Tax concessions for ACNC registered religious institutions
Registered religious institutions may be entitled to the following tax concessions:
- income tax exemption
- fringe benefits tax (FBT) concessions
- goods and services tax (GST) concessions.
If your organisation is a registered religious institution, this will help you to determine the requirements for accessing tax concessions.
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What is a registered religious institution?
Your organisation is a registered religious institution if it's:
- a registered charity with the Australian Charities and Not-for-profits Commission (ACNC)
- registered with the ACNC for the charity subtype 'advancing religion'
- an institution
It does not matter if an organisation is registered with more than one charity subtype, provided one of its charity subtypes is 'advancing religion'.
See Taxation Ruling TR 2019/3 Fringe benefits tax: benefits provided to religious practitioners for more information on what is considered a religious institution.
What is a registered charity?
A registered charity is an entity registered with the ACNC as a charity.
The ACNC is responsible for determining charity status for all federal tax purposes. Registration with the ACNC is voluntary. However, ACNC registration is now a prerequisite for charities to access charity tax concessions.
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What is an institution?
An institution can have different legal forms. It may be a trust established by will or instrument of trust. It may have the legal structure of an unincorporated association or a corporation.
However, incorporation is not enough on its own for an organisation to be an institution. Its activities, size, permanence and recognition will be relevant.
An institution is not:
- a fund – for example, a trust merely to manage or hold trust property to make distributions to other entities or people
- a structure with a small and exclusive membership that is controlled and operated by family members and friends and carries out limited activities.
Example: Not an institution
A corporation is set up and controlled by the small and exclusive membership of a family. Its object is to spread the gospel. The only activities are holding assets and arranging for the father of the family to speak at churches on some Sundays.
The corporation is not an institution.
End of exampleTypes of tax concessions available
There is a range of tax concessions that religious institutions can access.
Income tax exemption
Being exempt from income tax means your organisation does not need to lodge an income tax return (unless specifically asked to) or pay income tax.
To access income tax exemption, a registered religious institution must be a registered charity and endorsed by us as exempt from income tax.
A registered charity is entitled to be endorsed by us for income tax exemption if it:
- has an Australian business number (ABN)
- meets at least one of the following three tests
- in Australia test
- deductible gift recipient test
- prescribed by law test
- meets both of the following conditions
- governing rules condition
- income and assets condition.
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See also
FBT concessions
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FBT rebate
If you are eligible for the FBT rebate you will receive a refund equal to 47% of the gross FBT payable up to a cap of $30,000.
To access the FBT rebate, an organisation must be a registered charity and endorsed as a registered charity by us.
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FBT exempt car parking
Certain organisations that are employers are exempt from FBT for car parking fringe benefits and car parking expense payment benefits provided to their employees.
Generally, a car parking fringe benefit may arise for each day an employer provides a car parking space to an employee.
Also, a car parking expense payment benefit occurs when an employer reimburses or pays for an employee's car parking costs.
To access these FBT exempt car parking benefits, an organisation must be a registered charity but it is not required to be endorsed as a registered charity by us.
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FBT exempt benefits
To access the following FBT exempt benefits, a registered religious institution is not required to be endorsed as a registered charity by us.
Religious practitioners
Subject to certain requirements, benefits provided by registered religious institutions to religious practitioners or their spouse or children are FBT exempt if they are mainly for the practitioner's pastoral duties, or other duties related to the practice, study, teaching or propagation of religious beliefs.
Live-in residential carers
If a registered religious institution's activities include caring for elderly or disadvantaged people, then certain benefits it provides to employees are FBT exempt.
The exemption is for live-in carers who reside with the elderly or disadvantaged person in residential accommodation your institution provides. The benefits that may be exempt include the employee's live-in accommodation, residential fuel, meals or other food and drink.
Domestic employees
Benefits that registered religious institutions provide to live-in and non-live-in domestic employees are FBT exempt in certain circumstances.
For a live-in employee, their duties must involve mainly domestic or personal services for religious practitioners and the practitioner's relatives who reside with them. The benefits that may be exempt include the employee's live-in accommodation, residential fuel (any form of fuel, including electricity, used for domestic purposes), meals or other food and drink.
For a non-live-in employee, their duties must also mainly involve domestic services for religious practitioners and the practitioner's relatives who reside with them. The exempt benefits are limited to food and drink consumed by the employee at the place of residence while carrying out employment-related duties.
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GST concessions
These concessions, unless specified, do not require GST registration. However, to claim GST credits, a registered religious institution must be registered for GST and, where required, endorsed as a charity by us to access either:
- GST charity concessions
- income tax exemption.
A registered religious institution can register for GST if it is carrying on an enterprise.
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GST charity concessions
A registered religious institution that is endorsed as a charity by us can access GST charity concessions.
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GST-free supply of religious services
Some goods and services are not subject to GST and do not include GST in their price. These goods and services are referred to as GST-free supplies. If a GST-registered organisation provides a GST-free supply, they are entitled to credits for the GST included in the price of its 'inputs' (the goods or services used to make the GST-free supply).
A religious service is a service supplied by an ACNC- registered religious institution and is integral to the practice of that religion.
Examples of a religious service include:
- worship
- Sunday school
- a wedding, funeral or baptism service
- religious retreats
- bible study groups.
To access this concession, a registered religious institution is not required to be endorsed as a charity by us.
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GST non-profit concessions
A registered religious institution, as a non-profit organisation, can self-assess its entitlement to access:
The registered religious institution does not need to be endorsed as a charity by us to access these concessions.
A non-profit organisation must register for GST if its annual turnover is $150,000 or more. If its turnover is less, it can register if it chooses.
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Steps to access tax concessions
The steps that a registered religious institution needs to take to access tax concessions are detailed in the table below.
Use this table to check if you need the following to access these concessions:
Table 2: Steps to access tax concessions
Tax concession
|
ABN registration
|
ACNC registration
|
ATO endorsement
|
Income tax exemption
|
Yes
|
Yes
|
Yes
|
Fringe benefits tax (FBT) rebate
|
Yes
|
Yes
|
Yes
|
FBT exempt car parking for employees
|
Yes
|
Yes
|
No
|
FBT exempt benefits for:
- religious practitioners
- live-in residential carers
- domestic employees
|
Yes
|
Yes
|
No
|
GST-free supply of religious services
|
Yes
|
Yes
|
No
|
GST charity concessions:
- GST religious groups
- non-profit sub-entities for branches
- donated second-hand goods
- raffles and bingo
- fundraising events
- non-commercial activities
- accounting on a cash basis
- reimbursement of volunteer expenses
- retirement villages
|
Yes
|
Yes
|
Yes
|
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Where to go for help
If you cannot work out if your organisation is entitled to:
- register with the ACNC, phone the ACNC on 13 22 62 between 9.00am and 5.00pm AEST Monday to Friday
- tax concessions and endorsement, phone us on 1300 130 248 between 8.00am and 6.00pm Monday to Friday.
What a registered religious institution is and the requirements to access tax exemptions and concessions.