Private school bookkeeping: tuition earned monthly, deposits held honestly

Recognize tuition over the year it is taught

The enrolment contract creates an obligation to deliver a school year, so we defer tuition on receipt and recognize it monthly from September through June. A school that books September's collections as September's income looks rich in the fall and broke by spring — and makes real decisions, like hiring or a fee freeze, off that illusion. Recognized revenue, not cash in the bank, is the number a head of school and board should budget against, with the deferred balance sitting plainly on the statement of financial position as what is still owed to families in teaching.

Withdrawals test the setup. The contract's refund schedule decides how much of the deferred balance goes back to the family and how much is earned or forfeited, and books that track deferral per student — not as one pooled number — settle those conversations in minutes.

Receivables: the enrolment roster is the subledger

Tuition receivables should reconcile family by family to the roster, because every gap is a conversation someone has to have. Most schools run payment plans — monthly pre-authorized debits through a platform like FACTS or Blackbaud Tuition Management, or recurring invoices in QuickBooks Online — and the books need to mirror the plan schedule so an aging report means what it says. Sibling and staff discounts get recorded as reductions of tuition revenue, visible as their own line, so the board can see the real discount rate rather than a quietly shrunken top line.

Re-enrolment season is the other pressure point: next year's deposits arrive while this year's tuition is still being earned, so the books must carry two school years side by side without mixing them.

Deposits and levies are liabilities with terms attached

An enrolment deposit is the family's money until the contract says otherwise. We hold deposits as liabilities and move them — to tuition revenue when the year starts, or to forfeiture income per the contract when a family withdraws after the refund date. Capital levies and building fees deserve the same care: they are usually compulsory, which means a charitable school cannot issue a donation receipt for them, and if they fund a specific project the balance should be tracked to that project the way a restricted fund would be. Refundable exit or damage deposits simply stay liabilities until returned.

Bursaries and scholarships need a funded trail

A bursary is a discount, not an expense — the award reduces tuition revenue, and presenting it as money paid out overstates both sides of the statement. What matters is the trail behind it: donor-funded bursary money sits in a restricted fund with its own balance, awards are made against written criteria by a committee, and the fund's activity reconciles annually. For schools that are registered charities the arm's-length rule is strict — a donor cannot direct a gift to a named child and get a receipt, so intake and award decisions must stay independent of who gave.

One cheque, three tax treatments

A parent's payment to a private school can contain pieces the CRA treats completely differently, and the books have to split them at billing time — not reconstruct them when receipt season arrives:

Structure drives the rest of the compliance stack. A not-for-profit school that is a registered charity files a T3010, follows receipting rules, and — as a non-profit school authority — recovers a large share of the HST it pays through the public service bodies' rebate; a for-profit school files a T2 and follows ordinary corporate rules. Either way tuition itself stays HST-exempt, which means the school absorbs HST on most costs and budgets must be built gross.

International families paying from abroad and US curriculum licensing fees add a cross-border layer — withholding on licence payments, FX on tuition, and reporting questions we cover on our private school cross-border tax page. For the machinery of the monthly close itself, see our bookkeeping services.

Source: CRA — IC75-23, tuition fees and donations to religious schools.