Edited version of private advice

Authorisation Number: 1052009373457

Date of advice: 26 July 2022

Ruling

Subject: Religious practitioners and exempt fringe benefits

Question

Will benefits to be provided to the XXXXXXXX College (CC) be exempt from FBT under section 57 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) as benefits provided by a registered religious institution to an employee who is a religious practitioner?

Answer

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 commences on:

1 April 20XX

Relevant facts and circumstances

The CC is registered with the ACNC as a not-for-profit organisation with two subtypes "Advancing Religion", and "Advancing Education".

The Rev XX is employed by the CC to perform the duties of a religious practitioner and Minister of religion. Those duties involve pastoral care consults with staff members, young people (students) and their families that are directly related to religious activities.

He also prepares and delivers religious services of the Christian Faith.

The employee is an Ordained Minister of Religion.

Chaplains Role statement

a. Support for students exploring their spiritual beliefs and world views.

•         Assist students to explore their worldview and beliefs through education and conversation.

•         Facilitate Christian activities or groups at Senior School with voluntary student participation.

•         Liaise between Christian College and local Christian churches.

•         Visit local Christian churches on a regular basis.

•         Connect students with local Christian churches with parents'/caregivers' permission.

•         Network with support services, other agencies and organisations in the local community to provide a broad range of support services to the College community.

•         Network with and co-ordinate involvement in the College by external Christian programs and organisations (e.g. Youth for Christ; Local Christian Radio Station; Youth Alive; World Vision; Compassion; Salvation Army red Shield Appeal).

•         Contribute to a chaplain/Christian Education webpage.

b. Facilitate and provide pastoral care for all members of Christian College Community.

•         Facilitate and provide pastoral care and personal support for students, staff and parents of the College community within a Christian framework in co-operation with the College's support staff.

•         Be available to Students and provide referral to other agencies for professional Health, Counselling, Psychological support etc. when required.

•         Facilitate and provide pastoral care and support following Critical Incidents. (Chaplains will act and deal with critical incidents at the time then offer ongoing clinical support).

•         Visit students who are absent from school (including school refusals, hospital visitation, bereavement).

•         Assist with special needs and behavioural management programs.

•         Be available to meet with the Head of Campus and Deputy Head of Campus on a regular basis for consultation, discussion and wise counsel.

c. Christian Education Curriculum and Devotions

•         Be involved as a mentor to all staff in the development of Christian Education curriculum as well as Christian content and/or context for other faculty curriculum development.

•         To be a part of the Christian Education faculty.

•         To be available as a resource for Christian Education classes.

•         To participate in curriculum discussions in other faculties making recommendations and providing ideas for using Christian content and resources, in order to assist teachers to teach Christianly and what that entails.

•         To create ideas for the inclusion of Christian values in Devotions and Assemblies.

•         To provide resources for teachers.

•         To develop a one-on-one relationship/mentor opportunity with campus staff re Devotions and Christian Education programs.

•         To facilitate Staff Devotions rosters each term.

•         To provide and facilitate opportunities for other staff's own individual spiritual journey.

d. Events and Activities Facilitate and participate (with students and staff) in the following as required:

•         Student leadership training events.

•         College excursions, sports days, speech nights, house group meetings, assemblies.

•         Overseas Trips

•         Facilitate groups, events and activities with voluntary students' participation including lunchtime groups, breakfast clubs etc.

•         Plan and deliver Senior Campus services, such as Easter Service, Prefect Investiture, Staff Services and Student Commencement Services.

•         Plan and be involved in Commencement of Term Services, End of Year Services, and Retreats etc.

•         Coach sporting teams.

•         Facilitate and/or participate in parenting programs.

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

Will benefits to be provided to the XXXXXXXX College (CC) be exempt from FBT under section 57 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) as benefits provided by a registered religious institution to an employee who is a religious practitioner?

Summary

Yes, benefits provided to the Reverend from CC will be an exempt benefit under section 57 of the FBTAA.

Detailed reasoning

Section 57 of the FBTAA provides an exemption for benefits provided to employees of religious institutions where four conditions are met. The conditions are as follows:

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

(b)  the employee is a religious practitioner; and

(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.

Also, 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 CC 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 ACNC registration with a subtype 'advancing religion'. This status has been confirmed.

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.

CC is registered as a charity with the Australian Charities and Not-for-profits Commission (ACNC) with a subtype 'Advancing Religion' since xx.

Accordingly, it is accepted that CC is a registered religious institution.

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

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 12 of TR 2019/3 notes that 'Religious practitioner' is defined to mean (under subsection 136(1) of the FBTAA 1986 and subsection 995-1(1) of the Income Tax Assessment Act 1997):

•         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 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:

•         Is a member of a religious institution

In this context, the 'religious institution' is CC, of which the Reverend is a member in his capacity as an employee.

This characteristic is therefore satisfied.

•         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

The Reverend has had his authority to carry out the duties of a minister recognised through the rite of Ordination and is an Ordained Minister of Religion.

This characteristic is therefore satisfied.

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

It is acknowledged that an Ordained Minister of Religion would have authority on religious doctrine and practice.

This characteristic is therefore satisfied.

•         Is distinct from ordinary adherents of the religion

The Reverend through his academic training and experience in the relevant ministry as part of their role with the CC may be considered to be more well-versed in matters of doctrine or religious practice compared to ordinary adherents of the religion, this is recognised through the official rite of Ordination.

This characteristic is therefore satisfied.

•         Is an acknowledged leader in spiritual affairs of the institution

The Reverend is employed by CC to perform the duties of a religious practitioner and Minister of Religion.

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

­   The Reverend will have the role of supporting and nurturing the faith of students at CC as well as informing, teaching and communicating the Christian message to local churches and the College community.

­   Plan and deliver Senior Campus Services, such as Easter Service, Prefect Investiture, Staff services and Student Commencement Services.

The duties of a Chaplain in the College involve being a mentor to all staff in the development of Christian Education curriculum as well as Christian content for the other faculty curriculum development.

This characteristic is therefore satisfied.

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

(c)  Will the benefits be provided to the employee?

The Reverend is an employee of CC in the role of Chaplain, for which he will receive remuneration as Chaplain.

(d)  Will the benefits provided be 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?

To be exempt, paragraph (d) of section 57 of the FBTAA requires that a benefit must not be principally provided 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, duties and activities will be directly related where, in their essential nature, they promote the practice, study, teaching and propagation of religious beliefs.

The specified employee (the Reverend) duties to which benefits from the employer (CC) will be paid, include:

•         Assist students to explore their worldview and beliefs through education and conversation.

•         Facilitate Christian activities or groups at Senior School with voluntary student participation.

•         Facilitate and provide pastoral care and personal support for students, staff and parents of the College community within a Christian framework in co-operation with the College's support staff.

•         Be involved as a mentor to all staff in the development of Christian Education curriculum as well as Christian content and/or context for other faculty curriculum development.

•         To be a part of the Christian Education faculty.

•         To be available as a resource for Christian Education classes.

•         To participate in curriculum discussions in other faculties making recommendations and providing ideas for using Christian content and resources, in order to assist teachers to teach Christianly and what that entails.

•         To create ideas for the inclusion of Christian values in Devotions and Assemblies.

•         To provide resources for teachers.

•         To develop a one-on-one relationship/mentor opportunity with campus staff re Devotions and Christian Education programs.

•         To provide and facilitate opportunities for other staff's own individual spiritual journey.

These activities are predominantly pastoral duties, associated with the spiritual care of young people 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

Based on the employer (CC) being a religious Institution, and the employee (the Reverend) 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.