Exempt benefits
Religious institutions may be eligible for an exemption from fringe benefits tax (FBT) for benefits they provide to:
- religious practitioners
- live-in carers
- domestic employees.
Religious institutions do not need to be endorsed by us to access the exemption, but they must be registered with the Australian Charities and Not-for-profits CommissionExternal Link as a charity established to advance or promote religious purposes.
FBT rebate
A registered religious institution may also be eligible for the FBT rebate for benefits that are not exempt if registered by the Australian Charities and Not-for-profits Commission and endorsed by us.
Religious practitioners
Benefits are exempt if they are provided by registered religious institutions to religious practitioners principally in recognition of the practitioner's pastoral duties, or other duties related to the practice, study, teaching or propagation of religious beliefs.
For more information and examples, see Taxation Ruling TR 2019/3 Fringe benefits tax: benefits provided to religious practitioners.
The following examples will help you understand the requirements for an FBT exemption for benefits provided to religious practitioners:
- Meaning of religious practitioner
- What pastoral activities include
- Directly related religious activities
- Types of benefit
- Employee receiving non-cash benefits
Meaning of religious practitioner
Example: providing spiritual support
David is employed by a registered religious institution to provide spiritual support to children, and to conduct the youth group. While David has a Bachelor of Theology, he is not ordained by the religious institution and is not commissioned or authorised by the religious institution to act as a minister or spiritual leader.
He is not a religious practitioner and benefits provided to him are not exempt from FBT.
End of example
Example: commissioned to perform pastoral duties
Maya is commissioned by a registered religious institution to perform the pastoral duties of a minister. The religious institution employs her to run religious services on Wednesday and Friday, and to teach the Sunday school.
Maya is a religious practitioner, and benefits provided to her by the religious institution are exempt from FBT.
End of example
Example: writing news and website articles for religious institutions
Arjun is employed by a registered religious institution that provides support services for other religious institutions. His duties are to write news and website articles for various religious institutions. He has academic qualifications in theology, but is not ordained or authorised to act as a minister or spiritual leader.
Arjun is not a religious practitioner and benefits provided to him are not exempt from FBT.
End of exampleWhat pastoral activities include
Example: teaching a recognised subject of the state curriculums
Tashi is a minister of religion employed by a registered religious institution to teach at a private school it operates.
Her duties are to teach the Studies of Religion subject to year 11 and 12 students. These teaching duties are not pastoral or directly related religious activities, as they are concerned with teaching a recognised subject of the state year 11 and 12 curriculums.
Fringe benefits provided by the registered religious institution to Tashi are not exempt from FBT.
End of example
Example: teaching specific religious beliefs
Ameer is a minister of religion who is employed by a registered religious institution to teach at a private school it operates.
His duties principally relate to teaching its religious scriptures, leading the school’s daily prayer group and conducting religious instruction on the specific religious beliefs promoted by the religious institution.
These duties are considered pastoral duties. Benefits provided by the religious institution to him are exempt from FBT.
End of example
Example: mixed teaching and pastoral duties
Liev is a religious practitioner who is employed by a registered religious institution to teach at a private school it operates. His duties are to:
- teach the Studies of Religion subject to year 11 and 12 students
- provide religious guidance to the student body
- conduct a weekly religious service.
Teaching the Studies of Religion subject to year 11 and 12 students is not a pastoral duty.
If it is clear that any benefits provided to him are for providing religious guidance and the weekly religious service, which are pastoral duties, the benefits are exempt from FBT. Even if he is paid a salary, similar to other curriculum teachers, for teaching the Studies of Religion subject, the additional benefits would be considered to be for his pastoral duties.
End of exampleDirectly related religious activities
Example: writing spiritual content and preparing programs for spiritual study groups
Brianna is a minister of religion employed by a registered religious institution. Her duties include writing spiritual content for the religious institution’s website and newsletters, as well as preparing programs for other ministers to use in spiritual study groups.
These are directly related religious activities. Benefits provided by the registered religious institution to her for carrying out these duties are exempt from FBT.
End of example
Example: school administration duties
Zenshin is a minister of religion employed by a registered religious institution. He is the head administrator of the 5 schools run by the religious institution. His duties include:
- overseeing the day-to-day functions of the schools
- staff management
- asset and financial management
- program development.
These are not directly related religious activities. Benefits provided by the religious institution to him for carrying out these duties are not exempt from FBT.
End of example
Example: musical direction
Gabrielle is a minister of religion employed by a registered religious institution. She is the musical director for the religious institution’s weekly service. Her duties include:
- scheduling performers
- conducting rehearsals for the supporting band and backing vocalists
- attending production meetings
- managing the technical rehearsal.
These are not directly related religious activities. Benefits provided by the religious institution to her for carrying out these duties are not exempt from FBT.
End of exampleTypes of benefit
Example: housing, school fees and holiday benefits
Abdul is a minister of religion employed by a registered religious institution to perform daily prayer services. The religious institution provides him with a residence, pays his children’s school fees, and pays for a holiday every 2 years.
The benefits provided to Abdul and his associates are related to his pastoral duties and are exempt from FBT.
End of exampleEmployee receiving non-cash benefits
Example: car as the only benefit supplied to commissioned minister
Jean is not ordained, but has been commissioned by a registered religious institution to perform the pastoral duties of a minister. He conducts religious services once a week and provides spiritual counselling to members throughout the week. The religious institution does not pay him, but supplies him with a motor vehicle to enable him to perform pastoral duties.
The provision of non-cash benefits, such as a motor vehicle, is sufficient payment for Jean to be considered an employee of the religious institution for FBT purposes. The provision of the motor vehicle is exempt from FBT.
End of exampleLive-in residential carers
If a registered religious institution's activities include caring for elderly or disadvantaged people, certain benefits it provides to its employees are exempt from FBT.
The exemption is for live-in carers if the carer resides with the elderly or disadvantaged person in residential accommodation you provide. The benefits that may be exempt include the employee's live-in accommodation, electricity or other residential fuel, meals or other food and drink.
Domestic employees
Benefits provided by registered religious institutions to live-in and non-live-in domestic employees are FBT exempt in certain circumstances.
For a live-in employee, the employee's duties must mainly involve domestic or personal services for a religious practitioner and the practitioner's relatives residing with them. The benefits that may be exempt include the employee's live-in accommodation, electricity or other residential fuel, meals or other food and drink.
For a non-live-in employee, the employee's duties must also mainly involve domestic services for religious practitioners and the practitioner's relatives residing with them. The exempt benefits are limited to food and drink consumed by the employee while carrying out employment-related duties.
Find out about exempt benefits for religious practitioners, live-in carers and domestic employees.