Private ruling: religious practitioner exemption
Published: March 2014
Ruling period: Year ended 31 March 2014 | Year ended 31 March 2015 | Year ended 31 March 2016 | Year ended 31 March 2017
Date scheme commenced: 1 April 2013

Ruling: Q1: Are the benefits provided to an employee in the course of his employment exempt benefits pursuant to section 57 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A1: Yes

Relevant facts and circumstances: The employer is registered by the Australian Charities and Not-for-profit Commission (ACNC) as a charity that advances religion. The employee held a position as a religious practitioner which has had an administrative role attached to it (details of role and duties performed were provided). The employee receives a range of benefits from the employer. These were being received before the administrative role was added and are the same being provided to religious practitioners who do not have an administrative role.

Relevant legislative provisions: FBTAA section 57 | FBTAA subsection 136(1)

Reasons for decision: Summary: Section 57 of the FBTAA states: 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. Therefore for the exemption to apply: • the employer must be a registered religious institution • the employee must be a religious practitioner • benefit must be provided to the employee or to a spouse of child of an employee; and • be principally in respect of pastoral duties or other duties that directly relate to the practice, study, teaching or propagation of the religious beliefs. | Detailed Reasoning - Registered religious institution: A registered religious institution is defined in subsection 136(1) and is defined as: means an institution that is: (a) a registered charity; and (b) registered under the Australian Charities and Not-for-profits Commission Act 2012 as the subtype of entity mentioned in column 2 of item 4 of the table in subsection 25-5(5) of that Act. This definition applies from 1 January 2014. For the period 3 December 2012 to 31 December 2013 inclusive the definition stated: means an institution that is: (a) a registered charity; and (b) registered under the Australian Charities and Not-for-profits Commission Act 2012 as the subtype of entity mentioned in column 2 of item 3 of the table in subsection 25-5(5) of that Act. The employer is registered by the ACNC as a charity under the relevant sub-type to satisfy the relevant definition of a registered religious institution. | Detailed Reasoning - Religious Practitioner: Subsection 136(1) of the FBTAA defines a religious practitioner to have the meaning given by subsection 995-1(1) of the Income Tax Assessment Act 1997 (ITAA 1997). Subsection 995-1 of the ITAA 1997 defines a religious practitioner as: means: (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 The employee is a religious practitioner. | Detailed Reasoning - Benefit must be provided to the employee or to a spouse of child of an employee: All benefits subject to this ruling will be provided to either the employee, spouse or children. Principally in respect of pastoral duties or other duties that directly relate to the practice, study, teaching or propagation of the religious beliefs Paragraph 21 of TR 92/17 provides example of the types of duties that constituted pastoral duties and states: Pastoral duties generally are duties associated with the spiritual care 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. Paragraph 25 of TR 92/17 provides examples of non-pastoral duties and states: 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. In this case the employee was employed in the capacity as a religious practitioner which would be predominately a pastoral role before they were given the additional role. The additional role would be administrative. Although the employee continues to perform pastoral duties the administrative role would lessen the time available to perform pastoral duties. In other words by adding the new role the employee now has a role that consists of both pastoral and non-pastoral duties. Section 57 of the FBTAA will only apply if we can conclude that the benefits were provided principally in respect of pastoral duties. In respect of a religious practitioner who undertakes both pastoral and non-pastoral duties and the principal test paragraph 29 of TR 92/17 states: However, if an employee who is a religious practitioner undertakes both pastoral and non-pastoral duties (even where the non-pastoral duties predominate), it is possible for a benefit to be provided to the employee solely or principally in respect of the employee's pastoral duties, and, therefore, be exempt under section 57 of the FBTAA. Therefore, regardless of whether the employee spends more time or less time undertaking pastoral rather than administrative duties, we need to look at why a benefit is provided to determine if that benefit was provided solely or principally in respect of the pastoral duties. In this case the employer has a range of benefits that they offer to all religious practitioners including those who do not undertake administrative roles on behalf of the employer. No additional benefits are being offered to the employee as a result of taking on the administrative role. The benefits being received by the employee are the same as those offered to all religious practitioners and were being provided to the employee before the new role was added. In other words the benefits being received by the employee are a continuation of the benefits received when the employee's duties were only pastoral. Therefore it can be concluded that the benefits the employee currently receives are principally in respect of the pastoral duties as they can be clearly linked to the pastoral duties undertaken before the new administrative role was added. However if the employee was to receive benefits that were not provided before the administrative role was added an in depth examination of these benefits and the reason why they were being provided would need to be undertaken.