Payments to your not-for-profit organisation's volunteers are generally not subject to pay as you go (PAYG) withholding.
However, you may be required to withhold from a payment to a volunteer where both of the following applies:
- the payment is for a supply of goods or services made in the course of an enterprise carried on by the volunteer
- the volunteer has not quoted their Australian business number (ABN).
Example: PAYG withholding not required
Tom operates a bakery business. He volunteers to paint a community centre for a charity. Tom pays $80 for additional material not supplied by the charity. The charity reimburses Tom $80 for the cost of the material. As Tom has not made the supply in the course of his enterprise as a baker he does not need to quote his ABN to the charity and the charity will not be required to withhold from the payment to Tom.
End of example
Example: PAYG withholding may be required
Tom also agrees to make pies at his bakery for the charity’s pie drive for the cost of the ingredients. The charity reimburses Tom $150 for the cost of the ingredients. As Tom has made a supply in the course of his enterprise, he will need to quote his ABN to the charity to avoid an amount being withheld from the payment. If he does not quote his ABN, the rate of withholding in this situation would be 49% of the total payment.
End of exampleYour organisation must not withhold from a volunteer supplier if the:
- total payment to the supplier is $75 or less, excluding any GST
- supplier is an individual under 18 years old, is not your employee, and the payments you make to that person do not exceed $350 per week
- supply is wholly input taxed under GST – this includes
- most financial supplies
- supplies of residential rent and residential premises
- food supplies by school tuckshops and canteens that have chosen to be input taxed
- sales made at fundraising events that charities, gift-deductible entities and government schools can, and have chosen to, treat as input taxed.
Phone us on 13 28 66 if you’re not sure whether the supply is input taxed.
Also, your organisation does not need to withhold from a volunteer supplier if it is satisfied that the:
- supply is made in the supplier’s private capacity, or as their hobby
- payment is exempt income for the supplier (for example, the supplier is an income tax exempt charity)
- payment is to a non-resident who is not carrying on an enterprise in Australia or through an agent in Australia
- supplier is not carrying on an enterprise because they have no reasonable expectation of profit or gain.
If you are unsure that one of these exceptions applies, you should ask the volunteer supplier to give you a written statement that the supply is excluded for one of these reasons.
See also:
Your not-for-profit organisation must withhold amounts from payments to its volunteer for a supply of goods and services made in the course of their enterprise if they have not quoted their ABN.