Honorarium

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An honorarium is an ex gratia payment, i.e., a payment made, without the giver recognizing themself as having any liability or legal obligation to the recipient for their volunteered services, or for services for which fees are not traditionally required. It is a common remuneration practice in schools or sports clubs, for teachers and coaches. [1] [2] [3] Another example includes the payment to guest speakers at a conference meeting to cover their travel, accommodation, or preparation time. Services for funerals and/or memorial services are often paid by honorarium, as the clergy and other people such as musicians who commonly have roles at these events, out of care, do not have a set fee for services to grieving families. [4] [5] [6] Likewise, wedding officiants are sometimes paid through honorarium. [7] [8] When required, honorariums may be termed altarages, although an altarage may be paid to a church or parish rather than a person.

Contents

Taxation

Australia

An example of this is the payments made by Australian schools to their sporting coaches. [9] They are ostensibly receiving a reimbursement for their costs in their voluntary roles as coaches. The concept of an honorarium has a tax implication. In Australia, recipients of these funds make a tax declaration (known as the hobbyist form) [10] to the tax office and therefore do not have to include this money in their annual tax return.

Canada

In Canada, honoraria are considered salary and thus, taxable income under the Income Tax Act. [11] 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. [11]

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. [12]

Hong Kong

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. [13] [14]

Indonesia

Under Indonesian National Laws, honorarium recipients are subjected to withholding tax under Income Tax Article 21. [15] [16]

New Zealand

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. [17] 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. [18]

Sri Lanka

In Sri Lanka, remuneration received by Government Ministers and Members of Parliament (MPs) are considered by the President as Honoraria. As such deemed by him to be not subject to PAYE as MPs have honorific before their names as such receive honorariums and not salaries from the State. [19]

United Kingdom

Honoraria to employees are subject to Income Tax and National Insurance contributions under PAYE. [20] [21] However payments are made based on services required and not bound by any contractual arrangements.

The British spy agencies euphemistically call a bribe an "Honorarium" or "King George's cavalry". [22] [23] [24]

United States

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. [25]

Members of the United States Congress are prohibited by law from accepting honoraria for things such as speeches or articles. [26]

See also

Related Research Articles

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A pay-as-you-earn tax (PAYE), or pay-as-you-go (PAYG) in Australia, is a withholding of taxes on income payments to employees. Amounts withheld are treated as advance payments of income tax due. They are refundable to the extent they exceed tax as determined on tax returns. PAYE may include withholding the employee portion of insurance contributions or similar social benefit taxes. In most countries, they are determined by employers but subject to government review. PAYE is deducted from each paycheck by the employer and must be remitted promptly to the government. Most countries refer to income tax withholding by other terms, including pay-as-you-go tax.

<span class="mw-page-title-main">Payroll tax</span> Tax imposed on employers or employees

Payroll taxes are taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their employees. By law, some payroll taxes are the responsibility of the employee and others fall on the employer, but almost all economists agree that the true economic incidence of a payroll tax is unaffected by this distinction, and falls largely or entirely on workers in the form of lower wages. Because payroll taxes fall exclusively on wages and not on returns to financial or physical investments, payroll taxes may contribute to underinvestment in human capital, such as higher education.

<span class="mw-page-title-main">Payroll</span> Record of money paid or due to employees

A payroll is a list of employees of a company who are entitled to receive compensation as well as other work benefits, as well as the amounts that each should obtain. Along with the amounts that each employee should receive for time worked or tasks performed, payroll can also refer to a company's records of payments that were previously made to employees, including salaries and wages, bonuses, and withheld taxes, or the company's department that deals with compensation. A company may handle all aspects of the payroll process in-house or can outsource aspects to a payroll processing company.

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A tax refund is a payment to the taxpayer due because the taxpayer has paid more tax than owed.

<span class="mw-page-title-main">Tax returns in the United Kingdom</span>

In the United Kingdom, a tax return is a document that must be filed with HM Revenue & Customs declaring liability for taxation. Different bodies must file different returns with respect to various forms of taxation. The main returns currently in use are:

<span class="mw-page-title-main">Taxation in the Republic of Ireland</span> Irish tax code

Taxation in Ireland in 2017 came from Personal Income taxes, and Consumption taxes, being VAT and Excise and Customs duties. Corporation taxes represents most of the balance, but Ireland's Corporate Tax System (CT) is a central part of Ireland's economic model. Ireland summarises its taxation policy using the OECD's Hierarchy of Taxes pyramid, which emphasises high corporate tax rates as the most harmful types of taxes where economic growth is the objective. The balance of Ireland's taxes are Property taxes and Capital taxes.

Tax withholding, also known as tax retention, pay-as-you-earn tax or tax deduction at source, is income tax paid to the government by the payer of the income rather than by the recipient of the income. The tax is thus withheld or deducted from the income due to the recipient. In most jurisdictions, tax withholding applies to employment income. Many jurisdictions also require withholding taxes on payments of interest or dividends. In most jurisdictions, there are additional tax withholding obligations if the recipient of the income is resident in a different jurisdiction, and in those circumstances withholding tax sometimes applies to royalties, rent or even the sale of real estate. Governments use tax withholding as a means to combat tax evasion, and sometimes impose additional tax withholding requirements if the recipient has been delinquent in filing tax returns, or in industries where tax evasion is perceived to be common.

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<span class="mw-page-title-main">Taxation in New Zealand</span> Overview of taxation in New Zealand

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<span class="mw-page-title-main">Salaries tax</span>

Salaries tax is a type of income tax that is levied in Hong Kong, chargeable on income from any office, employment and pension for a year of assessment arising in or derived from the territory. For purposes of calculating liability, the period of assessment is from April 1 to March 31 of the following year.

