DET 18/02
Issued
28 Sep 2018

Amount of honoraria paid Royal New Zealand Plunket Trust volunteers that shall be regarded as expenditure incurred in production of that payment

This determination applies to honoraria paid by the Royal New Zealand Plunket Trust to volunteers undertaking voluntary activities for Plunket. It applies for the period 1 January 2018 to 31 March 2019. Reimbursement of expenses are exempt from income tax. This includes those in non-cash form, such as petrol vouchers, transport costs incurred in getting to and from the place of volunteering as well as those incurred in the course of volunteering. You can find more information in Tax Information Bulletin Vol 21, No 8, page 119.

Application

All references to legislation are to the Income Tax Act 2007.

This determination is made under section RD 8(3) and shall apply to honoraria paid to the Royal New Zealand Plunket Trust (“Plunket”) volunteers who undertake voluntary activities for Plunket.

This determination may be cited as “Determination 18/02: Determination of expenditure incurred for honoraria payments made by the Royal New Zealand Plunket Trust”.

This determination shall apply for the period 1 January 2018 to 31 March 2019.

For the purposes of section CW 62B, “volunteer” means a person who freely undertakes an activity in New Zealand:

  1. Chosen either by themselves or by a group of which they are a member; and
  2. That provides a benefit to a community or another person; and
  3. For which there is no purpose or intention of private pecuniary profit for the person.

Scope of definition

Honoraria paid to Plunket members come within the definition of “schedular payment” under section RD 8. Schedule 4, Part B requires PAYE to be deducted from honoraria at the rate of 33%.

Under section RD 3(1) a schedular payment is included in the definition of “PAYE income payment”. Consequently, any person who makes a schedular payment must deduct tax from it at the time it is made, unless an exemption applies.

Section CW 62B provides that an amount that is a reimbursement payment to cover expenses incurred by a volunteer when undertaking a voluntary activity, is exempt from income tax.

Section RD 8(3) allows the Commissioner to determine an amount or proportion of any schedular payment that is considered to be expenditure incurred that is exempt from income tax. If the Commissioner has made such a determination, the person making the schedular payment is only required to deduct tax from the amount that exceeds the determined expenditure amount.

Determination

When any Plunket volunteer receives honoraria as reimbursement of expenditure that person had incurred in carrying out Plunket related activities, that payment up to a maximum of $800 per tax year, shall be regarded as expenditure incurred in the production of that payment. However, if the volunteer receives any reimbursement (in addition to honoraria) for expenditure they have incurred, the amount exempted under this determination ($800) shall be reduced by that additional reimbursement.

Rob Wells
Manager, Technical Standards, OCTC
28 September 2018

Examples

Example 1

A Plunket volunteer receives honoraria of $500 in respect of the Plunket related activities carried out during the tax year. No other reimbursement had been paid during the year. The payer does not have to deduct withholding tax because the total payment does not exceed $800.

Example 2

A Plunket volunteer receives a payment of $625 at the end of February. During the tax year, in the preceding May, August and November the volunteer had also received three smaller payment of $100 each as reimbursement of travel expenses incurred for Plunket related activities, making a total of $925 for the year. Because the Plunket volunteer had received reimbursement payments of $300 earlier in the year, only $500 of the honorarium received in February could be regarded as expenditure incurred under this determination. Therefore, tax of $41.25 should be deducted from the balance ($125) of the honorarium.