Private ruling: Classification of Employee of Religious Institution as a 'Religious Practitioner'
Date of advice: 30 September 2015
Published: September 2015
Ruling period: 1 April 2014 to 31 March 2019
Date scheme commenced: 1 April 2014

Ruling: Q1: Would the Sole Employee of a religious institution be classified as a 'religious practitioner' for the purposes of section 57 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A1: No. | Q2: If the Sole Employee of the religious institution is classified as a 'religious practitioner' for the purposes of section 57 of the FBTAA, are the various ministries and activities as part of that employee's role at the religious institution principally in respect of pastoral duties or any other duties/activities that are directly related to the practice, study, teaching or propagation of religious beliefs for the purposes of section 57 of the FBTAA? | A2: Given the Sole Employee of the religious institution would not be classified as a 'religious practitioner' for the purposes of section 57 of the FBTAA (as determined in the response to Question 1), which is a condition that must be satisfied for section 57 of the FBTAA to apply, Question 2 has not been considered.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. The Religious Institution The religious institution is endorsed as a charitable institution with the Australian Charities and Not-for-Profits Commission (ACNC) - with a subtype pertaining to the advancement of religion. The religious institution is entitled to tax concessions in respect of income tax, fringe benefits tax and goods and services tax. The religious institution works across a range of churches and dominations, and is not connected to any one particular denomination. As such, the organisation does not have its own congregation. Its ministry is focussed on multiple congregations. The objects of the institution, while not encompassed in its Constitution, are provided on its website. The organisation has primarily been involved in supporting, resourcing and training pastors, church leaders and church members. There is currently only one employee (Sole Employee) working for the religious institution. The Sole Employee only received financial remuneration in certain income years. The work the Sole Employee has performed for the religious institution in all other income years was on a voluntary basis. The Sole Employee currently is not receiving any financial remuneration from the religious institution. The Sole Employee, who attended Theological College and holds a relevant Masters degree, has worked in Christian ministry on a formal basis at the religious institution for numerous years. While the Sole Employee is not officially recognised through ordination, the Sole Employee's theological training would be sufficient for ordination in a number of denominations if such a path was chosen. The Sole Employee has been involved in the following ministry activities as part of their role at the religious institution: Pastoral Duties • Preaching in various churches and at different special events. • Teaching at conferences and training courses. • Leading worship services (which does not include 'special' services such as baptisms, weddings and funerals). • Involvement in outreach programs in various churches which entails activities such as teaching, preaching, visiting, running children's/youth programmes and counselling/talking to people. • Starting a new congregation. • Writing courses and other materials that church leaders and Christians can use to assist them in their ministry and outreach. • Producing and editing ministry and teaching resources (for example, conference CDs) for churches and church leaders. • Speaking to pastors/church leaders regarding their church outreach programmes and plans for church planting (occasionally takes place in a more formal consultation process). Directly Related Religious Activities • Organising, planning and running conferences and training events for pastors, church leaders and church members (primarily on outreach, church planning and preaching). • Organising, planning and running inter-denominational outreach programmes involving churches from different denominations. • Selling and distributing various books and resources (on outreach, church planting and preaching) to individuals, churches and Christian organisations. The preaching that is conducted by the Sole Employee (through their role at the religious institution) is carried out in partnership with the local churches and is always conducted at the invitation and permission of the local minister. The frequency of such activities has been varied over the years, and in some years, the religious institution has focussed on some of the above ministries and not others. The Sole Employee regularly leads services at the church they attend, and occasionally preaches or give children's talks in the service. This is a personal ministry and not part of the Sole Employee's role with the religious institution. The religious institution receives an income through registration fees from running workshops and training seminars; selling books and CDs at those workshops and training seminars; consulting fees from working with churches; and donations from the community/supporters. Provision of motor vehicle to sole employee In certain income years, the religious institution provided the Sole Employee with a fully-funded car. In other years, the religious institution only paid for the vehicle use directly related to its ministry while the Sole Employee paid for their private use component of the vehicle.

