Private ruling: School building fund
Published: March 2012
Ruling period: Year ended 30 June 2012

Ruling: Q1: I s a houseboat a school building for the purposes of a school building fund endorsed under item 2.1.10 of the table in subsection 30-25(1) of the Income Tax Assessment Act 1997? | A1: No

Relevant facts and circumstances: The College is an incorporated association and has applied for a private binding ruling to confirm that donations from its school building fund can be used for the purchase and maintenance of a houseboat which will be used as a training facility, classroom and residential student accommodation facility. The College conducts various boat skills courses. The College is an endorsed tax concession charity - charitable institution and has a deductible gift recipient endorsed school building fund. The College is planning to provide training for employment in the Murray River tourism industry. The Maritime Training Authority has advised the College that the practical training required for qualifications in the industry must be undertaken on a commercial boat. The College submits that as the majority of commercial boats on the Murray River are houseboats, it is practical for the college to deliver both the theory and practical training in the one facility, being a house boat and wishes to use contributions made to its school building fund for the acquisition and maintenance of a house boat.

Relevant legislative provisions: Subsection 30-25(1) Income Tax Assessment Act 1997.

Reasons for decision: Summary: A fund endorsed under item 2.1.10 of the table in subsection 30-25(1) of the Income Tax Assessment Act 1997 (ITAA 1997) is permitted to used donated funds for the purchase, acquisition and maintenance of a school building. The word "building" is not defined in the ITAA 1997 and therefore has its ordinary and natural meaning unless the statutory context indicates otherwise. The Australian Oxford Dictionary , 2004, rev. 2nd edn, Oxford University Press, Melbourne defines building as: 1. a permanent fixed structure forming an enclosure and providing protection from the elements etc (e.g. a house, school, factory or stable). Whilst a house boat is a structure forming an enclosure and would provide protection from the elements, it is not fixed as described by the definition above. In contrast The Macquarie Dictionary 2001, 3rd edition (The Macquarie Library Pty Ltd, Macquarie University) describes a boat as: 1. a vessel for transport by water, constructed to provide buoyancy by excluding water and shaped to give stability and permit propulsion. Taxation Ruling TR 2011/D5 (TR 2011/D5) describes the Commissioners view on that which constitutes a building. At paragraph 102, comment is provided about the appropriateness of considering the context and purpose surrounding a building. It states: 102. In Cobb & Co Ltd , Windeyer J considered the meaning of 'building' in a former school building fund deduction provision.11 He said at CLR 337: Numerous cases were cited to show that sometimes a wall or an embankment or similar structure falls within the term 'building'; and sometimes it does not. I need not go through the cases. In each of them the meaning of 'building' depended upon its context and the circumstances and purpose of the particular instrument in which it appeared. No doubt a stone wall is built; and in that sense it is a building. No doubt too the school oval could be said to have been built… But, for the purposes in hand, this involves a strained and inappropriate use of the word 'building'. And moreover, what I have to consider is the meaning of the composite expression 'building used or to be used as a school'. Paragraph 106 of TR 2011/D5 explains that while a school building would normally be expected to have walls, flooring and a roof, there are circumstances where it would be possible for there to be a school building without these features being present. It states that it is in the nature of a building which is the determining factor: 106. Although a building would usually be expected to have walls, flooring and a roof, there are circumstances where a structure can be accepted as a building for the purposes of Item 2.1.10 even if it does not have walls. For example, a covered outdoor learning area that does not have any walls but is made of galvanised steel with colour bond roofing, has guttering and downpipes, and is fixed to the land by posts embedded in a concrete floor might be used for outdoor classes of a school and school assemblies. Even though it does not have walls, it is a building for the purposes of Item 2.1.10 because it is in the nature of a building: it is a structure with the function of a building used as a school (albeit with an atypical design influenced by environmental and particular operational factors), it is fixed to the ground , it has a roof and its size and method of construction indicate that it is not intended to be in place on an interim or short term basis or for a temporary purpose. ( Emphasis added ) By its very definition, a boat is not a building. It is a vessel capable of "…transport by water…" which has an ability to generate "…propulsion", words which connote a structure capable of movement in contrast to the requirements that a building is fixed as described in the definition of a building and the discussion in TR 2011/D5 Accordingly a house boat is not accepted as a building and funds from an endorsed school building fund cannot be used for the purchase, acquisition and maintenance of a house boat.

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