This article was last verified in July 2026. Land tax exemption rules and insurance requirements can change. Check the current position with your state revenue office and your church insurer before you commit to a hire arrangement.
Many small Australian churches hire their building to community groups, local organisations, or regular users during the week. The compliance requirements apply regardless of who the hirer is or how informal the arrangement looks. This article covers what needs to be in place: charity and tax status, land tax exemption conditions, and three practical steps before any hirer turns up.
Does hiring out the building affect our charity or tax status?
Hire income does not threaten a church's registration as a charity with the Australian Charities and Not-for-profits Commission (ACNC), provided that income is applied to the church's charitable purposes. A charity may carry out income-generating activities alongside its primary purpose. There is no published percentage threshold limiting how much of a church's income can come from hire. The key test is how the income is used. The ACNC's guidance on commercial activities is at acnc.gov.au.
For goods and services tax (GST): most small churches sit below the $150,000 non-profit registration threshold and have no GST obligations on hire income. If the church is GST-registered, community-rate hire is likely GST-free under the non-commercial supply concession, provided the fee is less than 50% of the market value. Full market-rate hire is a taxable supply. Confirm with your accountant if the church is registered.
One note on Basic Religious Charity (BRC) status: hire income does not threaten BRC eligibility, but incorporation removes it regardless of income type or amount. Check the church's ACNC registration type if BRC status is relevant.
Land tax: when the exemption is at risk
Religious and charitable land tax exemptions exist in every Australian state. The Northern Territory has no land tax. Across all states, the exemption is conditional on the land being used for the religious or charitable purpose, with income applied to those purposes.
The distinction that determines risk: hire to community groups, not-for-profits, and charitable organisations (playgroups, AA meetings, local council programmes) is generally consistent with the exemption. Hire to commercial entities, whether a business, a commercial event operator, or a commercial fitness studio, risks reducing or removing it.
Victoria applies the most restrictive test. Since 2021, the Victorian Land Tax Act requires land to be "used and occupied exclusively" for charitable purposes, not merely "used." State Revenue Office Ruling LTA-009v2, updated in February 2025, sets out how this test applies to facilities shared with third-party users. Victorian churches with regular hire arrangements should notify the State Revenue Office and, where any hire is to a commercial user, seek specific advice before proceeding.
The Australian Capital Territory is different again. The religious land tax exemption there covers residential land used to house a member of a religious institution performing their duties. General church property is not broadly exempt in the ACT. ACT churches should not assume the exemption applies to their hall or meeting rooms.
For all other states, community hire is generally compatible with the exemption, but the church should confirm with its state revenue office if uncertain about a particular arrangement.
The practical structural protection across all jurisdictions: structure every hire as a licence, not a lease. A licence grants permission to use the premises for a specific purpose and time without granting exclusive possession. The church retains the right of entry, can use the space at other times, and is not creating tenancy rights. Where a single group begins to occupy a defined space continuously with exclusive access, the arrangement may have drifted into a lease, and with it, both tenancy obligations and land tax complications.
What needs to be in place before the hirer turns up
Three things. These apply to every hire arrangement, however informal or community-minded.
A written licence agreement. The six core elements are: the identity of the hirer (an incorporated body or a named individual), the permitted use and what is not permitted, specific dates and times, cleaning and pack-up obligations, what happens if damage occurs, and written confirmation of the hirer's insurance. The agreement should also cover key and access arrangements, cancellation terms, payment terms, a requirement that portable electrical equipment be tested and tagged, waste removal responsibility, and any specific prohibited activities. Justice Connect, at justiceconnect.org.au, provides free not-for-profit law resources including contract guidance and agreement templates. Most denominations also have a property or finance team that can supply a standard template for their tradition.
Written confirmation of the hirer's public liability insurance. The hire agreement should require the hirer to hold current public liability insurance covering their activities on the premises and to provide written evidence of it before the hire begins. The church's own policy covers its activities, not the hirer's. A minimum of $10 million coverage is the practical standard across Australian church insurers; some recommend $20 million for larger events or higher-risk activities. Check what your own insurer requires. Ansvar Insurance publishes specific guidance for Australian churches on hire arrangements and insurance obligations, available at ansvar.com.au.
A documented building safety check. Under the Work Health and Safety Act 2011 (Cth) and equivalent Western Australian legislation, a church that allows third parties onto its premises is a person conducting a business or undertaking (PCBU) with a duty to maintain a safe physical environment for all persons there. That duty covers the building's condition, emergency exits, and electrical safety, not the hirer's activities once inside. A periodic written record of any known hazards, communicated to hirers at the time of booking, is the practical response.
For the broader work health and safety obligations that apply to a church as an organisation, Church Support Australia's article on church safety covers the main framework.