Relevant legislative provisions: Australian Charities and Not-for-Profits Commission Act 2012 Subsection 25-5(5) | Fringe Benefits Tax Assessment Act 1986 Section 57 | Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Reasons for decision: Summary: The Sole Employee of the religious institution would not be classified as a 'religious practitioner' for the purposes of section 57 of the FBTAA. As such, a benefit provided to this employee would not be an exempt benefit pursuant to section 57 of the FBTAA. | Detailed Reasoning - Detailed reasoning: Section 57 of the FBTAA states that: Where: (a) the employer of an employee is a registered religious institution; and (b) the employee is a religious practitioner; and (c) a benefit is provided to, 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) any pastoral duties; or (ii) any other duties or activities that are directly related to the practice, study, teaching or propagation of religious beliefs; the benefit is an exempt benefit. However, effective from 3 December 2012, section 57 of the FBTAA was updated to substitute the term 'registered religious institution' for 'religious institution', and a statutory definition for 'registered religious institution' was inserted at subsection 136(1) the FBTAA. The Australian Taxation Office (ATO) is in the process of updating TR 92/17 accordingly. In order to determine if the Sole Employee of the religious institution is a 'religious practitioner' pursuant to subsection 57(b) of the FBTAA, it must firstly be considered whether the religious institution is a 'registered religious institution' pursuant to subsection 57(a) of the FBTAA. | Detailed Reasoning - Is the Religious Institution a 'Registered Religious Institution'?: A 'registered religious institution' is defined in subsection 136(1) of the FBTAA to mean an institution that is a 'registered charity', and is registered under the ACNC Act as the subtype of entity with a purpose that is the advancement of religion pursuant to subsection 25-5(5) of that Act. A 'registered charity' is defined in subsection 136(1) of the FBTAA to mean an entity that is registered under the ACNC Act as a 'charity' pursuant to subsection 25-5(5) of that Act. The religious institution is registered with the Australian Charities and Not-for-Profits Commission (ACNC) as a charity (with a subtype pertaining to the advancement of religion) in accordance with subsection 25-5(5) of the ACNC Act. As such, the religious institution is a 'registered religious organisation' pursuant to subsection 136(1) of the FBTAA. | Detailed Reasoning - Is the Sole Employee of the Religious Institution a 'Religious Practitioner'?: A 'religious practitioner' is defined in subsection 136(1) of the FBTAA to mean: (a) a minister of religion; or (b) a student at an institution who is undertaking a course of instruction in the duties of a minister of religion; or (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. In respect of paragraph (a) of the definition of 'religious practitioner' in subsection 136(1) of the FBTAA, paragraph 12 of TR 92/17 1 states "…the expression 'minister of religion' clearly includes members of the clergy in the Christian denominations…". 'Clergy' is defined in The Macquarie Dictionary Online to mean 'the body of ministers ordained for religious duties, especially in the Christian church.' Based on the facts, while the Sole Employee of the religious institution attended Theological College and has a relevant Masters degree, the Sole Employee is not ordained as a minister in any domination under the Christian faith. 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 of 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. Each characteristic listed in paragraph 13 of TR 92/17 is discussed below in terms of whether the Sole Employee, through their role at the religious institution, would be considered a 'minister of religion'. Member of a Religious Institution The Sole Employee is a member of the religious institution. Therefore, this characteristic/element is satisfied. Recognised Officially by Ordination or Other Admission or Commissioning Based on the facts provided, while it is acknowledged that the Sole Employee is theologically trained, and that this would be sufficient for ordination in a number of Christian denominations, the Sole Employee is not formally ordained. As official ordination as a church minister/church leader/clergy is a requirement for this characteristic of a 'minister of religion', this characteristic/element is not satisfied. Recognised Officially as having Authority in Matters of Doctrine or Religious Practice The Commissioner acknowledges that the Sole Employee attended Theological College and completed a relevant Masters degree, as well as having a number years of experience at the religious institution in providing a range of pastoral duties and directly related religious activities. It is also recognised that, as part of the Sole Employee's role at the religious institution, they have written and presented training material on outreach, church planting and preaching, as well as having been invited and authorised by local ministers (of various churches) on numerous occasions to preach at church meetings or special outreach events. However, the information provided as part of the Private Ruling application does not provide a basis for concluding that the Sole Employee is recognised officially as having authority in matters of doctrine or religious practice by the churches and church leaders to whom the religious institution provide services. It is noted, though, that one does not require authority in an official capacity in order to preach or provide training/consultation in matters of doctrine or religious practice. Therefore, this characteristic/element is not satisfied. Position Distinct from Ordinary Adherents of the Religion (Christianity) While the Sole Employee - through their academic training and vast experience in a range of ministries as part of their role at the religious institution (particularly through preaching, teaching at conferences/training events, and writing training materials) - may be considered to be more well-versed in matters of doctrine or religious practice compared to ordinary adherents of the various denominations of Christianity, this is not recognised in an official sense. The information submitted as part of the Private Ruling application does not provide a basis for concluding the Sole Employee has a position that is recognised as distinct from that of the ordinary adherents of Christianity. However, on the basis of the facts available, the Sole Employee is not part of an institutional hierarchy in respect of the various churches and organisations they provide services to as part of their role at the religious institution. As such, the Sole Employee's academic training and Christian ministry experience does not result in the Sole Employee having a position (within the churches and organisations of the various