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Edited version of private ruling
Authorisation Number: 1011696732092
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Ruling
Subject: Car fringe benefit
Question
Whether the gift of a motor vehicle to a retiring clergyman is a fringe benefit
Answer
No
This ruling applies for the following period:
1 July 2010 - 30 June 2011
The scheme commences on:
1 July 2010
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
The applicant is endorsed as a charitable institution.
A clergyman who was employed by the applicant, received a stipend and had use of an employer provided motor vehicle in carrying out the duties of their religious ministry.
Following retirement the clergyman ceased to be an employee but may continue with some ministerial work in the local area.
The clergyman will not be assigned any religious work, there is no compulsion to perform any clergy duties or ministerial work and all such work undertaken will be of a voluntary nature.
The applicant has gifted a motor vehicle to the clergyman.
The applicant is seeking a ruling on the application of fringe benefits tax to the gift.
Relevant legislative provisions
Fringe Benefits Tax Assessment Act 1986 section 57
Fringe Benefits Tax Assessment Act 1986 subsection 136(1)
Further issues for you to consider
We have limited our ruling to the questions raised in your application. There may be related issues that you should consider including:
Eligible termination payment.
Reasons for decision
These reasons for decision accompany the Notice of private ruling.
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
The definition of a fringe benefit in subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) excludes payments that are considered to be eligible termination payments.
Chapter 1.7 of Fringe Benefits Tax guide for employers (Nat 1054) states:
Eligible termination payments are not fringe benefits. Broadly, eligible termination payments are payments made in consequence of terminating the employment of an employee (for example a lump sum paid upon retirement).
Property you transfer to an employee in relation to terminating their employment is an eligible termination payment (for example, a company car you give or sell to an employee on termination)
In this case the motor vehicle was gifted to the clergyman upon retirement which was in effect when their employment terminated. Any future work they choose to undertake is of a voluntary nature.
The transfer of the ownership of the motor vehicle is a consequence of the termination of the clergyman's employment and as a result is considered to be an eligible termination payment which falls outside of the definition of a fringe benefit under subsection 136(1) of the FBTAA.
This can be contrasted with the example in ATO Interpretative Decision ATO ID 2001/332 Fringe Benefits Tax: Religious Practitioner's Exemption, in which a pastor of a church who had recently retired from active pastoral duties was allowed to continue to use a car that was still owned by his employer. In that example section 57 of the FBTAA continued to apply to the use of the car as ownership had not been transferred but was merely a continuation of the benefits provided whilst employed as a religious practitioner.
Summary
As the provision of the motor vehicle is not a fringe benefit the FBTAA will not apply in this case (this includes section 57).