Superannuation is a different issue… everyone can sacrifice pre-tax earnings direct into super without any FBT style consequences for any employer or employee, there is however some limits on the ability to make those sacrifices in the general community.
When it comes to schooling, I went to a Public School (and also a selective school) and I also know of many other clergy kids in my generation (which wasn’t that long ago, but before many of the new SACS schools) who did the same for a large amount (if not all) of their schooling.
In the end though, my bigger concern, and I have hopefully expressed this before, is not that we are using the generosity built into our system by our government to encourage education, but instead that future ministry in this diocese (but also from this diocese around the world) could be held to significant financial pressure by a government changing any of a number of rules that govern Fee-Help loans, especially if these loans affect many years of graduates.
The ministerial [sic] sacrifice is also something that the minister can’t get his hands on to spend as he likes. There are checks and balances for as any expenditure from it has to be in certain areas and can’t be used to pay for his wifes dental bill or holidays for example. It has to be used for his personal educational purposes as well as some other areas which I can’t remember at the moment - books, other study, expenditure for conferences etc which ministers are expected to attend and furthermore professionally stretch themselves.
It is the church that administers that account and the minister has to provide a receipt of expenditure to be reimbursed. So its not like he / she is double dipping by investing it into their super.
Craig B
Actually, stipend sacrifice can be used for anything that the minister and his ‘employer’ agree on. Although in the Sydney Anglican Diocese the guidelines approved by Standing Committee are fairly limited (and even include things which by there nature are not Fringe Benefits!), those guidelines do not have the force of law. They are driven, however, by a concern to discourage ministers from using this benefit in such a way as to possibly be seen as ‘rorting’ the system and thereby attracting the ATO’s attention.
Bob
To think through how much it might cost for a rector’s housing benefit, you have to think through how much it would cost to rent a 4 bedroom house (I think clergy standard from memory is 4 bedroom + study). If you got the study by renting a fifth bedroom, then it would get even harder to even find suitable property.
For many clergy, their home is also their place of work for a certain percentage of the week. Their study isn’t a study, it is a place of work. Who has their place of work, their office, counted in their package? Let’s not mention the hospitality and meetings that are regularly held in clergy residence. To suggest housing is a straight-out benefit isn’t really doing justice to what the house is used for.
If you really want to find out what it’s like, why don’t you sit down and talk at length with your rector/vicar and ask how much the home is used for ministry?
There are a lot of assumptions that are going untested on this thread.
On another note, can I respectfully suggest that the question of whether clergy (or any other Christians for that matter) should send their children to Anglican schools, public schools or somewhere else is a discussion for another thread?
Jason,
My comments on this thread are to do with the interaction between clergy use of the fringe benefits exemption for ministers of religion and Fee help repayments.
As I said before I would be happy to be proven wrong on this.
Several commentators have argued that clergy have low incomes so that they would be liable for only a little Fee help repayments. And I agree many Christian workers live sacrificially on low incomes. (And I have no argument with low income workers not repaying fee help.) But not all christian workers’ incomes are low.
I gave an example of a minister on the minimum stipend of $49,000 salary sacrificing 30 percent of his income and receiving housing and school fee relief totalling $60,000.
It’s worth considering a number of things:
i. Your argument is a worst-case scenario.
ii. You are counting a school fee reduction in FBT - this isn’t done in any other profession, to my knowledge, by those who receive fee reductions for their children.
iii. What of those clergy who have no children, or no school-aged children? Or who chose to send them to public schools in the area. Again, your argument relies on the clergy that send their children to the most exclusive private schools. And it’s irrelevant anyway, because of ii. above.
iv. Again, you use the worst case scenario (or, the best case if it’s for the clergy concerned) of clergy receiving a housing “allowance” that pays off their mortgage. This is certainly not the case for all clergy, or even most. (By the way, from a Melburnian perspective, our housing is calculated as part of our package and the final figure of the stipend includes this housing component).
v. Your worst case scenario may be *possible* but does it happen in reality. And, is it related to someone who owes money on FEE-help? Arguing over hypotheticals is fine, but let’s state them as hypotheticals if that’s all they are.
vi. It’s worth including in your calculations that clergy often use their home as their primary place of work, and so if you wish to calculate housing as part of their package, it’s somewhat equivalent to adding a lawyer’s office space to their package (for example).
