Note: in this article, the terms ‘Honorarium(s)’, ‘Honoraria’ and ‘Koha’ are used interchangeably unless the context otherwise requires.
Honoraria and non‑cash gifts, are common in New Zealand charities, but they are frequently misunderstood, especially in relation to tax. This short article outlines what an honorarium is and how Inland Revenue (IRD) expects charities and other not‑for‑profits to treat honoraria and vouchers for tax purposes.
An honorarium is a modest payment for services such as speaking at an event, chairing a meeting or providing specialist advice, given as a mark of appreciation rather than a commercial fee. In churches and charities this might include a small payment to a visiting preacher, a guest speaker at an AGM, or a trustee who has taken on extra work beyond normal duties. In New Zealand non‑profits it is a token payment that recognises someone’s contribution, usually where they are not charging a full market fee and may otherwise be serving in a voluntary capacity.
It is often assumed that a payment described as an honorarium is not subject to income tax, but IRD does not take that view.
IRD’s approach: honoraria vs reimbursements
IRD distinguishes clearly between reimbursements and honoraria. Payments that only cover actual or reasonably estimated expenses (for example travel or materials) are treated as reimbursements and are generally not taxable to the volunteer. Any amount that goes beyond genuine expenses is treated as an honorarium and is taxable income, even if the organisation calls it a “koha” or “gift”.
For non‑profits, honoraria are treated as schedular payments: tax must be withheld and reported, unless the person is already an employee and the payment is taxed through PAYE. The recipient must include honoraria in their income tax return and may need to adjust their tax rate so the correct level of tax is applied.
Vouchers and other non‑cash gifts
Charities often give petrol or grocery vouchers to volunteers. A voucher given instead of cash can be either a non‑taxable reimbursement or a taxable honorarium, depending on the purpose and how it is documented.
IRD’s reimbursement rules expressly cover non‑cash forms such as petrol vouchers. If the voucher is intended to cover actual or reasonably estimated travel costs incurred in voluntary work (including travel to and from the place of volunteering), it is treated as exempt income to the volunteer. In this case, the organisation should record that the voucher is a reimbursement of transport or other expenses, not a reward for services, and no tax needs to be withheld.
If the voucher is given mainly as a “thank you” for services, and not clearly tied to actual or estimated costs, the value is treated like an honorarium rather than reimbursement. That means it is taxable income to the recipient and should be treated as a schedular payment (or employment income if they are an employee), with tax withheld and reported accordingly. In mixed situations, where part of the voucher covers expenses and part is a token of appreciation, IRD expects you to split and document the amounts; the reimbursement portion is exempt, and the honorarium portion is taxable.
Boards should decide clearly whether each payment is a reimbursement or an honorarium, document the decision, and keep records to support the treatment. A short policy on volunteer expenses and honoraria, aligned with IRD guidance on volunteer payments and schedular tax, helps churches and charities remain compliant while appropriately honouring those who serve.
For further detail, see IRD’s guidance on volunteer payments, voluntary work, koha and donations by businesses, and the tax treatment of reimbursements and honoraria paid to volunteers.
See the following IRD guidance:
Volunteer payments and expenses
Giving koha and donations as a business
Tax treatment of reimbursements and honoraria paid to volunteers
This article was prepared using the assistance of AI