denominations that the religious institution provide services to) that would be distinct from ordinary adherents of Christianity. Therefore, this characteristic/element is not satisfied. Acknowledged Leadership in the Spiritual Affairs of the Religious Institution From a governance perspective, the Sole Employee has been involved in leading the religious institution since its inception. The 'spiritual affairs' of the religious institution in this context would include the services provided by the institution as listed under 'Pastoral Duties' and 'Directly Related Religious Activities' in the facts above. While the Sole Employee has managerial leadership at the religious institution in a sense that they can make decisions regarding how the institution will contribute to the advancement of Christianity through the delivery of training/consultation services and other resources, it cannot be said that the Sole Employee has acknowledged leadership in the doctrinal matters/religious practices underlying the delivery of those services. However, the capacity to provide services in the form of preaching, writing/presenting training material and consulting with church leaders/ministers on matters of doctrine or religious practice is not considered to constitute spiritual leadership. According to the facts provided, the Sole Employee also does not have acknowledged leadership (in either a managerial or spiritual sense) in any of the churches and organisations they provide services to as part of their role at the religious institution. Therefore, on balance, this characteristic/element is not satisfied. Authorised to Discharge the Duties of a Minister or Spiritual Leader The Sole Employee has conducted preaching duties as part of their role at the religious institution in either church meetings or at special outreach events, which were triggered by invitation and permission of local ministers. On this basis, this characteristic/element of a 'minister of religion' may be considered to be satisfied. It is noted, however, that the Sole Employee has not been, and cannot be, authorised to discharge the full duties of a church minister or spiritual leader in terms of, for example, performing baptisms and leading marriage and funeral services. It is also acknowledged that the Sole Employee has also led worship services at the church that they attend, although this has primarily been conducted in their personal time and not as an employee of the religious institution. In any event, paragraph 13 of TR 92/17 provides that, in order for a person to be classified as a 'minister of religion', many if not all of the above characteristics should be present. On balance, most of the conditions to be a 'minister of religion', as discussed above, are not satisfied. As such, the Sole Employee would not be classified as a 'minister of religion'. Based on the facts provided, the other elements at paragraphs (b), (c) and (d) of the definition of 'religious practitioner' in subsection 136(1) of the FBTAA are not applicable, as the Sole Employee is not currently a student at an institution in order to become a minister of religion; is not a full-time member of a religious order; and is not a student at a college in order to become a member of a religious order. Conclusion The Sole Employee does not satisfy the definition of a 'religious practitioner' as defined in subsection 136(1) of the FBTAA. This conclusion is primarily on the basis that the Sole Employee: • is not a member of the clergy of any denomination of the Christian faith • is not formally ordained • does not have a distinctive position that is separate from other adherents of the Christian faith - while the Sole Employee may have more advanced skills, knowledge and experience in matters of religious doctrine compared to other adherents, this is not in an official capacity, nor is the Sole Employee part of an institutional hierarchy in terms of churches and organisations associated with the various Christian denominations • is not recognised in an official capacity as having authority in matters of doctrine or religious practice, and • does not have acknowledged spiritual leadership (noting that the capacity to preach and provide training/consultation/resources on matters of religious doctrine is not the same as constituting spiritual leadership). As the Sole Employee would not be classified as a 'religious practitioner' pursuant to its definition in subsection 136(1) of the FBTAA, any benefit provided by the religious institution to the Sole Employee would not be an exempt benefit pursuant to section 57 of the FBTAA. | Detailed Reasoning - Question 2: If the Sole Employee of the religious institution is classified as a 'religious practitioner' for the purposes of section 57 of the FBTAA, are the various ministries and activities as part of that employee's role at the religious institution principally in respect of pastoral duties or any other duties/activities that are directly related to the practice, study, teaching or propagation of religious beliefs for the purposes of section 57 of the FBTAA? | Summary: Given the Sole Employee of the religious institution would not be classified as a 'religious practitioner' for the purposes of section 57 of the FBTAA (as determined in the response to Question 1), which is a condition that must be satisfied for section 57 of the FBTAA to apply, Question 2 has not been considered. 1 While TR 92/17 is in the process of being updated to reflect the amended definition of a 'registered religious institution', the principles of TR 92/17 can still be relied upon for the purposes of determining whether the Sole Employee is a 'religious practitioner'.

Your arguments in support of your private ruling application: The religious institution is a 'religious institution' for the purposes of Taxation Ruling TR 92/17 Income Tax and Fringe Benefits Tax: Exemptions for 'Religious Institutions' (TR 92/17). | The Sole Employee is a 'religious practitioner' for the purposes of TR 92/17 on the basis that they: | 1. are a member of a religious institution | 2. are formally theologically trained (having attended Theological College and completed a relevant Masters degree), which would be sufficient for ordination in a number of denominations | 3. works/has worked in Christian ministry (as opposed to secular employment), which differentiates them from other adherents | 4. has been involved in leading the religious institution for a number of years | 5. has been involved in a range of Pastoral Duties (as outlined above) with the religious institution | 6. has been involved in Directly Related Religious Activities (as outlined above) related to the practice, study, teaching or propagation of religious beliefs, and | 7. has spent a small portion of their time undertaking general administrative tasks for the religious institution such as keeping financial records, preparing agendas, keeping minutes for Board meetings, answering correspondence, maintaining a database etc.