Edited version of private ruling

Authorisation Number: 1011568045388

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Ruling

Subject: Exempt Benefits - FBT

Are benefits provided to the employee by the employer exempt benefits pursuant to section 57 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)?

Yes.

This ruling applies for the following period:

1 April 2009 - 31 March 2012

Relevant facts and circumstances

The employer is a tax concession charity.

It is recognised by its incorporation by Letters Patent from the government.

The employer has appointed a director (the employee) charged to assume a ministry development role to grow and enhance the ministry.

The employer has been involved in the specific activity in the state for many years and the ministry has a long pedigree, and continues to be viewed as a significant ministry of the employer .

Summary

Section 57 of the FBTAA requires four conditions to be met in order for the exemption from FBT to apply. With the information you have provided to us, it is sufficient to conclude that the benefits provided to the employee will be exempt benefits pursuant to section 57 of the FBTAA.

Detailed reasoning

Section 57 of the FBTAA states:

Where:

(a) the employer of an employee is a religious institution

(b) the employee is a religious practitioner

(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.

In considering whether this section applies to the benefits provided to the employee, it is necessary to consider whether the following requirements are satisfied:

1. Is the employer a religious institution?

2. Is the employee a religious practitioner?

3. Is the benefit provided to the employee, the employee's spouse, a child of the employee?

4. Is the benefit provided principally in respect of pastoral duties, or any other duties or activities that are directly related to the practice, study, teaching or propagation of religious beliefs?

Is the employer a religious institution?

There is no definition of 'religious institution' in the FBTAA. However, Taxation Ruling TR 92/17 Income tax and fringe benefits tax: exemptions for 'religious institutions', provides guidance as to what constitutes a religious institution.

Paragraphs 4 and 5 of TR 92/17 state:

4. A body is an 'institution' for the purposes of both the ITAA and the FBTAA if it is an establishment, organisation or association, instituted for the promotion of some object (especially one of the public or general utility) that is religious, charitable, educational, etc. That definition was accepted by the high Court of Australia in YMCA of Melbourne v. FC of T (1926) 37 CLR 351 and later in Stratton v. Simpson (1970) 125 CLR 138.

5. A body is a 'religious institution' if it is instituted for religious purposes. For a body to be regarded as a religious institution:

a. its objects and activities must reflect its character as a body instituted for the promotion of some religious object; and

b. the beliefs and practices of the members of that body must constitute a religion.

In your case

A TCC is an entity that satisfies the TCC endorsement requirements as set out in section 50-110 of the Income Tax Assessment Act 1997 (ITAA 1997). To be endorsed as a TCC an entity must:

· have an ABN, and

· be an entity covered by item 1.1, 1.5, 1.5A or 1.5B of the table in section 50-5 of ITAA 1997, and

· meet any special conditions of the relevant item in which it is described.

You have TCC endorsement as a religious institute and are the core of the religious order in your State. In addition, you are recognised by your incorporation by Letters Patent and your ministry is to practise, study, teach or propagate religious beliefs. Accordingly, you have satisfied the requirements of a religious institution for the purposes of section 57 of the FBTAA.

Is the employee a religious practitioner?

A 'religious practitioner' is defined in subsection 995-1(1) of the ITAA 1997 to mean:

· 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.

While the expressions 'minister of religion' and 'member of a religious order' clearly include members of the clergy in the Christian denominations, they are also intended to include persons who hold equivalent positions in other religions.

In paragraph 13 of TR 92/17 it is stated that in determining whether a person is a minister of religion, many, if not all, of the following characteristics should be present:

· The person is a member of a religious institution

· 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

· The person is recognised officially as having authority in matters of doctrine or religious practice

· The person's position is distinct from that of the ordinary adherents of the religion

· The person has acknowledged leadership in the spiritual affairs of the religious institution

· The person is authorised to discharge the duties of a minister or spiritual leader, including the conduct of religious worship and other religious ceremonies.

In your case

We have already determined that you are a religious institution. Whether the employee in question is a participant in this religious institution in terms of the criteria listed above is discussed as follows:

The employee is a participant in a religious institution and this is demonstrated by:

· Appointment as the Director, with a mandate from the Board to develop and implement a Ministry Plan for the specific activities.

· Participant as a member of the Ministry Team.

· It is a requirement to attend and participate in the ministry of the employer.

The employee has been commissioned by you to fulfil a role that is primarily spiritual oversight of the ministry. Appointment at the denomination level for that type of role is by appointment by the Executive of the employer and is to a person who is so authorised to carry out the spiritual duties required of that position.

The appointment is to a spiritual leadership role in respect of the employer's staff that are engaged in the ministry, giving the employee authority in matters of doctrine or religious practice.

The primary purpose of the position is ministry enhancement and development. The employee has been instructed to develop a ministry plan for the Ministry and to implement it. The person is also required to be a participant on the Ministry Team. This indicates:

The employee has recognised authority in matters of doctrine and or religious practice and has been asked to extrapolate them to the ministry.

The expectation of implementation of the Ministry Plan indicates an acknowledged leadership in the spiritual affairs of the ministry.

The employee was chosen for this role on the basis of many years demonstrated religious training and ministry:

· Possesses tertiary qualification relevant to religious studies.

· Several years of ministry experience.

· Several years on the Board of Directors and Leadership team of the religious order.

The position has implied authority to facilitate and participate in programs and events that are religious ceremonies and/or religious worship. The employer facilitates and hosts a large number of events on an annual basis. The position has a clear charter to maximise the fulfilment of the Great Commission within the context of the specific activities.

Based on all these facts collectively, we can determine that the employee is a religious practitioner.

Is the benefit provided to the employee, the employee's spouse, a child of the employee?

You have stated that the benefits are being provided to an employee, a member of your ministry staff.

Is the benefit provided principally in respect of pastoral duties, or any other duties or activities that are directly related to the practice, study, teaching or propagation of religious beliefs?

In the description you have provided we can determine that the duties the employee will be performing include pastoral duties and other activities associated with the practice, study, teaching or propagation of religious beliefs.

TR 97/17 states that religious practitioners who receive a stipend or other form of remuneration (including non-cash benefits) are employees for the purposes of the FBTAA. Consequently, if the requirements of section 57 of the FBTAA are satisfied, fringe benefits provided to a religious practitioner who is an employee of a religious institution are exempt benefits.

The exemption would cover such benefits as board and accommodation provided to a minister, his or her spouse and children, and a car used by the minister for pastoral duties.

The benefit need not be provided by the employer, so long as it is provided to the employee in his or her capacity as a minister and in respect of the pastoral or religious duties referred to in subsection 57(c) of the FBTAA.

Conclusion

Section 57 of the FBTAA requires four conditions to be met in order for the exemption from FBT to apply. With the information you have provided to us, it is sufficient to conclude that the benefits provided to the employee will be exempt benefits pursuant to section 57 of the FBTAA.

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