baptist-business-support-service

Not-for-Profits and Income Tax

Fri, 24 Oct 2025 05:54:07 GMT

Does your not-for-profit need to pay income tax?

Did you know that some not-for-profits need to self-assess for income tax exemption? Some NFPs even need to pay income tax.

While most churches are registered with the ACNC and will have an exemption for income tax, if your ACNC registration is cancelled for any reason so is the exemption for income tax. You need to ensure your income tax exemption is in effect on re-registration otherwise you may get overdue notices from the ATO regarding your income tax return.

Australian Audit have recorded a webinar that covers essential information for NFPs with an ABN that are not registered with the ACNC. Also covered in this presentation is steps on setting up ATO Online Services, including where the steps to take where the authorised contacts may not be current.

Pastors' Wages & STP

Fri, 31 Mar 2023 06:39:13 GMT

Confused about setting up Pastors' wages for STP?

Single Touch Payroll Phase Two (STP2) is well and truly here, but you might find that little guidance exists on how to set up a payroll system specifically for religious ministers.

Click here for an article from Australian Audit that will help ensure you have set things up the right way.

Energy Provider Discounts

Mon, 08 Aug 2022 04:03:57 GMT

Are you eligible for a discount from your energy providers?

Some energy providers will issue discounts for certain eligible organisations to help with the running costs of their not for profit voluntary or charitable organisation. These are sometimes referred to as Community Service Tariffs.

To see if your providers offer such concessions and to access the application forms you may find the following links useful:

Synergy : Special rates for small voluntary and charitable organisations.

Horizon Power : Community Service tariff

Water Corporation : Down the bottom of this page is a drop down bar and one of the titles is ‘ Service charge discounts explained’.

Alinta Energy : If your organisation is under residential usage with your account in the Perth metropolitan area, you may be entitled to the discounts Alinta Energy have available You may wish to contact them directly if you think this may apply to you.

GST Worksheet

Wed, 10 Nov 2021 04:28:28 GMT

How do you know when to charge or claim GST?

If your church is registered for GST then you need to consider the impact on both the money that is collected and the expenses that are incurred.

A great resource in this regard is the Church Finance Handbook that Saward Dawson, an accounting firm in Melbourne, has compiled. Within this handbook is a specific section on GST which provides an overview of the general requirements to charge or claim GST, exemptions for churches, and examples of church-specific transactions.

According to the GST Handbook, donations, gifts, tithes and offerings are generally not subject to GST as they are not a payment for "supply" (the payer receives no material benefit). Such payments must be unconditional.

But what about all the other types of money that is collected, such as from the youth group, a church dinner, family camp, or other events?

You need to consider each type of income and whether it falls under the available exemptions, otherwise you need to include GST in the amount charged or collected.

It is worth noting that just because the church has a tax invoice that shows GST was paid on certain expenditure does not mean there is an automatic entitlement to claim back that GST. There are certain circumstances where this is not permitted.

To help you determine and document these decisions we have put together a GST worksheet. This resource walks you through the exemptions and, when completed, will form a record of the decision regarding GST that can be filed and produced in the future should you ever need to produce evidence of a decision.

Click here to download the worksheet

Note: this worksheet can be used by your church if you meet the three assumptions noted on the front page

This worksheet has been prepared on the basis of information available at the date of preparation. The information is general in nature and is not intended to be taken as substitute for specific professional advice. We recommend that advice be sought on specific issues prior to acting on transactions affected.

Payment of Exempt Benefits

Mon, 28 Jun 2021 08:59:00 GMT

A post for Pastors who want to different options for receiving exempt benefits

If you are new to the world of receiving exempt benefits this post will help you to understand what they are and outline a couple of the most common way that churches pay them.

Your church will have made an assessment of whether you are eligible to receive exempt benefits (for more on this see the ‘Providing Exempt Benefits’ post). If you are eligible, it means that you are able to receive a portion of your remuneration tax-free. This amount will be paid to you via a different mechanism to your taxable remuneration (i.e. it cannot be paid to you in cash).

