Private ruling: PAYG Withholding – Honorarium payments to genuine volunteers
Date of advice: 18 July 2017
Published: November 2017
Ruling period: Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 July 2016

Ruling: Question and answer | Is the Association required to withhold for Pay As You Go (PAYG) Withholding under Division 12 in Schedule 1 to the Taxation Administration Act 1953 (TAA) for honorarium payments made to Office holder A and Office holder B of the Association? | No. | Genuine volunteer payments are generally not subject to PAYG withholding. | The characteristics of a payment made to a genuine volunteer that is not assessable are listed below: | ● The payment is to meet incurred or anticipated expenses. | ● The payment has no connection to the volunteer’s income-producing activities or services. | ● The payment is not received as remuneration or as a consequence of employment. | ● The payment is not relied upon or expected by the volunteer for day-to-day living. | ● The payment is not legally required or expected. | ● There is no obligation on the part of your organisation to make the payment. | ● The payment is a token amount compared to the services provided or expenses incurred by the volunteer. Whether the payment is token depends on the full facts surrounding the payment and volunteer's circumstances. | Based on the facts provided we consider the payments made to the office holders to be genuine volunteer payments (and also an honorary reward for voluntary services). | Therefore, the payments made to Office holder A and Office holder B are not regarded as assessable income under section 6-5 of the ITAA 1997. | As such the Association is not required to withhold for Pay As You Go (PAYG) Withholding under Division 12 in Schedule 1 to the Taxation Administration Act 1953 (TAA) for honorarium payments made to Office holder A and Office holder B of the Association.

Relevant facts and circumstances: The Association is a Not-for-profit organization which currently has XX members. The Constitution of the Association provides the rules of membership. These rules stipulate that a member must be a registered professional with the appropriate Government Department, and the rules also state that an associate member must be a professional within the same field who has retired from the industry or a person who is interested in the welfare of the Association. The Constitution also stipulates that the Council elected by the members shall itself elect its office holders, and the Council at its first meeting shall appoint the office holders and fix the duties and remuneration of the persons so appointed. The office holder positions are advertised within the members of the association. There is no position description, contract or duties statement for each role. The roles and responsibilities of Office holder A and Office holder B have been documented in detail. The first meeting after the Annual General Meeting (AGM), is where the honorarium payments are discussed and 'set’. These payments are only paid if an executive committee within the Association (comprising of Y members) deem that the services provided by the Office holder A and Office Holder B are worthy of a payment, and the payments will be dependent on the workloads for Office holder A and Office Holder B. The payment could be any determined amount up to a total of the honorarium amount set at the first meeting of the year. The honorarium payments are entirely at the discretion of the Association, with the payments to be made as a reward for each of their efforts, subject to the approval of the executive committee. The Association is not bound to make these payments by any formal contract or agreement and these payments will only be awarded as recognition for the services provided by the Office holder A and Office Holder B. The payments, if received can be made up of regular payments or a one off payment, and the amounts of these payments could vary. Travel expenses are other office expenses that are claimable for members of the Association under the rules of the constitution but these are not incorporated into the payment amounts for the office holders.

Relevant legislative provisions: Tax Administration Act 1953 Section 12-35 of Schedule 1 | Income Tax Assessment Act 1997 Section 6-5