TR 2019/3 “Fringe benefits tax: benefits provided to religious practitioners” finalises the Commissioner's view expressed in draft Taxation Ruling TR 2018/D2 Fringe benefits tax: benefits provided to religious practitioners.
This Ruling explains when certain benefits provided by registered religious institutions to religious practitioners will be exempt from fringe benefits tax (FBT) under section 57 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA).
The main considerations in determining whether an exemption from FBT may apply to benefits provided are summarised as follows:
- The benefit must be provided by a registered religious institution; and
- The benefit must be provided to an employee religious practitioner, or their spouse or child; and
- The benefit must be provided in respect of the practitioner’s pastoral duties or directly related religious activities.
There are specific requirements which must be met in respect of each of these factors.
What this means for Schools
It is our experience that many independent schools employ religious practitioners to undertake pastoral duties or duties directly related to religious activities and furthermore, that it is common for the schools to provide various benefits to these employees
Whilst the majority of independent schools will be registered with the Australian Charities and Not for Profit Commission (‘ACNC’) under the subtype ‘advancing education’, there may be scope, depending upon the particular school’s governing documents, to also register under the subtype ‘advancing religion’.
Clearly not every school will have the same employment arrangements with religious practitioners and some schools governing documents may not contain the necessary details to support the qualification for subtype ‘advancing religion’ with the ACNC.
Should your school wish to have its circumstances reviewed in light of the finalised ruling to determine whether the benefits you provide to religious practitioner employees may qualify for fringe benefits tax exemptions, Nexia would be pleased to assist.
The above is general information only and should not be considered taxation advice. If you require assistance with determining whether your organisation is eligible for the FBT exemption, please contact our taxation specialists for more information.