Religious institutions providing fringe benefits to religious practitioners are exempt from fringe benefits tax (FBT) under section 57 of the Fringe Benefits Tax Assessment Act 1986 (FBTAA).

Unlike some other FBT exemptions, the concession is not subject to a dollar cap and is a highly valued method of remunerating religious practitioners.

The Australian Taxation Office (ATO) has revised its decades-old ruling on the provision, and it is timely for religious organisations to review their compliance. Some organisations will find that they may be able to provide more employees with FBT benefits under this category.

Ruling history

The new ruling TR2019/3 replaces taxation ruling TR 92/17 “Income tax and fringe benefits tax: exemptions for ‘religious institutions'” and takes account of law changes, mainly relating to the commencement of the Australian Charities and Not-for-profits Commission (ACNC), that have occurred since that ruling issued.

Last year the Commissioner conducted a process of consultation by issuing a draft taxation ruling TR 2018/D2 “Fringe benefits tax: benefits provided to religious practitioners” and this is now finalised.

The new definition of a registered religious institution

The 2012 legislation establishing the ACNC altered the definition of religious institution for the purpose of the FBT benefit. An institution registered as a charity with the ACNC with the subtype ‘advancing religion’ is now at the core of the definition.  The charity can have other subtypes, but one of them must be ‘advancing religion’.

The religious charity must also qualify as an ‘institution’. That is, it must be a ‘doing organisation’, rather than a mere pool of funds.  An institution is not a prescribed legal form and so 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.

No change to ‘who is an employee’

There are fine distinctions in law and theology about whether religious practitioners are ’employees’ and this debate has raged for many years. For tax law purposes, the term ’employee’ is given a wider meaning and generally will catch most relationships between a religious institution and its practitioners.

Clarification of who qualifies as a ‘religious practitioner’

The question of who qualifies as a religious practitioner has been an issue for years, particularly for missionaries and lay members of orders and lay preachers in parishes. Such persons will not qualify as religious practitioners unless they are either:

  1. a minister of religion;
  2. a student at an institution who is undertaking a course of instruction in the duties of a minister of religion;
  3. a full-time member of a religious order; or
  4. a student at a college conducted solely for training persons to become members of religious order.

A minister of religion should tick all of the following boxes:

  1. a member of a religious institution;
  2. 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;
  3. officially recognised as having authority on doctrine or religious practice;
  4. distinct from ordinary adherents of the religion;
  5. an acknowledged leader in spiritual affairs of the institution; and
  6. authorised to act as a minister or spiritual leader, including the conduct of religious worship and other religious ceremonies.

Clarification about what is ‘pastoral duty’

Many religious institutions now no longer function merely as churches, but often operate solely as, or can include, schools, hospitals, aged care, disability or community services. Those who fall within the definition of religious practitioner may have only administrative/secular duties or may perform a range of duties.  This has caused confusion for some, particularly where a position changes gradually over time.

There has also been some uncertainty around leaders whose job descriptions include significant time supervising religious practitioners and this has now been specifically included in the examples given in the ruling.

The ruling gives some examples for guidance being:

  1. communication of religious beliefs;
  2. teaching and counselling adherents and members of the community;
  3. providing adherents and members of the community with spiritual guidance and support;
  4. conducting an in-service seminar of a spiritual nature;
  5. meeting with or visiting adherents, the sick, the poor and others who need emotional and spiritual support; and
  6. providing pastoral supervision to those engaged in pastoral duties.


Religious institutions will be well served by reviewing the FBT treatment of their religious practitioners. The ATO often embarks on specific audit activity following revision of a ruling.  Further, there may be an upside to greater application of FBT benefits, that being from the clarification provided by the ruling.

The critical areas of note for religious institutions are those that refer to religious practitioners employed in schools, hospitals, aged care, disability or community services and leadership positions in the church hierarchy.