Parents in the Exclusive Brethren avoid paying tax on the bulk of their children's school fees in an arrangement that would be illegal if sought by other Australian parents.

Independent senator Nick Xenophon has called for a tax office investigation into the arrangement which he said looked ''at first blush like a tax lurk of biblical proportions''.

When most parents pay school fees, they are paying it from income which has already been taxed. If they sought to avoid tax by paying it via tax-deductable donations, or through a family trust, they could be prosecuted for tax evasion.

But figures released on the MySchool website show the Exclusive Brethren, a radically separatist Christian sect with about 15,000 members in Australia, gets around this law.

The website reveals that, at their Victorian school, Glenvale, 54 per cent of the income is tax-free because it is paid by parents through distributions from family trusts as well as donations. Because a school is a tax-free entity, Brethren families who arrange their business in this way do not need to pay tax on that money.