New Tax Office Ruling - Fringe Benefits Provided to Religious Practitioners
June 2019 | News | Jae Yang and Luke Hall
On 19 June 2019, the Australian Taxation Office released its Ruling TR 2019/3 which sets out the Commissioner’s position on when a benefit provided by registered religious institutions to religious practitioners will be exempt from fringe benefits tax (FBT). TR 2019/3 finalises the Commissioner’s view expressed in draft Taxation Ruling TR 2018/D2 and replaces the now withdrawn Taxation Ruling TR 92/17W.
In summary, the legislation provides that a benefit is FBT exempt if that benefit is provided by a registered religious institution to an employee religious practitioner, or to their spouse or child, in respect of the practitioner’s pastoral duties or directly related religious activities.
The Ruling outlines the Commissioner’s interpretation of the legislative requirements and provides some useful new examples. Aspects of the language in the latest Ruling have changed from the previous 1992 ruling (TR 92/17W), in particular in the definition of ‘religious practitioner’.
The Ruling clarifies that the term ‘employee’ includes religious practitioners in receipt of non-cash benefits made by a religious institution for activities undertaken in pursuit of the practitioner’s vocation. Importantly, this provides for situations where members of a religious order have taken a vow not to handle money and do not receive a stipend or get paid, but do receive non-cash benefits such as accommodation and travel.
The Ruling states that FBT exempt benefits may also be provided to lay persons acting in the capacity of, and having characteristics similar to, a minister.
The provision of pastoral supervision to those engaged in pastoral duties is included in the Ruling as an example of pastoral duties undertaken by religious practitioners.
Changes to the law that have occurred since the previous Ruling in 1992, are reflected in this latest Ruling, including a requirement that an FBT exemption will only be available to institutions that maintain current registration with the Australian Charities and Not-for-profits Commissioner with a charity subtype ‘advancing religion’. It does not matter if the entity is also registered under another charity subtype, provided one of the subtypes is ‘advancing religion’.
A copy of TR 2019/3 may be obtained here.
If you require advice on whether:
· your organisation is a religious institution;
· your ‘employees’ fall within the definition of ‘religious practitioner’; or
· your current benefits claimed as FBT exempt are consistent with the Ruling,
please contact Jae Yang or Luke Hall of our office.