Withholding for religious practitioners
This guide will help you to meet your pay as you go (PAYG) withholding obligations for certain payments you make and amounts you withhold to a religious practitioner. These payments may involve:
- an activity, or a series of activities, performed by the religious practitioner in pursuit of their vocation as a religious practitioner
- an activity, or series of activities, performed by the religious practitioner as a member of a religious institution
- payment your entity made in the course or furtherance of any of its enterprises.
Terms we use
For the purposes of PAYG withholding, a religious practitioner is a:
- minister of religion
- student at an institution who is undertaking a course of instruction in the duties of a minister of religion
- full-time member of a religious order
- student at a college conducted solely for training people to become members of religious orders.
Religious institution and religion
For the purposes of PAYG withholding, a religious institution is a body whose objects and activities reflect its character as a body instituted for the promotion of some religious object.
The beliefs and practices of the members of that body constitute a religion.
Generally, private schools, private universities and residential colleges will not be considered religious institutions. However, Bible colleges, seminaries and theological colleges may come within the definition of a religious institution.
- Taxation Ruling TR 92/17 Income tax and fringe benefits tax: exemptions for 'religious institutions'.
Registering for PAYG withholding
You must register for PAYG withholding if you need to withhold an amount from a payment.
Amount to withhold
To work out the amount to withhold from payments you have made to a religious practitioner, refer to the tax tables.
The amount required to be withheld from the payment will be affected by the information provided by the religious practitioner in their tax file number declaration (and withholding declaration form, where applicable).
Allowances are separately identified payments made to a religious practitioner for:
- qualifications or special duties, for example first aid certificate or safety officer
- expenses they can't claim as a tax deduction, for example normal travel between home and work
- expenses that may be able to be claimed as a tax deduction by the religious practitioner, for example travel between services at two locations.
What types of payments have the amount of withholding varied to nil?
Religious institution payments
For payments made by a religious institution to a religious practitioner for providing locum services for a period of less than two days in a quarter, the amount you are required to withhold is nil.
You must still issue payment summaries for these payments and include details of the payment and any amounts withheld, including a nil amount, in your PAYG withholding payment summary annual report.
Table: How withholding applies to locum services payments.
If a religious practitioner is engaged to provide locum services and the period is:
Then the religious institution must withhold:
Two days or less in a quarter
Two days initially and is then engaged for a further period in the same quarter
from the payment for the initial two days is nil
Subsequent payments will be subject to withholding according to the Tax tables
Continuous for more than two days in the quarter
an amount from the whole payment according to the PAYG withholding tax tables
A quarter is defined as a period of three months ending 31 March, 30 June, 30 September or 31 December.
The minister of a church in a small country town is on eight weeks annual leave from 1 October 2013. The church engages three different religious practitioners to provide locum services as follows:
- John is engaged to provide services for the first two Sundays
- Hilary is engaged to provide services for the next two Sundays
- Luke is engaged to provide services for the remaining four Sundays.
The church will not be required to withhold any amounts from payments made to John or Hilary, as the periods of engagement are not greater than two days in the quarter.
Payments made to Luke will be subject to withholding. The church will be required to issue payment summaries to John, Hilary and Luke, showing the total amount of the payment and the amount withheld, including a nil amount.
End of example
Payments from one religious institution to another for services performed by the other religious institution will not be subject to withholding, provided the institution has quoted its ABN, or has an exemption from doing so. However in some instances GST may be applicable.
Non-religious institution entity payments
The amount required to be withheld from the following payments by an entity that is not a religious institution to a religious practitioner, is nil:
- for work or services performed by the religious practitioner except for the performance of chaplaincy or counselling services
- for the performance of chaplaincy and/or counselling services where the payment does not exceed the following amounts:
For payments made on or before 30 June 2016:
- $100 where the entity pays the religious practitioner weekly
- $200 where the entity pays the religious practitioner fortnightly
- $433 where the entity pays the religious practitioner monthly.
For payments made on or after 1 July 2016:
- $150 where the entity pays the religious practitioner weekly
- $300 where the entity pays the religious practitioner fortnightly
- $650 where the entity pays the religious practitioner monthly.
Examples of payments made for services excluding chaplaincy and counselling services include a payment:
- made by a funeral director to a religious practitioner for the provision of funeral services
- by a wedding broker to a religious practitioner for a wedding.