Let’s try to think this through more thoroughly, rather than relying on gut reactions.
Again, you’re not comparing ‘apples with apples’. Craig mentions housing and you swap the discussion to cars.
John Sandeman - 07 April 2008 02:57 PM
Craig B,
If my employer insisted I drive a Rolls Royce they provided home each night, it would be still be a fringe benefit whether I wanted to drive it or not.
To think through how much it might cost for a rector’s housing benefit, you have to think through how much it would cost to rent a 4 bedroom house (I think clergy standard from memory is 4 bedroom + study). If you got the study by renting a fifth bedroom, then it would get even harder to even find suitable property.
For many clergy, their home is also their place of work for a certain percentage of the week. Their study isn’t a study, it is a place of work. Who has their place of work, their office, counted in their package? Let’s not mention the hospitality and meetings that are regularly held in clergy residence. To suggest housing is a straight-out benefit isn’t really doing justice to what the house is used for.
If you really want to find out what it’s like, why don’t you sit down and talk at length with your rector/vicar and ask how much the home is used for ministry?
There are a lot of assumptions that are going untested on this thread.
I know quite a bit about how a clergy house is used during any given week, and have seen it (from quite close up) done differently in different houses and different churches. Yes you are right that a proportion of the rental would be a tax deduction if it was owner-occupied and used by a home-based business, and all the other bits and pieces. I forgot this element of it when writing it up, and just took some things on their normal terms.
In my comment though, I wasn’t trying to say that the housing allowance was unfair, but rather simply to highlight the relative quantity of the amount that could be spent on housing by a parish (if they were to rent), and how it looks if you were to gross-it-up for FBT which makes everything look a lot more expensive because it factors in a high tax rate.
“There are a lot of assumptions that are going untested on this thread.”
Please feel free to pile in and test them. That’s what a discussion forum is all about.
Jason said,
“Your argument is a worst-case scenario.”
I have avoided extreme examples, and they do exist. Some ministers live in very expensive real estate. I have chosen a middling example, not Toorak or Portsea in Melbournian terms.
“You are counting a school fee reduction in FBT”.
Yes, you are right that school fee reductions are not a fringe benefit strictly defined, except when clergy are employed by schools. Perhaps we could call them a “beyond-the-fringe benefit”.
However the aim of my argument is to demonstrate what the grossed up value of clergy entitlements sometimes (not always) amounts to while avoiding repaying fee help. That some entitlements come from the employer directly and some from institutions allied to the employer is immaterial to THIS argument. (Your point would be of more relevance if we were focussing on FBT. But clergy don’t incur it anyway. In this thread we are using grossed up value not to determine a nominal FBT but to show that fee help repayment exemption applies to packages that are not “low income”..).
“What of those clergy who have no children, or no school-aged children? Or who chose to send them to public schools in the area.”
Arguably clergy with no children are in a better position to repay fee help and should consider it.
(By the way, from a Melburnian perspective, our housing is calculated as part of our package and the final figure of the stipend includes this housing component).
That’s an interesting difference. I wonder if that would change your fee-help situation. My guess is that it would satisfy much of my concern.
“It’s worth including in your calculations that clergy often use their home as their primary place of work”.
As discussed upthread, my point about fee help repayment is still valid if you discount the value of these entitlements by 50 per cent. If we were talking about FBT there is provision in the act to discount the tax owed due to “onerous conditions” of occupation.
“Again, you’re not comparing ‘apples with apples’. Craig mentions housing and you swap the discussion to cars.”
Please feel free to change the car to a house. It is still a fringe benefit.
“There are a lot of assumptions that are going untested on this thread.”