Your exempt benefits must be used for personal expenses that you incur. Historically there has been a list of eligible uses but there are no legal restrictions on their use. There are a couple of exceptions that should be noted. Exempt benefits cannot:

Be accessed as ‘cash’, which includes accounts where you are able to draw down that. benefit as cash. This includes a line of credit on a home loan or a cash advance on a credit card.
Used to make additional payments into your super.
For donations, including offerings and tithes.
To pay for fines (speeding, parking, tax debt etc).
For any expenses that are claimed as tax deductions.

There are a number of ways that you can receive your exempt benefits, each with their advantages and potential disadvantages. The options that are available to you will be determined in part by the administrative capacity of your church. You may also be able to use a combination of options to suit your specific circumstances.

Option 1 – your exempt benefits are paid onto a salary packaging debit card

This is the simplest method for receiving your exempt benefits. Salary packaging debit cards are issued by Baptist Financial Services or the major banks and are designed specifically to meet the needs of religious practitioners and others who receive similar benefits. Your church would pay the exempt benefit portion of your salary onto the debit card and then it would be available for you to spend on your living expenses. There is no need to maintain or submit receipts.

Limitations include:

A possible cap on the amount that can be maintained on the card
Transaction fees
You do not receive back the GST

Option 2 – your church reimburses you for exempt benefit expenditure

The church maintains a running balance of the exempt benefits owed to you and you submit claims or request reimbursement for your exempt benefit expenditure. You will need to maintain and submit tax invoices with your claim. There may be a mechanism for you to be reimbursed for the GST portion of your claim (your church will need to be registered for GST and have a policy of returning the GST to the Pastor, something which they are not obligated to do).

Limitations include:

Time and effort taken obtain receipts and prepare the claim
More administration on the part of the church

Option 3 – your church makes home loan, car loan or rent payments on your behalf

If you provide the details to your church they may be able to facilitate payments on your behalf from your exempt benefits. If you choose this method it is important to note that you cannot subsequently withdraw cash (from a re-draw facility for example). If you do then the cash becomes taxable income.

Limitations include:

There is generally no GST on such payments, hence you miss out on the benefit of receiving it back
Tax implications should you ever want to access any re-draw on your mortgage

A note about Centrelink

If you are receiving family tax benefits or Centrelink payments be aware that you need to communicate very clearly about your exempt benefits. While there is no direct cash benefit, exempt benefits can fall within Centrelink’s income tests. In your communication make sure they know you are a ‘minister of religion’ and be prepared with the details of the benefits you receive.

Sources:

http://www.addministry.org.au/Documents/Docs/Fringe_Benefits_for_Churches_2019.pdf

https://www.corneyandlind.com.au/resource-centre/fringe-benefits-centrelink/

Employing People in WA

Mon, 28 Jun 2021 08:25:49 GMT

Are you paying your people under the correct conditions?

*** Note that the following information relates to Western Australia

When it comes to employing people in Western Australia, your Church may fall under the state industrial system or the national industrial relations system. It is important that you know which applies as there are different rights and obligations under each.

If your church is an unincorporated association or an incorporated association that is not trading then you will fall under the WA state system. It is anticipated that most West Australian churches fall into the state system.

If your church is an incorporated association that is trading then you will come under the national industrial relations system.

What you need to determine:

Your legal structure. If you have no idea what your legal structure is, then you can look up the Australian Business Register to find out: https://abr.business.gov.au/
If you think you are trading, whether that trading activity is ‘sufficiently substantial’. You may need to get legal advice if you are not sure.

Once you have determined which system your church falls under then you need to read about the rights and obligations under that system. Your staff will be entitled to minimum benefits so make sure that you are familiar with what they are.

Lots of support is available – call the helplines in the diagram or get in contact with us and we can help get you started in the right direction.

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Sources:

https://www.commerce.wa.gov.au/labour-relations/guide-who-wa-state-system

https://www.commerce.wa.gov.au/labour-relations/private-sector-employers-and-employees

https://www.fairwork.gov.au/

Providing Exempt Benefits

Mon, 28 Jun 2021 07:58:00 GMT

Are you providing exempt benefits to the correct people?

If your church employs staff you need to be aware of any fringe benefits you provide and the FBT (fringe benefits tax) implications that may arise. Your church may be able to provide exempt benefits to some of your employees, but there are certain criteria that need to be met and the amounts need to be paid in particular ways. Continue reading to find out more.

