Private ruling: Religious institution and exempt benefits paid to a religious practitioner
Published: January 2012
Ruling period: 1 April 2011 to 31 March 2014
Date scheme commenced: 1 April 2011

Ruling: A1: Yes.

Relevant facts and circumstances: The employer has been endorsed as a charitable institution because they are promoting the advancement of religion. The employee is studying and has completed two of the four-year curriculum in theology. The employee will be working three days per week. The employee's will receive cash salary and benefits.

Relevant legislative provisions: Fringe Benefits Tax Assessment Act 1986 57 | Fringe Benefits Tax Assessment Act 1986 136(1) | Tax Administration Act 1953 12-47 | Income Tax Assessment Act 1997 50B and | Income Tax Assessment Act 1997 995-1(1).

Reasons for decision: Summary: The benefits to be provided to a part-employee are exempt from fringe benefits tax under section 57 of the Fringe Benefits Tax Assessment Act 1986. | Detailed Reasoning - Detailed reasoning: Section 57 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) provides an exemption for benefits provided to employees of religious institutions where four conditions are met. The conditions are as follows: (a) the employer of an employee is a religious institution; (b) the employee is a religious practitioner; (c) the benefit is provided to the employee, or to a spouse or a child of the employee; and (d) the benefit is not provided principally in respect of duties of the employee other than: (i) pastoral duties; or (ii) any other duties or activities that are directly related to the practice, study, teaching or propagation of religious beliefs. The tax office's position concerning the above conditions is discussed in Taxation Ruling TR 92/17: Income tax and fringe benefits tax: exemptions for religious institutions . All the four conditions have to be met for the exemption from fringe benefits tax to apply. | Detailed Reasoning - (a) Is the employer a religious institution?: TR 92/17 states that a body is an institution if it is an establishment, organisation or association, instituted for the promotion of some object that is religious, charitable, educational, etc. A body is a religious institution if it is instituted for a religious purpose. The employer is a non-profit income tax exempt charitable institution endorsed under subdivision 50B of the Income Tax Assessment Act 1997 . It was endorsed as a charitable institution because its purpose is the advancement of religion and benefits a portion of the community. The employer is a religious institution. Therefore, this condition is met. | Detailed Reasoning - (b) Is the employee a religious practitioner?: A 'religious practitioner' is defined in subsection 136(1) of the FBTAA to mean: (a) a minister of religion; (b) a student at an institution who is undertaking a course of instruction in the duties of a minister of religion; (c) a full-time member of a religious order; or (d) a student at a college conducted solely for training persons to become members of religious orders. Paragraph 13 of TR 92/17 states that in determining whether a person is a minister of religion, many if not all, of the following characteristics should be present: (a) the person is a member of a religious institution; (b) the person is recognised officially by ordination or other admission or commissioning, or, where the particular religion does not require a minister to be formally ordained, the person is authorised to carry out the duties of a minister based on a specified level theological or other relevant training or experience; (c) the person is recognised officially as having authority in matters of doctrine or religious practice; (d) the person's position is distinct from that of the ordinary adherents of the religion; (e) the person has acknowledged leadership in the spiritual affairs of the religious institution; (f) the person is authorised to discharge the duties of a minister or spiritual leader, including the conduct of religious worship and other religious ceremonies. The part-time employee is a student of theology. The part-time employee is training to be become a fully ordained member of the employer. Hence under the definition of a 'religious practitioner' in subsection 136(1) of the FBTAA he is a religious practitioner. The Pastor will supervise the part-time employee. He is expected to learn and follow the culture and procedures of the employer. The employee's time and duties will primarily be devoted and directly related to the practice, study, teaching or propagation of religious beliefs and/or pastoral duties. Any administrative tasks and duties will be minuscule. The part-time employee's duties are those expected of a spiritual leader and distinct from ordinary members of the employer. The employee will have the necessary authority to promote his faith to a certain section of the public. The employee's duties are within the definition of a religious practitioner as outlined in subsection 995-1(1) of the Income Tax Assessment Act 1997 , as directed from subsection 136(1) of the FBTAA. Accordingly, this condition of a religious practitioner is satisfied. | Detailed Reasoning - (c) Will benefits be provided to the employee?: The employer will be deducting Pay As You Go Withholding Tax as outlined by section 12-47 of Schedule 1 of the Tax Administration Act 1953 for a religious practitioner. Therefore, he is an employee for FBT purposes. The employer will provide the employee with accommodation. The benefit is being provided by the employer to an employee. Therefore this requirement is satisfied. (d) Will the benefits provided be principally in respect of pastoral duties of the employee or any other duties or activities that are directly related to the practice, study, teaching or propagation of religious beliefs? Pastoral duties generally are duties associated with the spiritual care of the members (or a section of the members) of the congregation of a religious body. The following are examples of pastoral duties: (a) communication of religious beliefs; (b) teaching and counselling adherents and members of the surrounding community; (c) providing adherents and members of the surrounding community with spiritual guidance and support; (d) attendance at an in-service training seminar by a person or persons conducting the seminar, provided that the seminar is of a spiritual nature; and (e) meeting with and visiting adherents, the sick, the poor, or persons otherwise in need of emotional and spiritual support. The duties or activities must be related directly to the practice, study, teaching or propagation of religious beliefs to meet the requirements of paragraph 57(d) of the FBTAA. The duties or activities may include secular activities if it can be shown that there is a direct link between those activities and the religious beliefs of the person concerned. The following examples, which are not intended to be exhaustive, are duties or activities which are not pastoral duties or directly related religious activities: (a) the administration of a church; and (b) work undertaken by a director of a department of a Diocese or similar unit of ecclesiastical administration; and (c) the administration of a school. Whether the benefit has been provided principally in respect of pastoral duties or directly related religious activities depends on the facts of each case. The non-pastoral tasks and duties of the employee will not take up the majority of his time. The employer states that the employee's time will primarily be devoted and directly related to the practice, study, teaching or propagation of religious beliefs and/or pastoral duties. The benefit to be provided is principally in respect of his practice, study, teaching or propagation of religious beliefs and/or pastoral duties and the exemption under section 57 of the FBTAA applies. This condition is satisfied. | Detailed Reasoning - Conclusion: Based on the employer's submission, the employer being a religious institution, and the employee having been determined to be a religious practitioner, it is concluded that the benefit(s) to be provided to the part time employee is principally in respect of the pastoral duties of a religious practitioner. Therefore, the benefits to be provided will be exempt benefits in accordance with section 57 of the FBTAA and do not have to be pro-rated.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Subject: Religious institution and exempt benefits paid to a religious practitioner: Can a part time employee, receive exempt benefits in accordance with section 57 of the Fringe Benefits Tax Assessment Act 1986 ?