Honorarium

From Wikipedia, the free encyclopedia
Jump to: navigation, search

An honorarium is an ex gratia payment (i.e., a payment made without the giver recognizing themselves as having any liability or legal obligation) made to a person for their services in a volunteer capacity or for services for which fees are not traditionally required. This is used by groups such as schools or sporting clubs to pay coaches for their costs.[1][2] Another example includes the payment to guests speaker at a conference to cover their travel, accommodation, or preparation time.

Taxation of honoraria[edit]

Australia[edit]

An example of this are the payments made by Australian schools to their sporting coaches.[3] They are ostensibly receiving a reimbursement for their costs in their voluntary role as coach. The concept of an honorarium has a tax implication. In Australia recipients of these funds make a tax declaration (known as the hobbyist form)[4] to the tax office and therefore do not have to include this money in their annual tax return.

Canada[edit]

In Canada, honoraria are considered as salary and thus, taxable income under the Income Tax Act.[5][6] In the case where a gift is substituted for honorarium (gift in lieu of money), it is still classified as a taxable benefit by Canada Revenue Agency.[5]

In cases where an honorarium is paid to an individual who is not a resident of Canada, the honorarium is still subjected to income tax withholding (usually 15%) unless prior approval was obtained from Revenue Canada.[7]

Hong Kong[edit]

Honoraria are subjected to taxation under HK Laws. Chap 112 Inland Revenue Ordinance and also subjected to the Mandatory Provident Fund, a compulsory saving scheme for retirement.[8][9]

Indonesia[edit]

Under Indonesian National Laws, honorarium recipients are subjected to withholding tax under Income Tax Article 21.[10][11]

New Zealand[edit]

When honorarium is paid to an employee, such as mayors, chairpersons and local clubs and societies, it is not subject to withholding tax but is subject to income tax.[12] However, if the payment was not made to the above-mentioned category of people, it is subject to withholding tax rate between 33c to 48c.[13]

United Kingdom[edit]

Honoraria to employees are subject to Income Tax and National Insurance contributions under PAYE.[14][15] However payments are made based on services required and not bound by any contractual arrangements.

United States[edit]

An honorarium paid to a U.S. resident for services performed within or outside the U.S. is subject to federal (and in some cases state) income tax.[16]

See also[edit]

Notes[edit]