The Tax Office Looks at Volunteers

The Australian Tax Office has released an overview that explains the tax treatment of transactions that commonly occur between Not for Profit organisations and their volunteers.

The ATO looks at common payments such as honoraria, allowances and reimbursements made by organisations to their volunteers and explains the tax treatment.

It also provides guidance for Not for Profits on Goods and Services Tax (GST), Fringe benefits tax (FBT) and Pay As You Go (PAYG) withholding obligations that may arise on transactions involving volunteers.

There is no legal definition of ‘volunteer’ for tax purposes and the ATO relies on the dictionary explanation of a volunteer as being someone who enters into any service of their own free will, or who offers to perform a service or undertaking.

But making the distinction between volunteer and employee is necessary to assess the tax implications.

The ATO says that as a general rule
1. Volunteers do not have to pay tax on payments or benefits they receive in their capacity as volunteers and
2. Not for Profit organisations are not liable for PAYG and FBT on payments they make or benefits they provide to volunteers.

But there are some exceptions that are explained in the Tax Guide.

If you would like an electronic version of the overview PDF format just send us an email with “ATO Volunteer Guide ” in the subject line to probono@probonoaustralia.com.au.