If you serve in a religious organisation and are not paid for your work - any board or lodging and other basic personal necessities (such as food, clothing and heating) you receive may be exempt income.
This exemption will apply to you, if you meet the following criteria:
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 and 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 pay you back an amount to cover these expenses.
- The accommodation or necessities must be basic and not be considered a luxury.
- Basic personal necessities include things like food, clothing, heating, basic travel, toiletries and grooming expenses.
- If you are given money to cover these expenses, you must show how this was calculated. It must be used only for board, lodging, and/or basic personal necessities. It cannot be used for general savings.
- If you are paid more than the amount of basic accommodation and personal necessities, none of the money is exempt from being taxed. 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 be entitled to the tax exemption.
If you are paid by the religious society or order 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 carry out. It cannot be divided between paid and unpaid services.
For example, if you carry out paid work, and also perform unpaid service which you get board and basic personal necessities for, the exemption will not apply.
The nature of the service is that you are not paid and do not receive a reward
We will consider both:
- the society or order's intention for the service, and
- whether you are actually 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 carries out 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 received by Robert are exempt from tax.
A sponsor of the regional rugby team donates to the religious society a number of free tickets for entry to an upcoming game. Each voucher is valued up to $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 would be considered an unexpected and one-off reward, and it would not change the nature of Robert’s service to the organisation.
The value of the voucher would be exempt, and his accommodation, food and monthly payment discussed in example 1 would still be exempt from tax.
The religious society receives a substantial donation from a philanthropist, who advises that she intends to provide a similar donation annually.
Together, the society and philanthropist decide that every year half of the donation is to be used for specific religious projects, and half is to be gifted to all volunteers and unpaid members as thanks for their service.
Robert receives $1,500. As this is a regular payment that will be received every year, and the religious society influenced the decision of where the money should be used, this affects the nature of Robert’s service.
The tax exemption does not apply to Robert’s portion of the donation. In addition, the exemption criteria would no longer be met for the accommodation, meals and payment for basic personal necessities from example 1.