Taxing of allowances paid to religious practitioners

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The pay as you go (PAYG) withholding system requires payers to withhold an amount from certain payments made to religious practitioners. This occurs where:

a. the activity, or series of activities, is performed by the religious practitioner in pursuit of his or her vocation as a religious practitioner, and

b. the activity, or series of activities, is performed by the religious practitioner as a member of a religious institution, and

c. payment is made by the entity in the course or furtherance of an enterprise the entity carries on.

This document outlines the correct withholding treatment of allowances paid to religious practitioners and only applies to payers who make payments to individual workers who are religious practitioners. It does not apply to payments to payees who are company directors or office holders.

For information on the correct withholding treatment of allowances paid to employees, company directors or office holders, refer to Withholding from allowances.