Private ruling: Withholding
Date of advice: 30 September 2016
Published: November 2016
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Are you required to withhold an amount from payments made to volunteers? | A1: No. | Q2: Are you required to withhold an amount from payments made to religious practitioners where they provide locum services for two or more days in a quarter? | A2: Yes.

Relevant facts and circumstances: You engage persons who are not under obligation, ongoing contract or employment to your charge. You make payments to them for their help and a payment as a travel rate which is compensation for the cost of fuel, wear and tear of their personal vehicle for assisting you.

Relevant legislative provisions: Taxation Administration Act 1953 Section 12-35 | Taxation Administration Act 1953 Section 12-47 | Income Tax Assessment Act 1997 subsection 995-1(1 )

Reasons for decision: Summary: Subdivision 12-B of Sch 1 to the Taxation Administration Act 1953 (TAA) discusses payments for work and services and pay as you go (PAYG) withholding requirements. Specifically, section 12-35 of Schedule 1 of the TAA outlines payments to employees and states an entity must withhold an amount from salary, wages, commission, bonuses or allowances it pays to an individual as an employee (whether of that or another entity). Paragraph 14 of Taxation Ruling TR 2005/16 states for the provision to apply, there must be an employee, a payment of salary, wages etc. to an employee as a consequence of his/her employment and finally, the payment must be made by the entity. In this case the Commissioner accepts that the persons that assist that are not religious practitioners are not employees as the activities are a social or personal pursuit of a non-commercial nature and constitute a pastime or hobby, with the payments received being from the pursuit of that pastime or hobby and not for being an employee. Consequently, there is no requirement to withhold from those payments under the PAYG provisions. Section 12-47 of Schedule 1 of the TAA requires entities to withhold from payments made to religious practitioners for an activity if: (1) the activity is done in pursuit of a vocation as a religious practitioner; (2) the activity is done as a member of a religious institution; and (3) payment is made by the entity in the course of an enterprise that the entity carries on. From 1 July 2002, payments to a religious practitioner for activities done in the pursuit of a vocation as a religious practitioner and as a member of a religious institution are subject to PAYG withholding. This only applies if the entity making the payment does so in the course or furtherance of an enterprise. For these purposes, "religious practitioner'' is defined in the Income Tax Assessment Act 1997 (ITAA 1997) under subsection 995-1(1 ) to mean: • a minister of religion; • a student at an institution who is undertaking a course of instruction in the duties of a minister of religion; • a full-time member of a religious order; or • a student at a college conducted solely for training persons to become members of religious orders. ``Religious institution'' is not specifically defined for the purposes of section 12-47 of the TAA . The term is, however, discussed in Taxation Ruling TR 92/17 for the purposes of ITAA 1997 and the Fringe Benefits Tax Assessment Act 1986 . The ruling states that a body is a religious institution if its objects and activities reflect its character as a body instituted for the promotion of some religious object, and the beliefs and practices of the members of that body constitute a religion. For payments made by a religious institution to a religious practitioner for providing locum services for a period of less than two days in a quarter, the amount you are required to withhold is nil. You must still issue payment summaries for these payments and include details of the payment and any amounts withheld, including a nil amount, in your PAYG withholding payment summary annual report. One day is regarded as any amount of time in any given calendar day. Retired religious practitioners are still considered to meet the definition of a religious practitioner. In this case for activities conducted by religious practitioners, including retired practitioners and practitioners employed or under contract elsewhere, the payments will be subject to withholding and you are required to provide payment summaries. However, where a religious practitioner is engaged to provide locum services for two days or less in a quarter the amount you are required to withhold is nil although a payment summary must still be issued. Where a religious practitioner is engaged for more than two days in a quarter, then you are required to withhold the relevant amount of PAYG.