No free lunch for church

There is a sign in the canteen at work that invites me to eat my lunch tax-free. By signing on to a salary sacrifice scheme the pewsitter’s $3.80 sandwich halves in price. But I won’t be signing on. The sight of well-paid journos eating half price while the pensioner down the road has to pay full freight is not a good look.

Welfare comes in many forms these days. The FEE-HELP scheme that provides loans to Moore College students among many others has come under fire in the media because low-income graduates may cost the government a larger subsidy. Some graduates of Moore (not Anglican clergy) might not even earn enough to reach the repayment threshold of $39,824.

Clergy save tax through receiving allowances instead. Charities and churches are exempt from fringe benefits tax and the government does not place a limit on this. The diocese recommends a cap of 30 per cent of salary. As the latest remuneration circular notes, “A failure to observe reasonable limits may lead a government to limit the relevant tax exemption which currently applies to those arrangements”.

This pewsitter has heard of parish staff who receive a lot more than 30 percent of their salary paid as allowances, however.

The diocese requires direct payment of some expenses such as utilities, hospitality, computers, books and conference costs. These expenses are both FBT-free and don’t appear on the annual payment summary. This means they do not count for FEE-HELP repayment.

Perhaps the greatest (untaxed) fringe benefit is the diocesan requirement that a parish houses its ministers. When you add the subsidised school fees that some ministers get, Pewsitter’s guess is that over half a minister’s monetary and in-kind support is tax-free in some cases.

Or to put it another way many pewsitters would have to earn a lot more dollars to live as well as some ministers.

The view from this pew is that all of these tax schemes are fair enough taken one by one. There are strong arguments in favour of them. The government has decided to subsidise education for the public benefit. Charities would collapse without the fringe benefits tax exemptions for non-profits. 

But put together, these tax advantages for ministers seem out of proportion, and a subsidy to the church from the wider community. Do we really want to be seen as living off society’s charity?

The church is also held hostage to the prospect of them being withdrawn. John Woodhouse, the Moore College principal, was quoted saying he would not oppose amendments to FEE-HELP that would create greater equity. It was the right thing to say.

We should think carefully about which tax minimisation schemes we take part in. Like the canteen tax-free food scheme, none is compulsory. At the very least, there’s no need to grab every bit of tax minimisation going. It’s not a good look.

As the Bible has it, “the labourer is worthy of his hire”. We pewsitters should pay our ministers well. But we should not expect unbelievers to subsidise them.

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