Frequently Asked Questions

for payment of services

(contractors, workers, volunteers or itinerant preachers)

These are some of the most commonly asked questions
If you can’t see an answer to your question, please feel free to contact us and we’ll be happy to help.

Q. What is the procedure to pay Itinerant Preachers?

Generally if the payment is made to the individual these people should be treated as employees (which requires the person to provide their TFN and the parish to withhold tax, produce an annual payment summary and include this payment in its annual reporting). Certainly if the person is an ordained minister then the presumption must be that the payment (even if it was called an honorarium) is in connection with the individual’s income-producing activities. That view would be reinforced if the individual’s circumstances showed they were an itinerant preacher, ie they regularly preach at different churches.

There are 3 circumstances where this may not apply –

If the recipient provides such services for not more than 2 days in a quarter there is no requirement to withhold tax (but the parish would still need to prepare an annual payment summary).

If the recipient’s circumstances demonstrated they provided voluntary services that were unrelated to their income producing activities. This may be the case if they were a lay person, had another source of income related to their professional training/skills, and the preaching was a very occasional activity.

If the payment was made to an organisation (such as the parish to which the person was licensed) rather than to the individual.

Q. How do I work out if a worker is a contractor or an employee for tax and super purposes?

A Contractor

  • must be engaged and paid to produce a result
  • quotes for a job for the service provided
  • decides what hours to work and what expertise is needed
  • must provide their own tolls and equipment
  • is responsible for their own work and must fix erros
  • has their own insurance cover (Public Liability,, Income Protection, Professional Indemnity)
  • uses a business name and ABN
  • has a business premises
  • advertises to the public at large (“word of mount” is not enough)
  • has a range of clients and provides services to the general public
  • is free to accept or refuse work
  • is in a position to make a profit or suffer a loss
  • is free to delegate work to other entities.

 

Q. How do we pay people for their services?

Correct categorisation & documentation is required when making payments to people for their services.

Since the implementation of the new tax system in 2000 the following applies when an organisation is paying people.

A supplier of personal services is either:

  1. An employee,
  2. A supplier, or
  3. A person not carrying out a enterprise – it is is made as part of a private recreational pursuit or hobby
  4. A Volunteer

The correct procedure/documentation for these must be followed as below:

1. An Employee:

  • a Tax File declaration form is required to be completed and submitted to the ATO
  • Employee must be paid under the Fair Work Commission– Read More  

2. A Supplier

  • Must have an ABN.
  • They may or may not be registered for GST

Must supply a valid Tax Invoice – Read More

3. A Person not carrying out an enterprise
If payment is made to a person who is not an employee or does not have a registered ABN,  this form is required to be completed and kept with any other supporting documentation. If this form is not completed, then the paying organisation is obliged to withhold 48.5% of the amount and submit to the ATO in the next BAS

4. A Volunteer
    Volunteer paid in cash as a honorarium, reimbursement or allowances – Read More