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Date of advice: 17 October 2017

Ruling

Subject: Are Pastoral Staff ‘religious practitioners’ for FBT purposes

Question 1

Are Pastoral Staff of T “religious practitioners” pursuant to subsection 136(1) of the Fringe Benefits Tax Assessment Act 1986?

Answer

No

This ruling applies for the following periods:

FBT year 1 April 2016 to 31 March 2017

FBT year 1 April 2017 to 31 March 2018

The scheme commences on:

1 April 2016

Relevant facts and circumstances

1. T was incorporated on mid 200X.

2. T is registered with the Australian Charities and Not-for-profits Commission as a charity for the advancement of religion.

3. The object of T, as specified in its constitution “is to undertake programmes for the teaching of Religious Instruction in schools”.

4. T employs staff to create and perform programmes for the teaching of Religious Instruction in schools (Pastoral Staff).

5. Each of the Pastoral Staff:

a) is a member of an Christian denomination;

b) has Bible and/or Theological College training or is currently undertaking such training;

c) has been set apart for their respective roles in an annual service of commissioning by the laying on of hands in recognition of their spiritual leadership and authority; and

d) engages in pastoral activities which are clearly distinguished from the activities of ordinary lay Christians.

6. The duties of Pastoral Staff include:

a) Regular preaching and leading of Religious Instruction programs;

b) Preaching to and counselling students attending Religious Instruction and members of the surrounding community;

c) Providing students attending Religious Instruction and members of the surrounding community with spiritual guidance and support;

d) Conducting seminars and other training events to equip lay and ordained Christians in the creation and performance of Christian programmes to children;

e) Meeting with key lay people in their responsibility for pastoral activities to children to provide leadership and support; and

f) Visiting children, who are poor, sick or are otherwise in need of emotional and spiritual support.

7. T also has employees carrying out the day to day administrative tasks of running the programmes for the teaching of Religious Instruction in schools, leaving the Pastoral Staff free to concentrate on their pastoral duties.

8. T proposes to provide fringe benefits to Pastoral Staff (or to their spouse or their child) as part of their remuneration package principally in respect of their pastoral duties or any other duties directly relating to the practice, study, teaching or propagation of the Christian belief.

Relevant legislative provisions

Fringe Benefits Tax Assessment Act 1986 Subsection 136(1)

Fringe Benefits Tax Assessment Act 1986 Section 57

Reasons for decision

All

All legislative references are to the Fringe Benefits Tax Assessment Act 1986 unless otherwise stated.

The relevant law

Under section 57, benefits provided to employees of religious institutions are exempt benefits where:

a) the employer is a religious institution;

b) the employee is a religious practitioner;

c) the benefit is provided to the employee or their spouse or their child; and

d) the benefit is not provided principally in respect of duties of the employee, other than pastoral duties or any other duties or activities directly related to the practice, study, teaching or propagation of religious beliefs.

A ‘religious practitioner’ is defined in subsection 136(1) to mean:

a) a minister of religion;

b) a student at an institution who is undertaking a course of instruction in the duties of a minister of religion;

c) a full-time member of a religious order; or

d) a student at a college conducted solely for training persons to become members of religious orders.

Paragraph 13 of Taxation Ruling TR 92/17 states

13. In determining whether a person is a minister of religion, many, if not all, of the following characteristics should be present:

a) the person is a member of a religious institution;

b) 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;

c) the person is recognised officially as having authority in matters of doctrine or religious practice;

d) the person’s position is distinct from that of the ordinary adherents of the religion;

e) the person has acknowledged leadership in the spiritual affairs of the religious institution;

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

Paragraph 19 of Taxation Ruling TR 92/17 states:

19. Missionaries who are not:

a) ministers of religion; or

b) members of a religious order; or

c) students at a college conducted solely for training persons to become members of religious orders

are not religious practitioners for the purposes of the FBTAA.

Pastoral staff

In determining whether the Pastoral Staff are ‘religious practitioners’ for the purposes of section 57, paragraphs a) and b) of the definition of ‘religious practitioner’ in subsection 136(1) are relevant. That is, each of the Pastoral Staff is either:

a) a minister of religion; or

b) a student at an institution who is undertaking a course of instruction in the duties of a minister of religion;

In determining whether the Pastoral Staff are ministers of religion, the activities of the Pastoral Staff and the circumstances surrounding their appointment must be assessed in light of the characteristics of ministers of religion identified in paragraph 13 of Taxation Ruling TR 92/17, many, if not all of which must be present.

In making this assessment, the following conclusions may be made:

a) Each of the Pastoral Staff, as a member of an Christian denomination, is a member of a religious institution;

b) Each of the Pastoral Staff have been recognised officially in their particular role in the ministry of children’s religious education in schools in an annual service of commissioning by the laying on of hands. They have also completed Bible and/or theological college training or are currently undertaking such training. However, the person is not authorised to carry out the duties of a minister of religion based on a specified level of theological or other relevant training or experience.

c) Each of the Pastoral Staff is recognised officially as having authority in matters of doctrine or religious practice in the context of the specific ministry of children’s religious education in schools. However, the person is not recognised officially as having authority in matters of doctrine or religious practice more generally as they relate to governing the affairs of the community of believers as a whole.

d) Each of the Pastoral Staff, working in the specific ministry of children’s religious education in schools, holds a position that is distinct from that of the ordinary adherents of the religion;

e) Each of the Pastoral Staff has acknowledged authority in spiritual matters in the context of the specific ministry of children’s religious education in schools. However the person does not have acknowledged leadership in the spiritual affairs of the religious institution more generally as they relate to governing the affairs of the community of believers as a whole.

f) Each of the Pastoral Staff is authorised to discharge their particular duties in the context of leading the specific ministry of children’s religious education in schools. However the person is not authorised to discharge the duties of a minister or spiritual leader, including the conduct of religious worship and other religious activities.

Each of the Pastoral Staff satisfies a) and d), but does not satisfy b), c), e) and f) of the characteristics of ministers of religion in paragraph 13 of Taxation Ruling TR 92/17. Each of the Pastoral Staff is therefore neither:

a) A minister of religion; or

b) A student at an institution who is undertaking a course of instruction in the duties of a minister of religion.

Each of the Pastoral Staff is therefore not a ‘religious practitioner’ for the purposes of section 57.

Each of the Pastoral Staff is better described as a ‘missionary’, which are not ‘religious practitioners’ for the purposes of the FBT Act (see paragraph 19 of Taxation Ruling TR 92/17).