Tax Planning Strategy 175 | Employees of Religious Institutions

Benefits provided to employees of religious institutions in respect of pastoral duties or other duties or activities directly related to the practice, study, teaching or propagation of religious beliefs is exempt from FBT. 

The FBT exemption applies where:

• A religious practitioner is an employee of a registered religious institution.
• A benefit is provided to the practitioner, or to his or her spouse or child.
• The benefit is provided principally in respect of the employee’s pastoral duties, or their practice, study, teaching or propagation of religious beliefs. 

A “registered” religious institution means one that is a registered charity and is registered with the Australian Charities and Not-for-profits Commission (ACNC) as an entity with a purpose of the advancement of religion. A body is a religious institution if it is instituted for religious purposes, i.e. its objects and activities must reflect its character as a body instituted for the promotion of some religious object, and the beliefs and practices of the members of that body must constitute a religion. 

Where the FBT exemption applies to a religious institution employee they can eliminate their tax liability completely by reducing their taxable wages to less than the tax-free threshold and having the employer provide the balance as FBT exempt benefits (i.e. motor vehicle, accommodation, and use of employer credit card.