New ATO Draft Ruling on the fringe benefits tax: benefits provided to religious practitioners
July 2018 | News | Jae Yang and Mark Fowler
The Australian Taxation Office (ATO) recently released a new Draft Ruling (TR 2018/D2) which sets out the Commissioner’s position on when a benefit 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 (Cth). The ATO has now withdrawn Taxation Ruling TR 92/17.
The Draft Ruling outlines the Commissioner’s interpretation of the legislative requirements and provides some examples.
In particular, the Draft Ruling takes into account changes to the law that have occurred since the previous Ruling in 1992 (TR 92/17), including that an entity eligible for FBT exemption in relation to a benefit it provides to a religious practitioner must be an institution that maintains current registration with the Australian Charities and Not-for-profits Commission with a charity subtype ‘advancing religion’.
Importantly, the Draft Ruling also clarifies the circumstances where a benefit provided by a registered religious institution to a religious practitioner, whose duties are not limited to pastoral duties or other directly related religious activities, may or may not be exempt from FBT. In order for the registered religious institution to be exempt from FBT, it would need to be able to demonstrate an arrangement that the benefit is provided principally for the pastoral duties or directly related religious activities and not other duties of the religious practitioner.
A copy of the Draft Ruling may be obtained here. If you require advice on the application of the Draft Ruling to your circumstances, or would like assistance with the preparation of a comment on the Draft Ruling, please contact Mark Fowler or Jae Yang of our office. Comments on the new Draft Ruling are open until 24 August 2018.