If you get paid for your volunteer work, you pay tax on this money. School trustees can earn a limited amount before paying tax.
If you get reimbursed for expenses you may not have to pay tax.
Who is a volunteer
A volunteer is someone who freely undertakes activity in New Zealand:
- that is chosen either by them or a group they are a member of
- that provides a benefit to a community or someone else
- there is no intention for their own financial gain.
Getting paid
You might get paid for the volunteer work you do. These payments are called honoraria.
The organisation will deduct tax from your honoraria before it pays you. They are treated as schedular payments for tax purposes.
In some circumstances when an employer pays a volunteer, the volunteer may be considered an employee for tax purposes. This does not include honoraria or reimbursements for expenses.
What you need to do
What you need to do depends on if you are considered an employee for tax purposes.
- If you're considered an employee, the organisation will deduct PAYE (pay as you earn) tax before it pays you. Before your first pay, give the organisation your IRD number and a completed Tax code declaration - IR330 form.
- If you're not considered an employee, any income (honoraria) you get will be treated as schedular payments. The organisation will deduct tax before it pays you. Before your first pay, give the organisation your IRD number and a completed Tax rate notification for contractors - IR330C form.
Getting reimbursed
Sometimes you need to spend your own money to do your volunteer work or to travel to or from the place you volunteer at.
You do not need to pay tax on money the organisation reimburses you to cover your expenses if your expenses are either:
- actual expenses
- a reasonable estimate of the likely expense.
Where a payment exceeds the actual cost incurred, the excess will be treated as honoraria.
Combined payment
If you get a payment that is part honoraria and part reimbursement it needs to be clear which amount is which, otherwise the whole payment will be taxed.
School trustees
If you're a school trustee you start paying tax once your payments exceed these limits:
- $75 per meeting for a chairperson (up to $825 per year)
- $55 per meeting for a board member (up to $605 per year).
Sometimes a school trustee gets reimbursed more than their regular honoraria payment. In this case the regular honoraria is reduced by the amount of the additional payment.