Israel Folau's church under scrutiny with court battle looming

Israel Folau’s expected legal action against Rugby Australia is reportedly being monitored by the Australian Taxation Office.

Folau said he was keeping his legal options open on Monday after opting not to appeal the decision to tear up his multi-million dollar Rugby Australia contract.

RA announced on Monday it would terminate the Wallabies fullback's contract after the 72-hour deadline passed to appeal the sacking decision handed down by a three-person panel following a code of conduct hearing.

"My decision not to commence Rugby Australia's appeal process is in no way an acceptance of the judicial panel's findings," said Folau in a statement.

"I simply do not have confidence in Rugby Australia's ability to treat me fairly or lawfully throughout this process.

"The messages of support from fans, players, former rugby administrators and the public have been humbling.

"I believe I still have a lot of rugby left in me and the potential impact of Rugby Australia's decision on my reputation and my career is substantial.

"Ultimately, I need to do what is best for my family, my teammates and the fans, so I am considering all potential avenues open to me."

That statement is believed to be an indication that he’ll take RA to court, but a new report says Folau’s legal challenge could be hampered by the ATO.

According to the Daily Telegraph, the ATO is monitoring donations to Folau’s church in case they are used to help fund his legal challenge.

It is believed Folau has a number of high-profile supporters who are keen to help with his legal costs.

But according to The Telegraph, the ATO has concerns that his supporters will funnel the money through the church - The Truth Of Jesus Christ Church in Kenthurst - in order to claim tax deductions.

There are no suggestions of illegal activity from Folau or the church, but an ATO spokesperson told The Telegraph: “Endorsed income tax exempt ­organisations are required at all times to comply with their governing rules and apply their income and assets ­solely for the purpose for which they are established.”

Defiant move

Folau had been given until Monday afternoon to appeal his high-level code of conduct breach and sanction over his religiously-motivated but controversial social media posts.

"As Folau has not notified the panel of his intention to appeal, the code of conduct process has now formally concluded," RA said on Monday.

“With the code of conduct matter complete, Folau's employment contract will be terminated."

Last Friday the three-person panel found Folau's contract should be terminated after his Instagram posts, including one proclaiming hell awaits "drunks, homosexuals, adulterers, liars, fornicators, thieves, atheists and idolaters".

That came after Folau had been warned against making such posts before signing his new contract last year. He'd previously posted that hell awaited homosexuals unless they repented.

Rugby Australia CEO Raelene Castle said at the time the decision would have ramifications across the sporting world.

"This is a decision that will change the landscape for sport across Australia and perhaps internationally," she said.

"It will be landmark, it will be important, and it is a big decision.

"He is a very important player in our game and he has been for a long period of time and we wanted to make sure we took the time to get it right."

with AAP