If you serve in a religious organisation and they do not pay you for your work, any board or lodging and other basic personal necessities (such as food, clothing and heating) you get may be exempt income.
Exemption requirements
This exemption will apply to you if you:
- are a member of a religious society or order
- get only basic board, lodging and/or personal necessities
- are not paid and do not receive a reward.
You must meet all 3 requirements.
Here are more details.
You are a member of a religious society or order
You must have evidence that you have joined or are a part of a religious society or order.
Your service to the religious society or order can be helping or doing work of any kind. It must be unpaid (other than the amount for board, lodging and/or basic personal necessities).
The service does not have to be full-time, but it must be the only paid or unpaid work you do.
It does not matter whether you are married, and you do not need to have taken a vow of poverty.
You only receive basic board, lodging and/or personal necessities
The religious organisation can:
- directly provide you with board, lodging, and/or basic personal necessities, or
- pay or reimburse an amount to cover these expenses.
The accommodation or necessities must be basic.
Basic personal necessities include food, clothing, heating, basic travel, toiletries and grooming expenses.
Money for expenses
If you get money to cover these expenses, you must show how the society or order worked out the amount. You must use the money for only board, lodging, and/or basic personal necessities. You cannot use it for general savings.
If you get paid more than the amount of basic accommodation and personal necessities, none of the money is exempt from tax. You cannot divide the money between exempt amounts and taxable amounts.
If you get income from other passive sources, such as trusts or investments, you may still get the tax exemption.
Donating all earnings
If the religious society or order pays you for your service, the exemption will not apply, even if you donate all your earnings to the society.
We will consider the total work or service you do. It cannot be divided between paid and unpaid services.
For example, if you do paid work and unpaid work, and the society or order gives you board and basic personal necessities, the exemption will not apply.
You are not paid and do not receive a reward
If your type of service means the society or order does not pay you and you do not receive a reward, we will consider both:
- the society or order's intention for the service, and
- whether you are paid or rewarded.
We will consider rewards that are unexpected, infrequent, or one-off on a case-by-case basis.
Robert serves the religious society that he is a member of and does unpaid work for 35 hours a week.
The religious society provides Robert with a room for accommodation in shared premises and meals in a communal dining area. It also calculates a $200 monthly payment to cover other basic personal necessities including clothing, grooming, toiletries and health expenses.
The value of accommodation, meals and the monthly payment Robert gets are exempt from tax.
A sponsor of the regional rugby team donates to the religious society free tickets for entry to an upcoming game. The value of each ticket is $200, and the society makes them available to members and volunteers.
Robert chooses to use a voucher one weekend for him and his family. This is an unexpected and one-off reward. It does not change the nature of Robert’s service to the organisation.
The ticket's value is exempt, and his accommodation, food and monthly payment discussed in example 1 is still exempt from tax.
The religious society receives a big donation from a patron, who advises that she intends to provide a similar donation each year.
Together, the society and patron decide that every year half of the donation will be used for specific religious projects, and half will be gifted to all volunteers and unpaid members as thanks for their service.
Robert receives $1,500. As this is a regular payment he will receive each year, and the religious society influenced the decision of where the money should go, this payment affects the nature of Robert’s service.
The tax exemption does not apply to the part of the donation that Robert got. In addition, the exemption requirements are no longer met for the accommodation, meals and payment for basic personal necessities from example 1.