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Edited version of your private ruling

Authorisation Number: 1012568268942

Ruling

Subject: Fringe Benefits Tax

Question

Will the benefits provided to an overseas visitor give rise to a taxable fringe benefit?

Answer

No.

This ruling applies for the following periods:

Year ended 31 March 2014

Year ended 31 March 2015

Year ended 31 March 2016

The scheme commences on:

1 April 2013

Relevant facts and circumstances

You are a registered religious institution which has a number of part time volunteers (volunteers) who do not receive any remuneration or benefits for the services they provide.

You also have visitors from overseas (overseas visitors) who assist you by conducting:

You do not have a formal agreement with the overseas visitors.

The overseas visitors are not paid salary or wages or leave payments. However, the overseas visitors may receive support in the form of lodging, meals, personal toiletries, dry cleaning, some medical expenses, medical insurance, clothes, mobile phone plan and use of a shared car.

The overseas visitors are able to determine their working hours and the activities they provide based on agreement with the volunteers as to the best means of furthering your purposes.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Section 57

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Fringe Benefits Tax Assessment Act 1986 Section 137

Taxation Administration Act 1953 Division 12 of Schedule 1

Reasons for decision

Will the benefits provided to an overseas visitor give rise to a taxable fringe benefit?

In general terms a fringe benefit will arise when:

In the situation being considered, the first of these conditions is met as you provide a range of benefits to the overseas visitors.

Is an overseas visitor an employee?

An 'employee' is defined at subsection 136(1) of the FBTAA to mean a current, future or former employee.

A 'current employee' is defined at subsection 136(1) of the FBTAA to mean 'a person who receives, or is entitled to receive, salary or wages'.

'Salary or wages' is defined at subsection 136(1) of the FBTAA to mean a payment from which an amount must be withheld under one of the listed provisions in Schedule 1 to the Taxation Administration Act 1953 (TAA). The listed provisions include:

Are the overseas visitors common law employees?

As the overseas visitors only receive benefits they do not receive and are not entitled to receive 'salary or wages'. Therefore, they do not come within the definition of 'current employee'.

However, section 137 of the FBTAA extends the meaning of salary or wages to create an employment relationship for the purposes of the FBTAA where a benefit is provided that would have been classified as salary or wages if it had been a cash payment. That is, had the benefit been provided by way of a cash payment, the payment would be a payment from which an amount must be withheld under one of the provisions of the TAA listed in the definition of salary or wages.

Subsection 137(1) states:

In considering whether the relevant withholding provisions would apply if the benefits had been provided as a cash payment it is necessary to consider whether the overseas visitors are volunteers or employees? Guidance for considering this question is provided in the ATO publication, Volunteers and tax,( NAT 4612-04.2008 Guide for non-profit organisations and individuals Volunteers and tax Treatment of transactions between non-profit organisations and volunteers (Guide for non-profit organisations and individuals) as follows:

Volunteers and tax also provides guidance in distinguishing volunteers from employees:

Further guidance is provided in Miscellaneous Taxation Ruling MT 2032 Fringe benefits tax: sporting clubs (MT 2032). In discussing whether a benefit provided to a player will be a fringe benefit paragraph 3 of MT 2032 states:

In discussing when players will be considered to be employees of the club paragraph 4 notes there is a range of situations. The situations at both ends of the range are discussed in paragraphs 4 and 6 of MT 2032. Paragraph 4 of MT 2032 states:

By contrast, paragraph 6 of MT 2032 states:

In providing a guideline as to the approach to be adopted where the situation is between these two situations paragraph 8 of MT 2032 states:

In applying these guidelines, many of the benefits merely offset expenses that would otherwise be incurred in coming to Australia to undertake duties for you. For example, the accommodation and meals expenses are incurred as a result of coming to Australia. However, there are also benefits which appear to be additional to expenses incurred in coming to Australia to undertake duties for you. For example, personal travel, medical and clothes.

In considering whether these additional benefits cause the overseas visitors to be considered to be common law employees it is relevant to note:

Each of these factors indicates a common law relationship does not exist with the overseas visitors. Given these factors, the value of the benefits received is not considered to be sufficient for the overseas visitors to be considered to be common law employees.

Do the overseas visitors come within section 12-47 of schedule 1 to the TAA?

Section 12-47 of Schedule 1 to the TAA 1953 provides that an entity must withhold an amount from a payment it makes to a religious practitioner for an activity, or a series of activities, if:

If these requirements are met, the overseas visitors will be employees for the purposes of the FBTAA. However, such a conclusion may not result in the benefits being fringe benefits as section 57 of the FBTAA provides that a benefit provided to a religious practitioner who is an employee for the purposes of the FBTAA will be an exempt benefit if:

Are you a registered religious institution?

A registered religious institution is defined under subsection 136(1) of the FBTAA as an institution that is a registered charity and is registered with the Australian Charities and Not-for-profit Commission (ACNC) as an entity with a purpose of the advancement of religion. You satisfy this requirement.

Do the overseas visitors undertake pastoral duties or duties directly related to the practice, study, teaching or propagation of religious beliefs?

Paragraphs 20 to 29 of Taxation Ruling TR 92/17 Income tax and fringe benefits tax: exemptions for 'religious institutions' (TR 92/17) considers what are and what are not 'pastoral duties" and what are "directly related religious activities' as well as the 'provided principally' test required in paragraph 57(d) of the FBTAA.

Paragraph 21 of TR 92/17 describes 'pastoral duties' generally as duties associated with the spiritual care of the members of the congregation of a religious body and gives examples, such as:

Paragraphs 22 and 23 of TR 92/17 consider what duties or activities are 'directly related religious activities'. Paragraphs 22 and 23 state:

The Macquarie Dictionary version 5.0.0-01/10/01 defines 'propagation' as follows:

Therefore, duties that can be directly relating to causing the growth or spread of religious beliefs will be accepted as religious activities.

Paragraph 25 of TR 92/17 provides an exhaustive list of examples of duties or activities which are not 'pastoral duties' or 'directly related to religious activities' as follows:

The activities undertaken by the overseas visitors include:

These activities are pastoral duties or activities directly related to the religious beliefs of the Association.

Conclusion

A fringe benefit will not arise from the provision of the benefits to the overseas employees as either:


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