Assessing income and assets for ministers of religion 108-04050000

Allowances and reimbursements of ministry related expenses are deducted from the minister's gross employment income. Reportable fringe benefits (including exempt reportable fringe benefits), which are for the minister's own private benefit are 'valuable consideration' and must be included.

Reimbursements made to a minister of religion by the church or organisation for out-of-pocket expenses paid by the minister for directly related ministry work, are not counted as income. However, any portion of reimbursements paid to a minister to meet expenses not directly related to ministry work is counted as income.

Similarly, allowances paid to a minister of religion to cover expenses directly related with the minister's work are not counted as employment income. If the church or an organisation pays more than the amount actually incurred by the minister, the extra is included as income.

Income for the minister's own use and benefit is counted under the income test. For example, a stipend or reportable fringe benefit provided to a minister to meet general living expenses such as grocery items, private health cover or children's school fees is counted as income.

When a customer receives free accommodation or free board and lodging, the value of the accommodation or board and lodging is not income for social security purposes. This includes free accommodation provided by an employer or provided to a minister of religion.

However, when an employer or other organisation pays the mortgage repayments on a customer's property, the value of the mortgage payments is assessed as income. In a targeted income support system it is not the intention to help people to acquire assets.

If an employer or organisation pays an allowance to cover the costs of private accommodation or pays the rent on accommodation leased by the customer, the amount of the allowance or rent paid is income.

All personally owned assets of a minister are treated in the same manner as assets personally owned by any other customer.

If there is a small change to asset values determine if the customer needs to notify.

When a person is employed as a member of a religious organisation, the employing organisation sets the rate of pay, and pays the member. The amount earned is treated as employment income for social security purposes. The income amount earned, derived or received is paid for the member's own use or benefit regardless of their subsequent divesting themselves of the money after payment.

Examples of gratuitous payments are a Sustentation Benefit, or payments from the Clergy Sustentation Fund or Clergy Foundation.

These payments are:

• made to members of certain churches (both pastors/ministers and other non-pastoral members of their church) based on the years of service to the church. Payments are received after the person has ceased employment
• not assessed/classified as:
• employment income, as an employer/employee arrangement no longer exists and the income is not directly in return for remunerative work undertaken, or
• superannuation, as the amount of the payment to the member has no direct relationship to the amount paid by the member, if any

Income received is assessed as other ordinary income for the income test and therefore does not deplete Working Credits, Income Bank or Work Bonus. Other ordinary income is coded on the Other Income Summary (OINS) screen. Record payments made periodically using a periodic frequency and lump sums using the frequency ‘ANN’ - Annual.

If an organisation employs a religious organisation to supply any member of their organisation, the religious organisation sets the rate of pay and the employing organisation pays the religious organisation, the amount earned is income of the religious organisation and not of the individual member.

The assessment of income for a minister of religion differs between Family Tax Benefit and income support payments.

For Family Tax Benefit (FTB) and Child Care Subsidy (CCS) purposes, the amount of fringe benefits to be assessed is determined by the Australian Taxation Office (ATO). Certain benefits received by a minister of religion are exempt under section 57 of the Fringe Benefits Tax Assessment Act. This means any fringe benefits received would not appear on the Pay As You Go (PAYG) Summary or be declared to the ATO. As certain fringe benefits are exempt for ATO purposes, they are exempt for FTB and CCS assessment purposes.

FTB and CCS entitlement is based on a person's Adjusted Taxable Income, which includes taxable income, adjusted reportable fringe benefits, (including exempt reportable fringe benefits and other reportable fringe benefits), foreign income, net rental property loss and tax free pensions or benefits such as Disability Support Pension, less any deductible child maintenance expenditure. For further information on fringe benefits for family payments, see Adjusted fringe benefits for family assistance and Paid Parental Leave scheme payments.

For income support payments the assessment of fringe benefits for a minister of religion is different. Note: a fringe benefit is a benefit received as part of employment conditions that is not a wage or salary, this does not include reimbursement of work related expenses or allowances for work related expenses. All fringe benefits are personal income (valuable consideration) and must be declared for assessment purposes. For further information on fringe benefits for income support payments, see Assessing fringe benefits for Social Security income test purposes.

As ministers of religion are not self-employed, they cannot claim reductions of business income. Thus if a minister's salary package includes any expense payments (for example, books, telephone calls and petrol) it is in the minister's interests to have these payments identified and excluded from assessment.