One aspect of the Henry Tax review that has received scant attention is the Federal Government’s re-affirmation of the status quo in the not-for-profit sector.
One aspect of particular concern to local churches is Fringe Benefits Tax (FBT).
In a society where Christianity is becoming increasingly marginalised, I was relieved to hear the recent Government assurances that the FBT exemptions are to remain.
This means my church can, God willing, proceed with our ministry and staff expansion in ways that would be otherwise not possible. In fact, if the exemptions were removed most Christian organisations would be forced to retrench staff. It would have been a huge setback for the Gospel in this country.
Because the concept of fringe benefits is complicated, they can so easily be misunderstood.
In essence, they are a non-cash benefit provided to an employee. In the case of secular employers, Fringe Benefits Tax (FBT) is payable. This is not so with a number of non-profit organisations, including churches. Public hospitals even employ specialists to help employees make use of these benefits, and split the benefit with the hospitals.
In a church situation, fringe benefits might include the provision of housing, a motor vehicle and school fees. In the case of public hospitals, employees can elect to have a credit card with a major bank so anything that can be paid for by a credit card is treated as a fringe benefit, and qualifies for appropriate tax concessions.
For some, the concept of fringe benefits 'feels' wrong because of the complexity. Yet it is important to realise that this is not a loophole in taxation legislation. It is the deliberate way that the Federal Government chooses to show concessions to churches and other non-profits. In the United States, a similar concession is provided by allowing direct giving to churches to be tax deductible. In Australia, it is done - intentionally and deliberately - via the FBT exemptions. It is an approach that the Government has now reaffirmed.
For most employers, there is no benefit to providing fringe benefits as part of one's package. But in the case of many non-profit organisations, like churches, there is an enormous benefit.
These concessions are different in their character to the tax exempt status of commercial operations of churches.
It is in this area that alleged abuse has arisen, and questions about commercial advantages.
My personal view has been that some practices by some religious institutions are questionable, but even I had to re-evaluate my thinking when the High Court ruled that these 'questionable' concessions are legitimate. Further, the Government has also reaffirmed its position that these concessions are to remain.
It is worth noting the efforts that the Diocese of Sydney has gone through to prevent abuse. While for churches there is no legislative limit on the amount of fringe benefits that may be paid, our Diocese has developed a self imposed limitation of 30 percent of the stipend component. Other denominations have no such limitations, some even paying clergy almost entirely in fringe benefits.
And while we should thank the Government, ultimately God is responsible. Praise God that at least in this area the claim that we are a Christian country is paid more than lip service.
