HONORARIUM & OTHER PAYMENTS TO VOLUNTEERS
AND CLERGY
A
PAYMENTS BY A PARISH TO A LOCUM FOR TAKING SERVICES
Assumption: The locum is a religious practitioner for the purposes of the Income Tax law.
(Please contact the General Manager’s Office if you need further clarification of
this definition or refer to https://www.ato.gov.au/Business/PAYG-withholding/Indetail/Specialised-industry-topics/Withholding-for-religiouspractitioners/?page=2
1.
Payments in cash
PAYG withholding is required as follows:1
If a religious practitioner is
engaged to provide locum
services and the period is:(a) Two days or less in a quarter
(b) Two days initially and is then
engaged for a further period in the
same quarter
(c)
Continuous for more than two days in
the quarter
Then the religious institution must
withhold:is nil
from the payment for the initial two days
is nil
Subsequent payments will be subject to
withholding according to the tax tables at
https://www.ato.gov.au/Rates/Tax-tables/
an amount from the whole payment
according to the PAYG withholding tax
tables

Payment summary must be issued and include the payment even if there was a
nil withholding
Example
The minister of a church in a small country town is on eight weeks annual leave from
1 October 2014. The church engages three different religious practitioners to provide
locum services as follows:
John is engaged to provide services for the first two Sundays
Hilary is engages to provide services for the next two Sundays
Luke is engaged to provide services for the remaining four Sundays
The church will not be required to withhold any amounts from payments made to
John or Hilary, as the periods of engagement are not greater than two days in the
quarter.
Payments made to Luke will be subject to withholding. The church will be required to
issue payment summaries to John, Hilary and Luke, showing the total amount of the
payment and the amount withheld, including a nil amount.
2.
Payments in Benefit Account
In the Diocesan Handbook. E1 Stipends (section E1.11.) up to only 30% of a stipend
can be packaged as a fringe benefit in the case of clergy who undertake “regular
parish locum work”.
However the term “regular” is not defined in the current Handbook. Accordingly, in line
with the principle of thresholds outlined by the ATO, it is proposed the following apply
and the Diocesan Handbook be amended accordingly.
2
(a)
(b)
(c)

Engagement
First two days or less per quarter
performed by the locum at any
Diocesan Parish or Agency during
the quarter
All subsequent days in a quarter
Continuous for more than two days in
the quarter
Benefit Account
100% to the Clergy Benefit Account
30% to be Clergy Benefit Account
(balance to be subject to PAYG and
reporting on payment summary)
30% to be Clergy Benefit Account
(balance to be subject to PAYG and
reporting on payment summary)
A quarter is a period of three months ending 31 March, 30 June, 30 September or
31 December
Therefore in answer to the specific examples (page 2, dot point 1):
Parish to issue Payment Summary in respect of all non-Benefit account
payments made, other than those described in 1(a) above.

Benefit components are limited to being 30% as set out in 2(b), and 2(c), or 100% as set out in 2(a).

Benefit components are not reportable by the Parish.

Clergy are responsible for the declaration of non-Benefit payments in their tax
returns.
B
PAYMENTS TO CLERGY FOR WEDDINGS AND FUNERALS
Assumption: The locum is a religious practitioner for the purposes of the Income Tax law.
(Please contact the General Manager’s Office if you need further clarification
of this definition or refer to https://www.ato.gov.au/Business/PAYGwithholding/In-detail/Specialised-industry-topics/Withholding-for-religiouspractitioners/?page=2
1.
Payments made by the Parish for weddings and funerals
These would be treated as salary and subject to ordinary withholding and benefit
component limitation rules (refer Section A)
2.
Payments in cash from third party for services (excluding chaplaincy and
counselling services)
Examples of payments made by a third party for services other than chaplaincy and
counselling services include:
Payments made by funeral director for the provision of funeral services

Payments made by a wedding broker for a wedding
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For those payments, the Parish is not required / responsible for including these
amounts on withholding statements nor required to record them from a tax point of
view.
However, the payments do form part of the assessable income of the clergy recipient
and should be included in their personal tax return.
3.
Payments in cash from a third party for chaplaincy and counselling services (eg.
At weddings and funerals)
Any payments made by a third party that total more than $100 paid weekly (from the
same payee) for chaplaincy or counselling type services are potentially subject to
“ABN withholding” by the entity, However, the onus is on the payer (third party) to
comply, not the clergy recipient of the payment. The requirements are summarised
under the Statement of Supplier in Section D below.
However the payments do form part of the assessable income of the clergy and should
be included in their personal tax return.
C
1.
NON CLERGY “HONORARIUM” AND “OUT OF POCKET” PAYMENTS
What is an “honorarium”?
The ATO view is that the amount of an honorarium is not a conclusive factor in
deciding whether it is assessable income to the recipient. The more important factor is
the occupation of the recipient in relation to the nature of the honorarium. In addition,
the nature of the payment is important.
If a payment to an individual is merely or specifically aligned with expected “out of
pockets”, then it is likely to be a non-assessable honorarium.
2.
Payments to Organist (hobby only, not a professional organist)
Payments made to a Parish Organist who is not a professional organist or musician
would generally be a genuine honoraria for voluntary services rendered and not
assessable income as the payments are not relied upon nor have a connection to the
person’s income producing activities.
Where the payment displays the following characteristics it will be an non-assessable
honorarium:
The payment has no connection to the recipient’s income producing activities or
services.

