations, new documents we’ve received under the OIA reveal IRD is now looking into discrepancies at several private schools or childcare centres.

“The information shows payments - which a childcare centre or school would otherwise have to recover from parents by way of attendance or tuition fees - are being used to meet the running costs.

“That’s a rort in anyone’s language.

“And it comes on the back of revelations the IRD is holding at least $15 million of unclaimed rebates owed to parents of students at state schools who have forked out some $48 million-plus in voluntary donations.

“So parents of children at public schools aren’t claiming tax back, while parents of children at private schools are doing just that, despite it being unlawful.

“What’s more Hekia Parata has confirmed private schools are in line to receive a bigger share of taxpayers' money.

“Labour’s priorities are clear – we will ease the financial burden parents sending their kids to state schools face by making sure those schools are properly funded.

“Unlike National, we will seek to create equal opportunities through education, not keep tilting the playing field in favour of the wealthy,” Chris Hipkins says.