Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Income - Exempt income

CW 62B: Voluntary activities

You could also call this:

“Money you get as a volunteer to cover your expenses is usually tax-free”

If you’re a volunteer, you might receive money to cover expenses you have when doing volunteer work. This money is called a reimbursement payment, and you don’t have to pay tax on it.

The person or group giving you the money can estimate how much you might spend. They can treat this estimate as if it were the actual amount you spent.

Sometimes, you might get a payment that’s partly for expenses and partly as a thank you (called an honorarium). The person paying you needs to separate these two parts. The expense part is tax-free, but the thank you part is taxed.

A volunteer is someone who chooses to do work in New Zealand that helps others or their community. They don’t do it to make money for themselves.

An honorarium is money you get for doing work, but it’s less than what you’d normally be paid. Usually, you wouldn’t expect to be paid for this kind of work.

It doesn’t matter if you get the reimbursement payment all at once or in parts, or if you get it during the year or at the end.

The Commissioner of Inland Revenue can change how much of your expenses are covered by this rule.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2539630.

Topics:
Money and consumer rights > Taxes
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CW 62: Interest paid under the KiwiSaver Act 2006, or

“KiwiSaver interest from the government is tax-free”

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CW 62C: Income from foreign-currency loans used for disallowed residential property, or

“Tax exemption for foreign-currency loan income used for certain residential properties”

Part C Income
Exempt income

CW 62BVoluntary activities

  1. When a volunteer, in undertaking a voluntary activity, derives an amount that is a reimbursement payment to cover actual expenses incurred by them, the amount is exempt income of the volunteer.

  2. For the purposes of subsection (1)—

  3. a person may make a reasonable estimate of the amount of expenditure likely to be incurred by the volunteer for which reimbursement is payable; and
    1. the amount estimated is treated as if it were the amount incurred.

      1. If the person paying the amount to the volunteer makes a payment to them that is only partly a reimbursement of expenses, the person must identify the portion of the amount that is the reimbursement, and treat the remainder as an honorarium, being a schedular payment to which the PAYE rules apply.

      2. For the purposes of this section, a volunteer means a person who freely undertakes an activity in New Zealand—

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

            1. For the purposes of this section, an honorarium means an amount that a person receives for providing services that—

            2. is paid at a rate that is less than the market rate for providing the services; and
              1. is an amount for which, in the normal course, no payment is fixed for the services provided.

                1. For the purposes of this section, it does not matter whether—

                2. an amount of a reimbursement payment is paid in 1 sum or not:
                  1. the amount is paid during an income year or at the end of an income year.

                    1. A determination made by the Commissioner under section RD 8(3) (Schedular payments) may apply to modify an amount of expenditure under this section.

                    Notes
                    • Section CW 62B: inserted (with effect on 1 April 2009), on , by section 50(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                    • Section CW 62B(5): amended, on (applying for the 2009–10 and later income years), by section 15(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).