The payment is not received as remuneration or as a consequence of
employment.

The payment is not relied on 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.
Further, using a professional fee comparison as an example, a fee paid of $50 per
service is not in line with commercial rates of approximately $150 - $250 per session.
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3.
Payments to Sound and Video Operators (hobby only, not connected to a
professional occupation)
Similarly payments made to a Sound and Video Operator would be genuine honoraria
for voluntary services rendered and not assessable income where the payments are
not relied upon nor have a connection to the person’s income producing activities.
The payments to a Sound and Video Operator would be an honoraria where they
display the characteristics described in C(2) above.
4.
Payments to Parish Musician (where activity is connected to professional
occupation)
As set out above, a payment to a Parish Musician will not be assessable income
where:
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.
Where a Parish musician is a professional musician, it is expected that the payment
would be assessable to the Musician (albeit subject to travel and other expenses being
deducted).
However the assessability in the hands of the Musician is a concern for the Musician.
There would generally not be an employee/employer relationship. In order to ensure
withholding is not required, a Statement of Supplier should be obtained from the Parish
Musician (and any other persons performing services on a regular basis even if the
payments are genuine honorariums).
5.
Reimbursements
The ATO states that 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 the expenses
actually incurred

The payment is not for a supply made in the course of an “enterprise” (a
business or income activity) of the volunteer.
Volunteer Australia suggest that organisations should require volunteers to vouch
expense with receipts. A draft expense vouching template is attached.
Suggested rates for car travel reimbursement for volunteers would be those set by the
Taxation Office, refer https://www.ato.gov.au/Individuals/Tax-return/2014/Taxreturn/Deduction-questions-D1-D10/D2---Work-related-travel-expenses/.
For the June 2014/15 year, they are:Rates per business kilometer
Engine capacity
Ordinary engine
1.6 litre (1600cc) or less
1.601 – 2.6 litre (1601 – 2600cc)
2601 litre (2601cc) and over
Rotary engine
0.8 litre (800cc) or less
0.801 – 1.3 litre (801 – 1300cc)
1301 litre (1301cc) and over
Cents per
kilometre
65 cents
76 cents
77 cents
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D
1.
STATEMENT BY A SUPPLIER
Statement by a Supplier not quoting an ABN
When a Parish makes payments to suppliers for goods or services to the business, those
suppliers generally need to quote an Australian business number (ABN). They can quote
their ABN on an invoice or some other document that relates to the goods and services
they provide. If a supplier does not provide its ABN, the payer may need to withhold an
amount from the payment for that supply. This is referred to as 'no ABN withholding'.
Certain suppliers are not required to quote an ABN to a payer. In these cases, the
suppliers can use a Statement by a Supplier form to justify and document that
withholding is not required to be deducted from the payment.
Having all recipients of honorarium payments provide a Statement by Supplier on the
first payment instance is the best evidence that the Parish has sought to ensure the
payment is correctly treated.
2.
Who can complete a Statement by a Supplier form?
An individual or a business that supplies goods or services can only complete a Statement
by a supplier form, if one of the following applies:
(a) they are not carrying on an enterprise in Australia
(b) they are an individual under 18 years and the payment does not exceed $350 per
week
(c)
the payment does not exceed $75, excluding any goods and services tax (GST)
(d) the supply that the payment relates to is wholly input taxed
(e) they are an individual and a written statement is provided to the payer to the effect that
the supply is either
o
made in the course or furtherance of an activity done as a private recreational
pursuit or hobby
o
wholly of a private or domestic nature
(f)
they are an individual or a partnership without a reasonable expectation of profit or
gain
(g) they are not entitled to an ABN as you are not carrying on an enterprise in Australia
(h) the whole of the payment is exempt income.
3.
Who can not complete a Statement by a Supplier form?
Suppliers cannot use this form if any of the following apply:
(a) they are receiving payments for the supply as an employee
(b) their activity is not wholly of a private or domestic nature
(c)
they are receiving payments for the supply as a company director or office holder
(d) they are receiving payments for the supply under a labour hire arrangement or
specified payment
(e) they are receiving payments for the supply as a religious practitioner
(f)
they are entitled to an ABN for the relevant activity
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E
USEFUL WEBSITE LINKS
Volunteering Australia – fact sheet on volunteers & tax
http://www.volunteeringaustralia.org/wpcontent/files_mf/1377053078VAManagersvolunteersandtaxinformationsheet.pdf
Australian Tax Office - Payments to Volunteers
https://www.ato.gov.au/Non-profit/Employees,-volunteers-and-other-workers/Indetail/Employees,-volunteers---other-workers/Volunteers/Volunteers-and-tax/
Statement by a Supplier
https://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/BUS38509n3346_5_2012.pdf
Australian Tax Office - Car travel reimbursement rates
https://www.ato.gov.au/Individuals/Tax-return/2014/Tax-return/Deduction-questions-D1D10/D2---Work-related-travel-expenses/.
VOLUNTEER EXPENSE VOUCHING FORM
Parish & Church Name
Volunteer Name
Position / Activity
Date purchased
Cost $
Retail outlet
Description of item
Invoice attached?
Yes / No
Please provide a tax invoice if possible to assist the parish in obtaining the
GST credit.
Please remit reimbursement to:By cheque
By Direct Credit
 Payable to:
 BSB:
Account number:
Account Name
Volunteer Name
Signature
Date
Parish approvals
Name
Name
Signature
Signature
Date
Date
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