Inland Revenue or Inland Revenue Department is the public service department of New Zealand charged with advising the government on tax policy, collecting and disbursing payments for social support programmes, and collecting tax.

Under Article 108 of the Basic Law of Hong Kong, the taxation system in Hong Kong is independent of, and different from, the taxation system in mainland China. In addition, under Article 106 of the Hong Kong Basic Law, Hong Kong has independent public finance, and no tax revenue is handed over to the Central Government in China. The taxation system in Hong Kong is generally considered to be one of the simplest, most transparent and straightforward systems in the world. Taxes are collected through the Inland Revenue Department (IRD).

The Tanzania Revenue Authority (TRA) is the government agency of Tanzania, charged with the responsibility of managing the assessment, collection and accounting of all central government revenue in Tanzania.

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<span class="mw-page-title-main">Taxation in South Africa</span>

Taxation may involve payments to a minimum of two different levels of government: central government through SARS or to local government. Prior to 2001 the South African tax system was "source-based", where in income is taxed in the country where it originates. Since January 2001, the tax system was changed to "residence-based" wherein taxpayers residing in South Africa are taxed on their income irrespective of its source. Non residents are only subject to domestic taxes.

Taxation in Estonia consists of state and local taxes. A relatively high proportion of government revenue comes from consumption taxes whilst revenue from capital taxes is one of the lowest in the European Union.

Taxation in Sri Lanka mainly includes excise duties, value added tax, income tax and tariffs. Tax revenue is a primary constituent of the government's fiscal policy. The Government of Sri Lanka imposes taxes mainly of two types in the forms of direct taxes and indirect taxes. As of 2018 CBSL report, taxes are the most important revenue source for the government, contributing 89% of the revenue. The tax revenue to GDP ratio is just about 11.6 percent as of 2018, which is one of the lowest rates among the upper-middle income earning countries. At present, the government of Sri Lanka also face major challenges regarding the continuous budget deficits where government expenditures have exceeded the government tax revenue.

References

  1. Washington State Executive Ethics Board, ethics.wa.gov, An example of the rules for payment of an honorarium in the United States. Archived 2007-09-17 at the Wayback Machine
  2. cbc.ca, Sports, Coaches courted with payment in minor hockey, Gone are the days when all coaches were unpaid volunteers, By Kristina Rutherford, CBC Sports, Dec 05, 2008
  3. "McMaster University, mcmaster.ca, A Canadian example of the use of an honorarium" (PDF). Archived from the original (PDF) on 2008-05-29. Retrieved 2014-02-03.
  4. Caring.com, What is the standard donation for a minister who performs a memorial service?, July 13, 2016. Archived 2016-09-20 at the Wayback Machine
  5. "Etiquette for the Surviving Family: Planning the Funeral". Funeralwise. Retrieved 2024-01-09.
  6. "Funeral Honorarium - Memorial Tipping | Heart2Soul". www.heart2soul.com. Retrieved 2024-01-09.
  7. "Honorariums for Minister". WeddingWire. Retrieved 2024-01-09.
  8. "How Much Does an Officiant Cost?". CostHelper. Retrieved 2024-01-09.
  9. "Employment Contract Considerations – SWIM Coaches and Teachers Australia" . Retrieved 2024-01-09.
  10. "Australian Taxation Office, Australian tax law regarding the payment of honoraria". Archived from the original on 2004-06-09. Retrieved 2020-01-16.
  11. 1 2 "Queen's University, queensu.ca How to Pay an Honorarium". Archived from the original on 2015-01-07. Retrieved 2015-01-07.
  12. McMaster University's Faculty of Health Sciences, THE HOOKER DISTINGUISHED VISITING PROFESSOR TRUST FUND. Archived 2016-03-03 at the Wayback Machine
  13. Hong Kong Special Administrative Region, Report No. 43 of the Director of Audit
  14. University of Hong Kong , Mandatory Provident Fund
  15. "Embassy of Indonesia in Ottawa, ARTICLE 21 INCOME TAX". Archived from the original on 2007-12-21. Retrieved 2008-04-11.
  16. Pajak Indonesia, Konsultan Pajak, Taxation of Expatriate Employee. Archived 2016-03-03 at the Wayback Machine
  17. New Zealand Inland Revenue website, When to tax honoraria. Archived 2016-03-14 at the Wayback Machine
  18. New Zealand Inland Revenue website, Activities subject to withholding tax
  19. Cabinet: State employees liable for PAYE Tax
  20. HM Revenue and Customs. "Honoraria and similar payments". PAYE for employers. Archived from the original on 30 January 2013. Retrieved 26 May 2012.
  21. HM Revenue and Customs. "NIM02205 – Class 1 NICs: Earnings of employees and office holders: Honoraria and similar payments". National Insurance Manual. Retrieved 26 May 2012.
  22. Tom E. Mahl,Espionage's Most Wanted: The Top 10 Book of Malicious Moles, Blown Covers, (2003)
  23. Joseph Goulden The Dictionary of Espionage: Spyspeak into English, 2013.
  24. Scott Shane Russia Isn’t the Only One Meddling in Elections. We Do It, Too., New York Times, Feb. 17, 2018.
  25. UCAR, Honorarium Payment Guidelines
  26. Brudnick, Ida A. (April 11, 2018). "Congressional Salaries and Allowances: In Brief" (PDF). p. 2. Retrieved June 30, 2018.