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Re: Clarification on entertainment fringe benefits for FBT exempt religious institutions

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Hi,

 

I'm trying to get my head around a number of rules that concern entertainment fringe benefits for churches. Specifically I'm trying to determine under what circumstances a church can and cannot claim a GST credit for the purchase of food and drink. The situation is a church body where the head of the body regularly has lunch meetings with members of the church district for the purpose of pastoral care.

 

First, could someone please tell me if I understand correctly how this works for a regular business. In my understanding there are two options for accounting for entertainment fringe benefits: the 50/50 method and the actual method. Regardless of which method is used, the amount declared a fringe benefit is subject to fringe benefit tax, but is also tax deductible and eligible for a GST credit. The amount spent on entertainment that is not considered an entertainment fringe benefit is a non-deductible expense under Sect 32.1 of the ITAA 1997 and is therefore not eligibile for a GST credit.

 

I would like to clarify this interaction as it applies to religious institutions. As religious institutions providing benefits to religious practitioners in respect of their pastoral duties are exempt from fringe benefits tax under Sect 57 of the FBTAA, and Sect 57 is not included in the list of exceptions in item 1.6 of the table in section 32.30 of the ITAA 1997 (http://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s32.30.html), does this mean that 100% of entertainment expenses that a church incurs that aren't subject to some other exception in the table in section 32.30 are non-deductible for the purposes of GST credit entitlement?

 

Thanks for your help!

WQ

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ATO Certified Response

Community Manager

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Hi @WeirderQuark,

 

Thanks for your question.

 

You do understand the two options correctly.

 

Yes it does mean that the entertainment expenses are not deductible for the purpose of GST

The page FBT and religious practitioners has some examples that might be helpful.

 

There is also a page regarding registered religious institution’s that might be of interest.


Thanks
KylieS

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ATO Certified Response

Community Manager

Replies 1

Hi @WeirderQuark,

 

Thanks for your question.

 

You do understand the two options correctly.

 

Yes it does mean that the entertainment expenses are not deductible for the purpose of GST

The page FBT and religious practitioners has some examples that might be helpful.

 

There is also a page regarding registered religious institution’s that might be of interest.


Thanks
KylieS

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Enthusiast

Replies 0

Thanks!