Part B5: Not for profit requirements – Permitted payments and activities under the Education Regulation
The Education Regulation may specify whether or not a school operates for profit because of any particular use of assets or income, and any particular payment in relation to the school or any other matter (Section 83C(3) of the Education Act).
There are 8 matters currently addressed in the Education Regulation.
B5.1 Student Scholarships, Prizes and Other Activities
Making a reasonable payment to a student in connection with a prize, scholarship or other activity as a student of the school does not constitute operating for profit (Clause 10 of the Education Regulation).
- Policies and procedures supporting any student scholarship or prize (including cash prizes) routinely awarded by the school.
- Records of the payments made by a school in connection with a student scholarship or cash prize, including that the payment was authorised by the governing body and/or a person with authority within the school.
- Appropriate documentation supporting that the payment is reasonable.
- Documentary evidence that conflicts of interest and relationships with related parties (if any) have been appropriately identified and managed.
Note: This list is only a guide. It is not intended to be exhaustive or prescriptive. For further detail read our section on Records to demonstrate compliance.
B5.2 Redress payment for child sexual abuse
A school will not operate for profit because of a payment made by or on behalf of the school to the National Redress Scheme for Institutional Child Sexual Abuse.
A school will also not operate for profit because of a payment made by or on behalf of the school directly to a person whose application for redress has been approved under the National Redress Scheme for Institutional Child Sexual Abuse because the school is an institution responsible for abuse of the person under the National Redress Scheme for Institutional Child Sexual Abuse Act 2018 (Cth).
A school will not operate for profit because of a payment made by or on behalf of the school to a person under a local redress scheme for sexual abuse committed against the person while the person was a minor and connected to the school. To be considered a valid local redress scheme under the Education Regulation, the scheme should have objectives and principles that are similar to the National Redress Scheme.
Schools must be able to demonstrate to the Minister’s satisfaction that any payment does not comprise any money provided by the Minister as financial assistance in respect of the school.
- Audited financial statements and/or financial audit information.
- Documentation of other redress schemes, including:
- evidence of alignment with the objectives and principles of the National Redress Scheme.
- Rationale for payments exceeding prescribed amounts.
- Records showing the individual’s connection to the school and eligibility for redress.
Note: This list is only a guide. It is not intended to be exhaustive or prescriptive. For further detail read our section on Records to demonstrate compliance.
B5.3 Recognised education and care programs
A school does not operate for profit if the proprietor’s assets or income, as far as they relate to the school, are used by the proprietor to provide a recognised education and care program for children who attend the school, and children who meet criteria specified in guidelines.
However, funding provided by the Minister cannot be used for a recognised education and care program.
Any payment for property, goods or services must not be at more than reasonable market value, required for the operation of the recognised education and care program or the school and not in any other way unreasonable having regard to the fact that funding is provided to or for the benefit of the school.
Any income received by the proprietor from the operation of the recognised education and care program must be used for operation of the recognised education and care program or the operation of the school (Clause 10B of the Education Regulation).
What are recognised education and care programs?
Recognised education and care programs are long day care, out of school hours care and preschool programs. The definition of recognised education and care programs is not exhaustive and includes transition to school programs and playgroups.
- ‘out of school hours care’ – means care, play and learning for school children delivered before and after school, during school holidays and on pupil free days
- ‘long day care’ – means a service providing care, including a pre-school program, for children less than 6 years of age
- a ‘preschool program’ – means an early childhood educational program delivered by a qualified early childhood teacher to children in the year that is 2 years before grade 1 of school (“grade 1” in this context is a reference to the first year of compulsory full-time schooling)
- ‘transition to school program’ – means a short-term program intended to support children’s transition into a school in the year before school, having regard to normal practice
- ‘playgroup’ – means regular, informal sessions where children aged 0–5 and their parents or carers come together to play, socialise and support each other in a relaxed setting.
Eligibility criteria
Recognised education and care programs are designed to invest in children who attend a school or children that are likely to attend a school in the future. Proprietors can use school income and school assets to operate recognised education and care programs for children who meet the following criteria for the purpose of Clause 10B(1)(b) of the Education Regulation:
- children who are likely to attend the school
- children who are not eligible to enrol at the school because of the school’s eligibility criteria, in circumstances where the recognised education and care program is designed and delivered mainly for children likely to attend the school (for instance, a co-educational preschool provided by a single-sex non-government school)
- children who do not attend the school, in circumstances where the recognised education and care program is designed and delivered mainly for children who attend the school (for instance, vacation care provided for children who attend the school and offered to children from other schools), or
- children who will not or do not attend the school in circumstances where there are no other recognised education and care programs of the relevant kind in the geographic vicinity (for instance, delivery of a preschool program or out of school hours care in a regional or rural area).