A fringe benefit is a payment to employee, but in a different form to salary or wages. The payment of such benefits is governed by the Fringe Benefits Tax Assessment Act 1986, and in general will attract fringe benefits tax.

This article focusses on section 57 of the Act which outlines the circumstances when payment of fringe benefits to an employee of a religious institution may be exempt from fringe benefits tax.

In order to qualify for tax concessions your church needs to be a ‘registered religious institution’. This means that it needs to be:

A registered charity with the Australian Charities and Not-for-profits Commission (ACNC)
Registered with the ACNC for the charity subtype ‘advancing religion’
An Institution (this can mean different legal forms – activities, size, permanence and recognition will be relevant)

You may need to seek legal advice if you are unclear whether your church is an “institution”.

Only ‘religious practitioners’ of your church will be eligible to receive exempt benefits. A religious practitioner is a:

Minister of religion
Student at an institution who is undertaking a course of instruction in the duties of a minister of religion
Full-time member of a religious order
Student at a college conducted solely for training people to become members of religious orders

According to Taxation Ruling 2019/13 section 14 except in rare cases, a minister of religion would have all of these characteristics:

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

Exempt benefits can only be provided principally in respect to the employees’ ‘pastoral duties’ or other duties directly related to the practice, study, teaching or propagation of religious beliefs. Administrative duties, even those undertaken by a minister of religion, do not qualify for exempt benefits.

Pastoral duties are duties associated with the spiritual care of people. Examples of pastoral duties undertaken by religious practitioners are:

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

You will need to review each staff members’ duties on an individual basis to determine if, and the extent to which, they qualify to receive exempt benefits.

Refer to Taxation Ruling TR 2019/3 for more information and specific examples of duties.

If you are providing benefits to an employee who is not a religious minister and/or who is not principally involved in pastoral duties or other religious duties then these benefits may be subject to FBT.

The actual payment of exempt benefits will be addressed in a separate blog post. While it is technically possible to pay 100% of a religious practitioners remuneration as exempt benefits, commonly churches and denominations take a more conservative approach and limit the portion that can be paid as exempt benefits. Your denominational body should be able to provide their guidance around this.

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Sources:

https://www.ato.gov.au/General/fringe-benefits-tax-(fbt)/

https://www.ato.gov.au/non-profit/Getting-started/In-detail/Types-of-charities/Registered-religious-institutions--access-to-tax-concessions/

https://www.ato.gov.au/Non-profit/Your-workers/In-detail/FBT-and-religious-practitioners---examples/?page=1#Directly_related_religious_activities

https://www.ato.gov.au/law/view/document?DocID=TXR/TR20193/NAT/ATO/00001&PiT=99991231235958

http://www.addministry.org.au/Documents/Docs/Fringe_Benefits_for_Churches_2019.pdf

Paying honorariums

Thu, 20 May 2021 22:58:39 GMT

Are you paying guest speakers and other volunteers correctly?

Note: since the original publishing of this post there has been some clarification on who can and cannot use a Statement by Supplier form. The text of this post has been updated to reflect this but the accompanying video has not been altered (edited 27 March 2025).

When it comes to paying honorariums it's not quite as simple as giving cash a cash gift or making a one-off transfer into a personal bank account. Read on to discover the different things you need to consider.

According to the ACNC...

The Australian Charities and Not-For Profit Commission approach payments of honorariums from a governance perspective. They define an honorarium as "an honorary payment made to someone without obligation in recognition of their professional service". They expect that such payments will be token in nature. It should not provide the individual with a sizeable or significant personal benefit.

It’s up to your church’s 'Responsible Persons' to determine an acceptable value (for a definition of responsible persons, see the ACNC website, but is someone who is responsible for governing the church such as elders or the board). What is clear is that they need to consider the financial position of the church and it’s ability to carry out it’s charitable purposes. This could mean that, given the differing financial position of churches, a $100 honorarium might be acceptable in one church and not in another.

The ACNC also give a range of legal considerations to keep in mind when considering an honorarium - you should check out the link below to read them in full. One point to highlight is the giving of an honorarium to a 'Responsible Person' or their relative needs to be disclosed as a conflict of interest, otherwise the church is breaching ACNC Governance Standard 5.

According to the ATO...

