Edited version of private advice

Authorisation Number: 1052347982227

Date of advice: 18 June 2025

Ruling

Subject: Fringe benefit tax - religious practitioner

Question 1

Are benefits provided to the Employee exempt from FBT under section 57 of theFringe Benefits Tax Assessment Act 1986 (FBTAA) as benefits provided by a registered religious institution to an employee who is a religious practitioner?

Answer 1

Yes.

This ruling applies for the following periods:

FBT Year Ending 31 March 20XX

FBT Year ending 31 March 20XX

FBT Year ending 31 March 20XX

FBT Year ending 31 March 20XX

The scheme commenced on:

1 April 20XX

Relevant facts and circumstances

The Employer is a registered charity with ACNC under the sub-category of Advancing Religion.

Education

The Employee is theologically qualified and holds a Masters of Divinity and ordained by XXX Minister.

Duties and Responsibilities of the Employee

The Employee is required to perform the following duties and responsibilities:

•                     studying, developing and preparing religious materials, curriculum and doctrine of the organisation

•                     propagating the Christian faith

•                     providing pastoral care, discipleship and spiritual oversight to staff as required

•                     representing the institution at interdenominational summits and meetings

•                     liaising with and training denominational leaders

•                     prepare, preach and teach at occasional church service and lead worship, prayer and religious ceremonies as required

•                     management responsibilities including staffing and governance.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 section 57

Fringe Benefits Tax Assessment Act 1986 subsection 136(1)

Income Tax Assessment Act 1997 subsection 995-1(1)

Reasons for decision

Question

Are benefits provided to the Employee exempt from FBT under section 57 of theFringe Benefits Tax Assessment Act 1986 (FBTAA) as benefits provided by a registered religious institution to an employee who is a religious practitioner?

Summary

Yes, the benefits provided to the Employee are exempt benefits under section 57 of the FBTAA

Detailed reasoning

Benefits provided to employees of religious institutions are exempt under section 57 of the FBTAA, where:

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

(b)           the employee is a religious practitioner;

(c)           the benefit is provided to the employee, 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)            pastoral duties; or

(ii)           any other duties or activities that are directly related to the practice, study, teaching or propagation of religious beliefs.

All four conditions must be met for the exemption from fringe benefits tax (FBT) to apply.

The Australian Taxation Office's (ATO) position concerning the above conditions is discussed in Taxation Ruling TR 2019/3 - Fringe benefits tax: benefits provided to religious practitioners (TR 2019/3).

(a) Is the Employer a registered religious institution?

Paragraph 7 of TR 2019/3 explains that in considering whether a benefit is provided by a registered religious institution, administration by the ATO is limited to determining that the entity is an institution that maintains current Australian Charities and Not for Profits Commission (ACNC) registration with a subtype 'advancing religion'.

An institution may take various forms, including a company limited by guarantee, an incorporated association, an unincorporated association, a trust, or a body established under statute or letters patent.

In the context of the FBTAA, the word 'institution' refers to a significant body which is a recognised part of society, and for which the grant of an exemption is seen to provide a public benefit. As a recognised member of a religious institution demonstrates this characteristics.

Accordingly, it is accepted that the Employer is a religious institution.

(b) Is the benefit provided to an employee religious practitioner, or their spouse or child?

Subsection 57(b) of the FBTAA requires that an employee be a religious practitioner to receive an exempt benefit.

Subsection 136(1) of the FBTAA states that 'religious practitioner' has the meaning given to that term under subsection 995-1(1) of the Income Tax Assessment Act 1997(ITAA 1997). A 'religious practitioner' is defined under subsection 995-1(1) as:

•                     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.

Paragraph 11 of TR 2019/3 explains that to be exempt, the benefit must be provided by a registered religious institution to an employee who is a religious practitioner. 'Employment' is given a wider meaning than its ordinary meaning and includes holding an office or appointment. Employees are recipients of salary or wages. Here the term 'salary or wages' has a wider meaning than might ordinarily be the case. It includes payments and non-cash benefits made by a religious institution to a religious practitioner for activities done as a member of the institution in pursuit of the practitioner's vocation.