Actually John, I didn’t. That was Jason.
As I indicated before, my only problem with the talk of grossed up income is the fact that the value of clergy housing is very difficult to quantify (but I won’t restate my argument here). Apart from that, I think you’ve argued your case fairly well with regard to grossed up income. I’m still not convinved this is an argument against theological students using FEE-HELP (nor are you suggesting so) or that this whole matter is a huge problem. I do wonder, however, if this does become a matter of contention in the wider society, whether the problem would be solved by churches putting in place arrangements to encourage clergy to repay their debt even when not legally obliged to do so, and to help those clergy for whom this might create/increase financial hardship.
Bob
I have avoided extreme examples, and they do exist. Some ministers live in very expensive real estate. I have chosen a middling example, not Toorak or Portsea in Melbournian terms.
Yes, but let’s have a look at this. You’re looking at it from the clergy benefit situation. Let’s look at it from the parish situation. The parish owns the property (or the Diocese owns it) and if we treated this as a rental situation, then it takes on a different look. If a landlord decided to let a property at substantially less than the market value - for whatever reason - it doesn’t mean the tenant should claim the difference between the landlord’s rate and the market value as a “grossed up” benefit. Why should you “gross up” the housing at all? Why should you include it at all? (both theologically, and from an ATO perspective). Essentially, you are counting clergy housing on a market value basis. But is this applicable? I don’t think so.
[A slight aside. We’ve had friends who have had their accommodation paid by their company when they are sent O/S, or Interstate for periods of time. Does anyone know if that accommodation value is included within FB’s or their income? It would provide an interesting parallel with clergy if it isn’t included.]
Okay, let’s say that there is a decent benefit from housing. Let’s get really Pharisaical and if we’re going to include every benefit and loss (this really is a silly exercise, but I’m doing it to make a point), then let’s subtract the amount of time many clergy spouses and their families spend in active unpaid ministry in the parish from that total benefit - after all the housing is used to house the ministry family, and we all know the expectations many churches have of clergy spouses and families. There is benefit to the parish in their unpaid ministry that is additional to the paid ministry “supplied” by the clergy (and the parish only engages the full time ministry of the clergy person, doesn’t it?). And if we were to put a notional value on it, we might say something in the area of $25 000 p.a.
After all, in which other vocation (except politicians perhaps - and they get paid a whole lot more) does a person’s family contribute (and in some cases is expected to contribute) to one family member’s “job”?
One of the reasons the tax office and the Diocese probably avoids determining that clergy housing is a benefit is because it’s very messy trying to determine what specific “benefits” are derived, and what “losses” incurred for clergy.
John Sandeman - 07 April 2008 08:30 PM
“You are counting a school fee reduction in FBT”.
Yes, you are right that school fee reductions are not a fringe benefit strictly defined…
However the aim of my argument is to demonstrate what the grossed up value of clergy entitlements sometimes (not always) amounts to while avoiding repaying fee help. That some entitlements come from the employer directly and some from institutions allied to the employer is immaterial to THIS argument. (Your point would be of more relevance if we were focussing on FBT....
I get your point about fee help repayment and that some clergy might be able to pay off that fee help loan. But you are including items like school fees that are irrelevant to the concept of FB’s or income (which is what the Fee help repayment is based on for all people, not just clergy).
Reductions in school fees are not included as a benefit by the ATO for every other profession, are they, so why would we do it with clergy, except to do a “Today Tonight” job on them? It would require you to include any bursaries or scholarships for the children of people in other professions as their “grossed up” income. The basis of the scholarship isn’t important (whether it’s academic merit or by virtue of the policy of the school towards certain members of society - e.g., clergy).
You’re making up the rules as you go along. You can’t “gross up” a value that is non-existent. The fact that some third-party to the “employer” gives a reduction in school fees to the offspring of the “employee” - even though, historically they have some connection to the Anglican church - it is not regarded as FB’s or income - nominal or otherwise. So of course it’s material to the argument - you’ve been using some concocted figure to inflate the value of a clergy’s “grossed up” income to try to prove your point.