The Australian Taxation Office want you to consider whether the payment to a volunteer is assessable income in the hands of the person receiving it. They outline that where amounts are earned, expected, relied upon and have an element of periodicity, recurrence or regularity should be treated as assessable income of the volunteer. If the person’s activities are a pastime or hobby – rather than income producing – money and other benefits received by them for those activities are not assessable income. The ATO provides a more detailed list of characteristics for income that is not assessable, check out the link to read those.

You need to consider the specific circumstances of the person you are making the payment to. You cannot make a blanket decision that covers all payments.

When it comes to honorariums specifically, the ATO wants you to consider whether the payment is:

An honorary reward for voluntary services, or
A fee for professional services voluntarily performed.

The difference essential comes down to whether the person performing the service is a “professional” (i.e. do they do this kind of thing for a living). Where they are a professional, the honorarium should be treated as assessable income and needs to be paid in a way that flags it as such

In a church context, the most common example of honorariums are payments to guest speakers. A visiting Pastor from another church, a person representing a mission agency, even a missionary themselves are likely to be considered professional speakers. Such payments are considered assessable income. You can still pay an honorarium but the way you make the payment will be different.

The best way to deal with honorariums to professionals (in our example, to Pastors or speakers from other organisations) is to send the money to their employer. You could request an invoice from their church/organization or you can raise a recipient-created tax invoice (including GST, if the recipient is registered for GST). It is then up to the other church/organization to pass that money on to the Pastor as per their policies, which should be through payroll.

If the speaker has their own ABN, they can issue an invoice to you or you can raise a recipient created tax invoice and make the payment as they direct.

Every other “type” of speaker will need to complete a ‘Statement by a supplier’ form from the ATO. This form essentially outlines the reason why the person is not providing an ABN, and covers things like:

International speakers
Guest speakers filling in as part of a “past time or hobby”
Payments under $75

Note that if a person is receiving a payment for the supply as a religious practitioner, they are not permitted to use the Statement by Supplier form. This means that if a visiting speaker is a Pastor from another church who is entitled to receive exempt benefits then they cannot use this form. The payment must be forwarded to their employer, or if they have an ABN they should issue an invoice.

These similar considerations apply to other types of honorariums your church may want to make to any type of volunteer.

As you can see, making such payments is not as straight forward as you may think and depends on the circumstances of your church and your volunteers. The information here is not intended to provide legal or financial advice, so make sure you seek out professionals to help with your specific circumstances. Hopefully we have provided you with the right questions to get the conversation with your advisors rolling.

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Sources:

https://www.acnc.gov.au/tools/guides/gifts-and-honorariums

https://www.ato.gov.au/non-profit/your-workers/your-volunteers/paying-volunteers/

https://www.ato.gov.au/Non-profit/Your-workers/Your-volunteers/Paying-volunteers/Honorariums/

https://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/BUS38509n3346_5_2012.pdf

https://www.ato.gov.au/Forms/Recipient-created-tax-invoices/

Tax Invoices

administrator@heliummarketing.agency (Helium Marketing) — Thu, 20 May 2021 22:56:39 GMT

Are you getting the right paperwork to claim GST?

Are you looking to claim the GST on the purchases your church makes? Then you need to make sure that the documentation you have meets the minimum requirements of a tax invoice.

By way of quick overview, you need a tax invoice for all purchases over $82.50 (including GST).

For purchases that are less than $1,000 there are seven requirements:

Something to identify that the document is intended to be a tax invoice
The seller’s identity
The seller’s ABN
The date the invoice is issued
A brief description of the item sold, including quantity (if applicable) and the price
The GST amount (if any). This can be shown separately, or a statement such as ‘total price includes GST.
The extent to which each sale on the invoice is a taxable sale (i.e. the extent to which each sale includes GST). Separately identifying the GST on each line item, or the symbols next to each item that attracts GST.

For sales of $1,000 or more the tax invoice also needs to show the buyer’s identity or ABN.

Other things to note:

Tax invoices don’t need to be in paper form – they can be digital/electronic.
Even though you don’t need a tax invoice for purchases under $82.50 in order to claim GST, it still good practice to require tax invoice or receipt.

Sources:

https://www.ato.gov.au/business/gst/claiming-gst-credits/

https://www.ato.gov.au/business/gst/tax-invoices/