Paragraph 14 of TR 2019/3 provides a definition of 'minister of religion'.

Except in rare cases, a minister of religion would have most of these characteristics:

•                     is a member of a religious institution

•                     is recognised by ordination or other admission or commissioning, or has authority from the religious institution to carry out the duties of a minister based on theological training or other relevant experience

•                     is officially recognised as having authority on doctrine or religious practice

•                     is distinct from ordinary adherents of the religion

•                     is an acknowledged leader in spiritual affairs of the institution, and

•                     is authorised to act as a minister or spiritual leader, including the conduct of religious worship and other religious ceremonies.

Each of these characteristics are further discussed below.

Member of a Religious Institution

The Employee is a member of a religious institution.

Recognised by ordination or other admission or commissioning, or has authority from the religious institution to carry out the duties of a minister based on theological training or other relevant experience.

The Employee was commissioned by an Ordained XXXX Minister.

Officially recognised as having authority on doctrine or religious practice

The Employee is theologically qualified and holds a Masters of Divinity and has authority to act as a spiritual leader.

Is distinct from ordinary adherents of the religion or is an acknowledged leader in spiritual affairs of the institution

It is recognised that as the predominant purpose of their employment as a spiritual leader, the Employee is distinct from other members of the institution and is considered the primary teacher, curriculum developer and propagator of religious teachings. The Employee will:

•                     develop, prepare, present religious curriculum and doctrine intended to teach and propagate the Christian faith to parishioners

•                     provide pastoral care to staff and key volunteers

•                     represent the institution at interdenominational summits and meetings and have authority to speak on matters of doctrine

•                     prepare, preach and teach at occasional church services, camps, events and lead worship, prayer and religious ceremonies as required

Is authorised to act as a minister or spiritual leader, including the conduct of religious worship and other religious ceremonies

You advised that the Employee, is authorised to act as spiritual leader who leads worship, prayers and religious ceremonies as required.

Based on these facts, we consider that the Employee satisfies the definition of minister of religion, as defined in paragraph 14 of TR 2019/3.

(c) Will the benefits be provided to employee?

You advised that it is likely the entity would enable exempt benefits in the form of living and accommodation expenses of a stipend nature on a similar basis to other religious practitioners. This would also apply only an appropriate portion of remuneration to be paid in the form of exempt benefits. It is anticipated that this would be no more than XX%.

(d) Principally in respect of pastoral duties or any duties that are directly related to the practice, study teaching or propagation of religious beliefs

To be exempt, subsection 57(d) of the FBTAA requires that a benefit must not be provided principally for duties other than pastoral duties, or duties or activities that are directly related to the practice, study, teaching or propagation of religious beliefs ('directly related religious activities').

The word 'principally' is not defined in the FBTAA. Paragraph 20 of TR 2019/3 provides that 'principally' takes its ordinary meaning of 'mainly' or 'chiefly'.

Paragraph 49 of TR 2019/3 explains that the words 'directly related' point to a close connection between the duties or activities of the religious practitioner and the practice, study, teaching and propagation of religious beliefs. In this context, this refers to the Ministry Leader's duties and activities that will be directly related where they promote the practice, study, teaching and propagation of religious beliefs.

As stated in the facts, the Employee's duties and responsibilities are predominantly pastoral duties, associated with the spiritual care of parishioners and others, or directly related to the practice, study, teaching or propagation of religious beliefs.

On this basis, we also consider that the benefits will be provided principally in respect of pastoral duties of the Employee or any other duties or activities that are directly related to the practice, study, teaching or propagation of religious beliefs. Hence the requirement under paragraph (d) of section 57 of the FBTAA will be met.

Conclusion

On this basis, the entity, being the Employer and religious institution, and the Employee being a religious practitioner, we conclude that the benefits to be provided to the employee is principally in respect of the employee's pastoral duties or activities that are directly related to the practice, study, teaching or propagation of religious beliefs.

Therefore, the benefits to be provided will be exempt benefits in accordance with section 57 of the FBTAA.

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