It's tax time again. In some ways filling out your tax return is a rewarding experience. It brings a vague sense of good citizenship and (much more importantly), often a sweet refund. It is however an undeniable pain.

Getting all your group certificates together, remembering your various identity numbers, realising e-tax won't work on your computer, finding a form, losing the form, filling out a new form, remembering to post the form - it can all get quite complicated. And this is just for an individual tax return - and one that isn't dealing with particularly large numbers, either.

Imagine how complex the process must be for professional tax evaders - sorry, 'legal tax minimisers' - as many of Australia's super-rich appear to be. And how much more complex still it must be for large corporations, most of which are pretty focused on hanging on to as much as possible.

There are some large organisations, however, for whom 30 June is just another day. These are, of course, churches.

Religious organisations are exempt from income, payroll and land tax as a direct result of their status as 'believers in a supernatural being, thing or principle', using the tax office's definition. There are over 17,000 religious organisations recognised by the ATO; in 2006 they cost state, local and federal governments over $500 million in lost revenue.

Religion's tax-exempt status has come under fire recently in the Federal parliament. South Australian Senator Nick Xenophon is proposing an amendment to the tax laws that would require religious and charitable organisations to pass a 'public benefit test' - and the benefit must extend to the general public, not just members of the organisation.

It's not an enormously high bar - certainly not for legitimate charities. Basically, the amendment removes the presumption that the promotion of religion is in and of itself a public good. Sadly Xenophon seems to have abandoned his usual pun-based approach to campaigning in this crusade against Scientology - a missed opportunity to encourage Australia to 'practice safe sects'.

A lot of the debate around this amendment has focused on Scientology, as Xenophon intended. And there's no reason it shouldn't. Scientology is both entertainingly crazy on the surface and enormously creepy on closer examination. It provides none of the charitable benefits generally associated with religion - aside from personality tests that seem to always come up with the answer 'your horrible personality could be improved by Scientology' - and is dogged with accusations of separating families and engaging in cult-like persecutions of those trying to leave.

But Scientology is hardly the only religion benefiting from the tax exemption. Take Hillsong, a mega-church known above all for its high-tithing, money-focused ways. The church spends only a fraction of its multi-million dollar income on its charitable arm and provides little in the way of pastoral care - Pastor Brian Houston, who donates his salary back to the church (coincidentally avoiding income tax), previously owned a lovely holiday home in the Hawkesbury, but it was sold to a Hillsong-related entity of which Houston is a director. Where Scientology sells dubious courses, Hillsong - and most other churches - base a large portion of their income on tax-free tithes.

Although, due to its broad connection with Christianity, Hillsong is less immediately confronting than Scientology. Similarly, is Scientology's prohibition on psychiatric care any more irrational and irresponsible than Jehovah's Witness views on blood transfusions, or the Christian Scientist approach to medicine generally? Auditing, thetans and aliens are strange things to believe in, but arguably so is a large invisible man in the sky who is always watching you - no, not Santa. And let's not forget the 'elaborate fancy dress party' vibe that is integral to the Catholic Church.

Freedom of religion means that people are free to believe in any or all of these things, and participate in these organisations as they choose. The real question is whether ordinary taxpayers should be required to subsidise this participation without any guarantee of a broader public benefit, which is the practical effect of the tax exemption. Xenophon's public benefit test will mean that religious organisations will be assessed on the merits of the tangible benefits they provide - not a huge hurdle for the majority of churches.

Further, a public benefit test means that when the government is debating whether Scientology or Seventh Day Adventists should receive a tax exemption, the question will no longer be 'is it a religion'. The idea of a government deciding what is and isn't a valid religion seems inconsistent with the separation of church and state. Under this system, I would still be free to travel the country spreading the light of the Church of the Flying Spaghetti Monster - I just have to pay tax on any money I con out of people on the way, which seems fair.

The amendment will also make sure the separation of church and state cuts both ways. Some churches like to have their cake and eat it too - an example is the Exclusive Bretheren, a sect that has gone as far as to fund political advertisements, and is widely held to have exercised an enormous degree of influence over the Howard government. They seem strangely opinionated for a group that doesn't allow its members to vote. This kind of political activism from a religious group is not the kind of thing the public purse should be subsidising.

Xenophon's amendment may have been intended as a back-door route to getting at Scientology after his calls for a public inquiry failed, but its broader implications are of potentially great benefit to Australian society. With an atheist PM and all-time low numbers of Australians active in religion, it seems that this is an appropriate time to address a lingering inconsistency in our tax laws.

All hail the Spaghetti Monster!

Lucy Saunders is an Arts/Law student at the University of Sydney.

*Editors note: This article originally stated Pastor Brian Houston owned a holiday home in the Hawkesbury, but has since been updated.