Private ruling: Provision of benefits by a religious institution to a religious practitioner
Date of advice: 22 December 2020
Published: March 2021
Ruling period: FBT year ending 31 March 2020 | FBT year ending 31 March 2021 | FBT year ending 31 March 2022 | FBT year ending 31 March 2023 | FBT year ending 31 March 2024
Date scheme commenced: 1 April 2019

Ruling: Q1: Are benefits provided to the SRE Director employed by a registered religious institution exempt under section 57 of the FBTAA? | A1: Yes

Relevant facts and circumstances: The employer is registered with the Australian Charities and Not-for-profits Commission (ACNC) with the subtype of 'advancing religion'. The employee is an SRE Director with the employer. The SRE Director is a student at an institution who is undertaking a course of instruction in the duties of a minister of religion. The employee will receive salary and non-monetary benefits under an employment agreement. The duties of the employee are primarily in respect of the propagation of religious beliefs and/or pastoral duties.

Relevant legislative provisions: FBTAA Section 57 | FBTAA Subsection 136(1) | Income Tax Assessment Act 1997 Subsection 995-1(1)

Reasons for decision: Summary: Section 57 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA 1986) provides an exemption for benefits provided to employees of religious institutions where four conditions are met. The conditions are as follows: • the employer of an employee is a religious institution; • the employee is a religious practitioner; • the benefit is provided to the employee, or to a spouse or a child of the employee; and • 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 Australian Taxation Office's position concerning the above conditions is discussed in Taxation Ruling TR 2019/3 - Fringe benefits tax: benefits provided to religious practitioners | Detailed Reasoning - The employer of the employee is a religious institution.: Paragraph 7 of TR 2019/3 explains that in considering whether a benefit is provided by a registered religious institution, administration by the ATO is limited to determining that the entity is an institution that maintains current ACNC registration with a subtype 'advancing religion'. This employer is registered with the ACNC with the subtype of 'advancing religion' with its role to provide services for religious organisations. In the context of the FBTAA, the word 'institution' refers to a significant body which is a recognised part of society, and for which the grant of an exemption is seen to provide a public benefit. The employer meets this requirement. | Detailed Reasoning - The employee is a religious practitioner: Paragraph 12 of TR 2019/3 notes that 'Religious practitioner' is defined to mean (under subsection 136(1) of the FBTAA 1986 and subsection 995-1(1) of the Income Tax Assessment Act 1997 ): • a minister of religion • a student at an institution who is undertaking a course of instruction in the duties of a minister of religion • a full-time member of a religious order, or • a student at a college conducted solely for training persons to become members of religious orders. The SRE Director is a student in a course of instruction in the duties of a minister of religion. We accept that the SRE Director is employed as a religious practitioner. | Detailed Reasoning - The benefit is provided to the employee, or to a spouse or a child of the employee.: The benefits are provided to the employee under an employment agreement. | Detailed Reasoning - The benefit is in respect of duties or activities that are directly related to the practice, study, teaching or propagation of religious beliefs.: To be exempt, paragraph (d) of section 57 of the FBTAA requires that a benefit must not be provided principally for duties other than pastoral duties, or duties or activities that are directly related to the practice, study, teaching or propagation of religious beliefs ('directly related religious activities'). This requirement is satisfied in this case. | Detailed Reasoning - Conclusion: The employer is a registered religious institution, and the employee is a religious practitioner, it is concluded that the benefits provided to the employee is principally in respect of the pastoral duties of a religious practitioner. Therefore, the benefits provided will be exempt benefits in accordance with section 57 of the FBTAA.