“What of those clergy who have no children, or no school-aged children? Or who chose to send them to public schools in the area.”
Arguably clergy with no children are in a better position to repay fee help and should consider it.
Those with no children may be in a better position. Those with non-school aged children, arguably are in a worse position. Those who send their kids to public schools - this point was just ignored.
“It’s worth including in your calculations that clergy often use their home as their primary place of work”.
John Sandeman - 07 April 2008 08:30 PM
As discussed upthread, my point about fee help repayment is still valid if you discount the value of these entitlements by 50 per cent. If we were talking about FBT there is provision in the act to discount the tax owed due to “onerous conditions” of occupation.
My whole point has been about what benefit is actually derived, and how would one (namely, the ATO) calculate that benefit. You’ve arbitrarily designated a 50% benefit for the housing as the lowest possible benefit obtained. How do you arrive at that figure? What factors have you taken into account? And what mitigating circumstances might there be to including housing in the figure?
The thing I object to is throwing out nominal and exaggerated figures when no-one has done any work on agreeing to some ground rules that might apply in this circumstance.
Could you please post online how much you earn. That would be fun for us to discuss too.
Make sure you include the value of the desk, computer, software, phones, reference materials, office, and cars you have use of for work.
Tell us how much your house is worth, and make sure you include the ‘grossed up’ value of those tax free capital gains it earns you.
While you are at it how about you post up your address too, so I can send the homeless and needy people knocking at my door round to your place instead.
Jason,
My argument is that Clergy who take advantage of the FBT exemption should be prepared to repay fee help. From your last post I see that you agree with me on that. We also agree that housing benefit should be taken account of, and if Melbourne clergy stipend statments include that then that would occur for clergy in your diocese.
Here is how the tax office desribes housing as a fringe benefit:http://law.ato.gov.au/atolaw/view.htm?DocID=SAV/FBTGEMP2/00010
They include details of how some discounts apply when housing is supplied as a condition of work. naturally a clergy situation is not covered as FBT does not apply. For the purposes of argument I said one might discount the value of supplied housing by 50 per cent. You are welcome to make a case for or lesser or greater discount but i don’t think that detail will affect he overall case for repaying FBT.
David,
I am sorry this discussion has upset you. Please accept my apologies and my assurance that your paid and unpaid work is valued.
I’m usually pretty slow to join in discussion threads, but I feel that this one has gone in an unhelpful direction and wanted to jump in to clarify a few issues and make some alternative points.
Peter said:
I like this thread. There is just something nice about thinking through these sorts of issues.
I have to say that I don’t like it too much - because there is an implication in some of the discussion that clergy are rorting the system or at least unaware of the good deal they are getting. It is worth considering the way this may be taken by some clergy who do seek to be sacrificially generous and feel they the financial challenges of their ministry decisions. Some of the other suggestions and comments may be taken as ill-considered insults, eg, Jeff said:
I reckon minister’s kids are in enough of a “churchy” bubble as it is without sending them to the Anglican School as well.
Send them to the public school instead to mix with “real” kids.
Please think about the implications of such statemens and the hurt they might cause!
You may be interested to know that there is a group in the Sydney Diocese that meets every few months to consider many of these issues - it is called the Stipends and Allowances Committee. It is made up of a majority of lay people and a minority of clergy and makes recommendations to the standing committee. I got on the committee for complaining too much about how much stipends were being put up (above CPI). I think that John’s thinking on this subject might make him an ideal candidate!
I should say that any opinions I express here do not necessarily represent the views of the S&A;committee or of the diocese.
I won’t get into the employment status of ministers. We will leave that fun for later.
This comment has upset at least one minister so I should clarify it. There is a question over whether ministers are employees. Who is their employer? the diocese? The parish? In the CofE there has been considerable debate about this. I was being sardonic about fun which was probably a mistake online.
John I knew what you meant. It is rather an interesting and difficult question and is why ministers are not covered under workers compensation but are covered under a accident and sickness policy.
