Volunteers and Tax

If you are asked be asked questions about your volunteers and tax regarding whether payments to them are part of their assessable income. This article will help you understand how honorariums and reimbursements apply for volunteers and the organisations employing them.

Honorariums, reimbursements and allowancesThis page 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.

Honorariums

The Australian Taxation Office (ATO) guidelines on honorariums are as follows.

What is an honorarium?

An honorarium may be paid in money or as property, and can be described as:

• an honorary reward for voluntary services
• a fee for professional services voluntarily rendered.

Is an honorarium assessable income? Whether an honorarium is assessable income in the hands of a volunteer depends on the nature of the payment and the recipient’s circumstances. Honorary rewards for voluntary services are not assessable as income and related expenses are not deductible.

How much is too much for an honorarium?

The amount of an honorarium is not a conclusive factor in deciding whether it is assessable income. Considering both the payment and recipient, we must review the details to determine how the honorarium is taxed. We should also consider its tax implications.

Reimbursements

What is a reimbursement?

A reimbursement is considered a precise compensation, in part or full, for an expense already incurred, for tax purposes. This holds true even if the expense has not yet been paid. A payment is more likely to be a reimbursement where the recipient is required to substantiate expenses and/or refund unexpended amounts. Broadly speaking, the payer considers the expense to be their own and the recipient incurs the expenditure on behalf of the payer. The recipient may be reimbursed for all or part of the expense.

Is a reimbursement assessable income?

If an organisation reimburses a volunteer for using a personal asset or incurring expenses on its behalf, the reimbursement will not be assessable income of the volunteer, provided:

• the payment does no more than reimburse the volunteer for expenses actually incurred
• the payment is not for a supply made in the course of an enterprise of the volunteer.

Allowances

What is an allowance?

A payment is an allowance when it is a definite, predetermined amount to cover an estimated expense. It is paid even if the recipient does not spend the full amount.

Is an allowance assessable income? Whether an allowance is assessable income of the volunteer depends on the facts surrounding the payment and the relationship between the individual and the organisation.

If a volunteer receives an allowance with no regard to actual expenses and there is no requirement to repay unspent monies, the allowance may be treated as assessable income.

For more information please visit the Australian Taxation Office Website