18.104.22.168 Income Test Treatment of Ministers of Religion
This topic deals with the treatment of income of ministers of religion or their partners who claim income support payments such as PP, and the LIC. For the income test treatment of FTB, which is based on ATI, please refer to the FA Guide 3.2.3. For treatment of ministers of religion under YA parental means testing, please refer to SS Guide 1.1.M.150.
Holder of religious office
For the income test treatment of most income support payments (other than parentally means tested YA) and for LIC, ministers of religion are considered to be 'holders of religious office' rather than employees or self-employed. This means that the gross income of the minister is counted as income for social security purposes. This ensures a consistent income test treatment of income of ministers of religion for income support payments (dealt with in this topic), or LICs (22.214.171.124).
Income from employment including fringe benefits & valuable consideration
The gross income of a minister of religion is assessed as income under the income test. The definition of income includes 'valuable consideration' (1.1.V.25) such as fringe benefits. A fringe benefit, which is for the minister's own private use or benefit IS assessed as income.
A minister of religion cannot claim business deductions (such as the depreciation of assets) under SSAct section 1075(1).
Act reference: SSAct section 8 Income test definitions, section 1072 General meaning of ordinary income, section 1075(1) Permissible reductions of business income
Policy reference: SS Guide 126.96.36.199 Deferred income, salary sacrifice, valuable consideration & fringe benefits
Work related expenses including reimbursements & allowances
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 disregarded as income. However, the 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 disregarded as 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.
Example: A stipend or 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.
Free accommodation or board & lodging
Where a minister receives free accommodation or free board or lodging, it is not counted as income for social security purposes.
Example: A manse is provided free-of-charge by the church during the term of the ministry or service.
However, where the minister is paid an allowance by the church or organisation to cover the cost of private accommodation, the payment IS counted as income. This includes situations where the church or organisation pays the mortgage repayments on a minister's home. The value of the mortgage payment IS assessed as income.
Note: For earnings of members of religious organisations under a vow of poverty see 188.8.131.52 General provisions for income from employment.
Act reference: SSAct section 8(8) Excluded amounts-general