Richard I tend to agree with what you have said. From your understanding why are these benefits only available to ordained clergy and not to stipendiary lay workers who are mostly paid less than a minister is?
On the initial topic of FEE-HELP and whether it should be repaid, it is worth noting who has benefited from FEE-HELP.
Remember that FEE-HELP is available to all private colleges, and while theological colleges make up a big subset they are not the only group ‘benefiting’. I am also sure that the government will continue to monitor the returns and will make changes if they belive them necessary.
Moore College entered the FEE-HELP a few years ago knowing most of the implications. (Almost every other thological college I know is also in the system). One thing it allowed them to do was charge more in fees - partly to recoup the administrative costs but also to cover the real costs of their courses. Before this point the fees were kept lower by fundraising and diocesan grants. Before FEE-HELP there was also a substantial diocesan bursary to candidates which is now paid in other ways (book allowance?) and used for other things. So the beneficiaries are Moore College and the diocese - ie. the churches.
Of course the students benefit, but it is arguable that the cost of living has gone up significantly and they still have to live on negligible income for three or four years. And everyone pays a bit more to provide scholarships for international students.
I started an MA under the old system. Within three years the fees had more than doubled. It is unrealistic that anyone will attempt to study without FEE-HELP when it is there on offer (although we used to manage somehow).
FEE-HELP is a government loan system. The question is whether clergy should repay their loans whether or not the government expects them to. It is fair enough to ask whether the government should change the rules (I bet some non-Christians / anti-Christians think so). But can we wind the clock back? Who will pay? (The students would have to pay, of course).
The other question is whether clergy should repay FEE-HELP even when they don’t have to. Associated with this is the question of what are clergy paid. I wonder if John is suggeting that the government should count all clergy allowances and ‘Fringe Benefits’ in determining level at which to pay. Even still he makes some ‘interesting’ assumptions about what these might be worth.
It is worth saying that the minimum stipend for ‘ministers’ (ie. incumbents) in Sydney diocese is set at 80% of Average Weekly Earnings (AWE - NSW Male Ordinary Time Earnings) as published by the ABS for the previous year. The idea behind this is that it will move in line with what happens to average people in the state. For example recent annual increases are quite comparable with increases in teachers’ salaries. Assistant ministers usually get paid less (ie. 85-95% of ministers). While this is a minimum figure and increases are recommended for certain circumstances I believe it is pretty much what is paid - certainly in smaller churches.
On the question of personal benefit from provided housing it is important to consider a few issues. First is that ministers don’t usually have a choice of where they live. I think it is a good idea that ministers live close to their church and among the people they minister to. This means a wide variety of accomodation. I know that a very different value could be put on a provided house at Neutral Bay or Seven Hills or Minto. But a house is still a house, and a ministers house is (or should be) a tool they use in their ministry.
Please also note that a minister provided with a house isn’t buying their own home. Some people see this as a cost of ministry. While some suggest you are better off being a long-term renter and investing the money (on the stock-market?), you have to have the income to invest! Nonetheless, most people still believe owning your own home is a really good idea.
It is worth considering the situation most ministers will be in at the compulsory retirement age (for incumbents) of 65. Most ministers won’t own a home, but will probably have a big Superannuation payout. On recent estimates - for a minister who served 35 years in ordained ministry - that would be about $350,000 in 2006 dollars. That is considered about enough to have an income stream OR to buy a small home. Personally I’m not looking forward to living off the pension ... perhaps the best option will be to keep working.
I’m not arguing that we must completely discount the beneficial value of provided housing, but to suggest it is anywhere in the vicinity of $30,000 p.a. is just naive. I think that even $15,000 is overstating the mark.
Of course the above comments don’t apply where the church is paying a housing benefit (ie. direct to a mortgage). Some churches do this because it can be significantly cheaper than paying rent. But it is still pretty rare, and usually only happens long term in wealthier suburbs. In such a case payment of $20,000 is worth at least $26,000
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