Accounting for allowances and benefits for staff: Special benefits
Volunteers may be either:
- reimbursed for any expenses they have from their voluntary activities, or
- receive an honorarium for their services.
Definition of volunteer
For these payments, a volunteer is defined as a person who freely undertakes an activity in New Zealand:
- that is chosen either by themselves or by a group they are a member of, and
- that provides a benefit to a community or another person, and
- there is no purpose or intention of private financial profit for the person.
Volunteers often incur expenditure associated with their voluntary activities. This could be from the activity itself or their travel to or from the activity.
Reimbursement payments are treated as tax-exempt income for the individual if they are based on:
- actual expenditure, or
- a reasonable estimate of the likely cost, where an organisation:
- reimburses for the expense before the activity, or
- when the actual expenditure can't be determined and the reimbursement is based on a reasonable estimate of the likely cost.
- Honoraria are payments made for services provided where no fixed payment would normally be made. They are treated as schedular payments for tax purposes.
If you are paying honoraria to:
- an employee, use the PAYE calculator to work out the amount of tax.
- someone who is not an employee, the payment is taxed at a flat rate. Find out more about taxing activities called schedular payments.
Part-reimbursement and part-honoraria payments
If the payment is partly honoraria and partly reimbursement of expenses, providing the portions of the payment can be clearly identified and recorded, the honoraria will be taxable and the reimbursement will be tax-exempt income.
If there is no distinction between the honoraria and the reimbursement the entire payment is treated as honoraria and taxed as a schedular payment.
Payments to school trustees
Part of any honoraria paid to school trustees for attending board meetings is treated as reimbursement of expenditure and is not subject to withholding tax as follows:
- for the chairperson, the first $75 per board meeting (up to a maximum of $825 a year)
- for any other board member, the first $55 per board meeting (up to a maximum of $605 a year).
If a board member received additional reimbursement for expenditure over and above their normal honorarium, the reimbursement of expenditure for the honorarium should be reduced by the amount of additional reimbursement received.
Date published: 06 Oct 2009