The criteria "children who are likely to attend the school" recognises that there will be children who, at the time of enrolment in a recognised education and care program, are likely to attend the school, but will not go on to attend the school. This criteria does not impose obligations or prohibitions on parents, carers or their children and it is not intended that subjective factors like the intentions of parents or carers concerning their child’s future education would be considered when assessing whether a recognised education and care program is for children likely to attend the school. A school will not operate for profit because these children did not ultimately go on to attend the school.
- Documents that show the nature of the recognised education and care program and its connection to the school.
- Records that demonstrate a connection between the education and care program and the school (for instance, the education and care program may be delivered on or near school grounds or with regular connection to the school to familiarise future learners with the school and school community).
- Eligibility criteria for the education and care program, and the school’s enrolment eligibility criteria.
Note: This list is only a guide. It is not intended to be exhaustive or prescriptive. For further detail read our section on Records to demonstrate compliance.
Payments for property, goods or services for a recognised education and care program
All of the circumstances of a particular transaction in this context will be considered when determining whether a school has operated for profit.
For guidance on ‘reasonable market value,’ and the relevant records to demonstrate compliance refer to section B2.2 (Goods or services for the school and reasonable market value).
- Policies or relevant records outlining the nature of the recognised education and care program.
- Appropriate consent authority confirmation the site is approved for the provision of the recognised education and care program. Where such provision is not permitted, that could indicate the payment is not required for the operation of the recognised education and care program.
- Any records demonstrating that the payment is required for the operation of the recognised education and care program.
Note: This list is only a guide. It is not intended to be exhaustive or prescriptive. For further detail read our section on Records to demonstrate compliance.
Income arising from the operation of a recognised education and care program
A school will operate for profit if it uses income generated from its recognised education and care program for a purpose other than for the operation of the recognised education and care program or the operation of the school.
- Separate General Ledger (GL) accounts or sub dissection within the proprietor’s financial accounts.
- Evidence of the application of income received from the operation of the recognised education and care program.
Note: This list is only a guide. It is not intended to be exhaustive or prescriptive. For further detail read our section on Records to demonstrate compliance.
Exclusions and limitations
Third-party providers
The Education Regulation deals only with the use of school income and assets for the provision of recognised education and care programs by the proprietor of the school.
Where a recognised education and care program is provided by a third-party or related entity, any use of the school’s assets or income (and any payments by the school) will be assessed under the not for profit requirements of the Education Act. Schools that deliver a recognised education and care program through a third-party provider should read the following parts of these Guidelines:
- reasonable market value (see B2)
- leasing school owned property and assets (see D3.1)
- investing school income (see D4.3)
- joint use arrangements (see B5.4).
Creche and long daycare services for children of students
Some schools operate creche or long day care services for children of students at a school and Clause 10B of the Education Regulation does not apply to these services. These services are important to support students continued engagement in education and are generally considered to be for the operation of the school. Any use of the school’s assets or income (and any payments by the school) will be assessed under the not for profit requirements of the Education Act.
Schools that operate creche or long day care services for children of students should read the following parts of these Guidelines:
B5.4 Joint use arrangements
Joint use arrangements are where a proprietor/school enters into a formal agreement with a third-party to share responsibility for the funding, development and ongoing use of a facility or asset. Both parties typically have agreed rights and obligations. This regulation applies in circumstances where the facilities being built or upgraded are owned by the proprietor/school or jointly owned by the proprietor/school and the other entity developing the facility.
A school does not operate for profit because of a payment made by the school under a joint use arrangement, or the use of the school’s assets or income by the school’s proprietor in accordance with a joint use arrangement as far as they relate to the school. Income received by the proprietor arising from a joint use agreement must be used for the operation of the school.
Any payment made by a school for property, goods or services under a joint use arrangement must not be above reasonable market value, must be required for the operation of the school and must be reasonable in the circumstances that funding is provided to or for the benefit of the school. The benefit to the school under the joint use arrangement must be proportionate to the costs incurred to the school under the arrangement.
- Written agreements documenting the joint use arrangement.
- Policies and procedures that align with the proportionate use of the asset.
- Business records demonstrating governing body approval of the arrangement.
- Documentary evidence that conflicts of interest and relationships with related parties (if any) are appropriately identified and managed.
- Records to demonstrate all arrangements are lawful and meet all relevant requirements (for instance child protection, work health and safety, student and staff welfare, public liability insurance).
