Reimbursements, allowances, honoraria and tax
A clear and consistent policy is crucial for organisations that choose to reimburse volunteers. Volunteers and their organisations should also be aware of the possible tax implications of some payment types for individual volunteers.
Volunteering is not free
Volunteers have a right to expect reimbursement of out-of-pocket costs they incur while undertaking agreed activities in their role.
Problems can arise when organisations fail to have a clear policy on the matter, or fail to communicate that policy to their volunteers. To avoid misleading expectations, ensure your policy is kept up to date and cover it in induction and orientation for volunteers.
Sample reimbursement policy
The details of your organisation’s policy on out-of-pocket expenses will depend on the circumstances of your volunteer program. Build on this sample to develop your policy:
Volunteers will be reimbursed for out-of-pocket expenses incurred when undertaking authorised activities on behalf of the organisation.
Volunteers may be reimbursed for the use of public transport to or from approved activities, such as meetings and training. The use of private vehicles for approved activities will be reimbursed at the rate of $ . per kilometre.
Reimbursement will be made only where prior approval has been given and where relevant receipts and/or other documentation are produced.
Organisations should also document the procedures that support this policy – and make sure volunteers know and understand them.
These may include:
- Where to obtain and submit expenses claim forms
- Who can approve cost-incurring activities and subsequent claims
- Time frames for claims
- Caps on claims
- How reimbursements will be
Some organisations wish to recognise the efforts of their volunteers with an allowance or honorarium.
Volunteering Victoria supports the definition of volunteering that sees it attracting no financial payment; in other words we believe volunteering is an unpaid activity.
Organisations that offer allowances or honorariums should ensure volunteers understand the possible implications for their personal tax – include this information in your policy on payments.
Such payments may be assessed as taxable income, particularly if the services rendered by the volunteer are the same as their usual paid work.