Volunteers and Taxation

Understand how honorariums and reimbursements apply to PAYG withholdings for volunteers and the organisations employing them.

Honorariums, reimbursements and PAYG withholdings

This document sets out the views of the Commissioner of Taxation on how honorariums and reimbursements apply to PAYG withholdings for volunteers and the organisations employing them.

Disclaimer

The advice given is not legally binding on the Commissioner of Taxation. Although this opinion is not legally binding on the Commissioner, it is Tax Office policy to stand by the advice given unless there is a change in the law, the factual situation changes, or the opinion is shown to be incorrect following a decision of a court or the Administrative Appeals Tribunal.

The advice is given subject to this necessary qualification.

Honorariums

The Australian Taxation Office (ATO) guidelines on 'True honorariums' are as follows. 'True honorariums' are not subject to PAYG withholding or instalment. The following factors indicate a 'true honorarium':

• The payment is received for personal reasons.
• The payment has no connection to the recipient's income-producing activities or services rendered.
• The payment is not received as remuneration or as a consequence of employment.
• The payment is not relied upon or expected by the recipient for day-to-day living.
• The payment is not legally required or expected.
• There is no obligation on the part of the payer to make the payment.
• The payment is a token amount compared to the services provided or expenses incurred by the recipient.

Reimbursements

A payment will be a reimbursement where the worker is being compensated exactly for an actual expense already incurred.

Reimbursements are not subject to PAYG withholding where they are made to a payee as an employee, through a labour hire arrangement or to a volunteer who is not obtaining the reimbursement in the course or furtherance of his/her enterprise.

A payment summary is not necessary where a reimbursement to a volunteer has not been subject to PAYG withholding.

Small Business Law, Australian Taxation Office, November 2002.