Note: This list is only a guide. It is not intended to be exhaustive or prescriptive. For further detail read our section on Records to demonstrate compliance.
B5.5 Payments for future use of facilities
A school may seek to develop or build new facilities for school use that are owned by another entity. Schools can use school income, assets and make payment under these arrangements provided the facilities being developed are for future school use and the school has a recognised entitlement to use the facilities. A school does not operate for profit because of a payment made by the school under these future use arrangements.
Any payment made by a school for property, goods or services under a future use arrangement must not be above reasonable market value, must be required for the operation of the school and must be reasonable in the circumstances that funding is provided to or for the benefit of the school. The benefit to the school under the future use arrangement must be proportionate to the costs incurred to the school under the arrangement.
- Written agreements documenting the future use arrangement.
- School governing body decisions to confirm the facilities are for future school use and that the school has an agreed entitlement to use them.
- Independent evaluations or competitive quotes demonstrating the payments under the arrangement are not above reasonable market value.
Note: This list is only a guide. It is not intended to be exhaustive or prescriptive. For further detail read our section on Records to demonstrate compliance.
B5.6 Community use of school premises
Schools are encouraged to share their facilities with the community when they are not needed by the school. A school does not operate for profit because the facilities of the school are made reasonably available, at no cost or below reasonable market value to another school, the local council, government agency, not for profit organisation or community group, to members of the public for recreational purposes or other purposes that benefit the local community.
Any use must not limit or restrict the operation of the school.
If schools share their facilities with commercial or for profit entities the school must receive payment for the use or access at reasonable market value.
- Written agreements or contracts documenting the arrangements for the use of the school’s premises, facilities or buildings with the third-party entity.
- Asset booking/management records.
- Policies and procedures that facilitate appropriate use of the school’s/proprietor’s premises, facilities or buildings by third parties.
- Business records demonstrating governing body approval of the arrangement.
- Documentary evidence that conflicts of interest and relationships with related parties (if any) are appropriately identified and managed.
- Records to demonstrate all arrangements are lawful and meet all relevant requirements (for instance child protection, work health and safety, student and staff welfare, public liability insurance).
Note: This list is only a guide. It is not intended to be exhaustive or prescriptive. For further detail read our section on Records to demonstrate compliance.
B5.7 Donating depreciated or redundant equipment
A school does not operate for profit because depreciated or redundant equipment of the school is donated to another school, charity or local council. A school will not operate for profit if it makes a payment to cover the reasonable costs, including reasonable transportation costs, of donating the equipment.
Depreciated or redundant equipment refers to equipment that is substantially or completely depreciated. This means that the equipment has significantly declined in value due to age, use, or obsolescence, such that:
- the item has little to no remaining book value for accounting purposes
- the item is no longer economically viable to repair, upgrade, or continue using in the school’s operations, or
- the item is no longer needed for school purposes.
Exclusions and limitations
This regulation does not apply to equipment that is infrequently used or the disposal of other school assets. Schools seeking to dispose or sell asset (other than school equipment) should refer to the following parts of these Guidelines:
- disposal (sale) of school assets (see D3.2).
- Records of the donated items, including descriptions, condition, estimated remaining value, and reason for the donation.
- Signed documentation outlining the recipient organisation, items transferred, and confirmation that no payment was received for the equipment.
- Evidence of actual costs incurred for transport, removal, or recycling.
- Records demonstrating consideration and approval of the equipment’s donation by appropriately authorised senior staff.
- Documentary evidence that conflicts of interest and relationships with related parties (if any) are appropriately identified and managed.
Note: This list is only a guide. It is not intended to be exhaustive or prescriptive. For further detail read our section on Records to demonstrate compliance.
B5.8 Fundraising for external charitable purposes
Schools often fundraise for a particular external charitable cause, holding these funds for the relevant entity or cause, before making a donation to that cause. Schools may also use their school assets (i.e. using school facilities to host events or collect donations) when undertaking fundraising activities. Such activities are permitted by the Education Regulation. Use of a school’s assets when undertaking charitable activities should not disrupt or obstruct the operation of the school.
Exclusions and limitations
Schools cannot make donations that include the income of the school.
- Communications and correspondence to parents and the community in respect of the fundraising activity and the cause.
- Records of any school assets used (if any) when undertaking fundraising activities.
- Financial records that record the receipt and payment of donations/fundraising.
Note: This list is only a guide. It is not intended to be exhaustive or prescriptive. For further detail read our section on Records to demonstrate compliance.
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