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>> Fringe Benefits Tax

Fringe Benefits Tax

Fringe benefits tax is a tax on non-cash benefits provided to an employee (or an associate) by an employer (or an associate) in respect of the employment of the employee.

The Fringe Benefit Tax Assessment Act 1986 contains specific exemptions. In particular, under s.57, a benefit is an exempt benefit (and hence not liable to fringe benefits tax) if -

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

(b) the employee is a religious practitioner, and

(c) the 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) pastoral duties, or

(ii) other duties that are directly related to the practice, study, teaching or propagation of religious beliefs.

In ruling TR92/17 the Australian Taxation Office ("ATO") gave its interpretation of the key terms in s.57. Based on this ruling the Stipends and Allowances Committee considers that non-cash benefits provided to ministers, assistant ministers, full time lay ministers and student ministers licensed to or employed by a parochial unit are exempt benefits under s.57.

Non-cash benefits provided to other employees of parochial units are generally liable to fringe benefits tax, although the parish may be eligible for a concession that reduces the effective rate of fringe benefits tax if it is endorsed for FBT concessions by the Australian Taxation Office.

A parish should seek endorsement for -

• exemption from income tax
• GST concessions
• FBT concessions

when it applies for an ABN.

The current status of a parish's endorsements can be checked on the Government's ABN lookup site and if these exemptions and concessions have not already been obtained, application for endorsement can be made at any time.

A diocesan organisation should not assume that non-cash benefits provided to clergy employed by that organisation are exempt from fringe benefits tax under s.57. Ruling TR92/17 should be considered. In addition, other exemptions may apply to a diocesan organisation (for example, s.57A which applies to benefits provided by public benevolent institutions).

Current as at 21 March 2011