GUIDELINES FOR LOCUMS & RELIEVING CLERGY 1

Transcription

1 ANGLICAN DIOCESE OF MELBOURNE GUIDELINES FOR LOCUMS & RELIEVING CLERGY 1 (Including Intentional Interim Ministry Locums) INDEX Section 1: Locums for Vacancies, Sick Leave, Long Service Leave pages 2 4 (Fixed term Part time, Fixed term Full time) Section 2: Occasional Duties (Casual) pages 5 9 (Occasional services up to two Sundays concurrently) Section 3: Payments for duties other than locum services page 9 Section 4: Centrelink 18 September 2009 pages 9 (Locums on pensions reporting to Centrelink) Note: A locum for Annual Leave is arranged by the cleric without reference to the Diocese, however if the leave period is more than two Sundays concurrently please refer to Section 1 for payment scale. 1 Update to Churchwarden s & Treasurer s Manual Financial Guidelines for Locums - applicable 1 October 2011 Page 1

2 SECTION 1 Locums for Vacancies, Sick Leave, Long Service Leave DAILY RATE (from 1 October 2011): $222 per day which includes recompense for utilities, telephone, & accommodation). Payment of Travel costs, Superannuation and Holiday Leave are required and are in addition to the Daily Rate. Please see below for details. Time Components: 1/3 stipend = Sunday plus one week day Travel Costs: Holiday pay Long Term Locums: Sermon Preparation Time: ($222 x 2, plus travel, superannuation, & annual leave) 1/2 stipend = Sunday plus two week days ($222 x 3, plus travel, superannuation, & annual leave) 2/3 stipend = Sunday plus three week days ($222 x 4, plus travel, superannuation, & annual leave) Logged kilometres at the rate of 74 cents per kilometre (note tax implications that follow). There is no limit. Holiday payment to be proportional of 1 week for 3 months work. (After every 3 Months, one week leave is payable to the relieving cleric, or proportionally e.g. 6 weeks = ½ week holiday pay). Sermon Preparation Time needs to be recognized in the above arrangements. Hospitality Arrangements: The locum fees do not include any recompense for hospitality expense incurred by the locum in carrying out the locum ministry. These expenses should be negotiated with the Parish Churchwardens at the commencement of the locum appointment. Parishes are reminded that Parish Clergy are entitled to Annual Leave of 28 calendar days including four Sundays for which the Parish shall be responsible for the provision of relieving Clergy. Superannuation: For locums less than 70 years of age the parish contributes superannuation at 9% of Stipend provided the stipend paid per month is $450 or more. For locums who are 70 years or over, the parish should add 9% to the locum s stipend subject to PAYG deductions and fringe benefit guidelines. Salary sacrifice superannuation contributions may be made subject to the work test criteria for all locums aged between 65 years and 75 years. The work test is that locums must be gainfully employed for at least 40 hours over a period of 30 consecutive days during the financial year in which the contributions are made. No superannuation contributions may be provided for locums over 75 years. Churchwardens need to address the reporting of Salary Sacrifice Superannuation on Payment Summary refer to Diocesan Finance Department for clarification. Financial Guidelines for Locums - applicable 1 October 2011 Page 2

3 Tax Arrangements Locum Fees Locums performing duties under vacancies, sick leave or long service leave should follow the guidelines applicable to Stipend Determination 26. Where a particular parish is concerned that they are unable to meet their obligation to provide a payment summary to a cleric performing locum or relieving services and report to the ATO, the parish may make a written application to the ATO requesting an exemption. The parish must clearly describe their circumstances and reasons why they are unable to meet their obligation under the PAYG withholding legislation. A copy of the application should be forwarded to Registry. Fringe Benefits The guidelines provided in Stipend Determination Number 26 in respect to the stipend and fringe benefits should be followed. Up to 30% of the remuneration package, that is stipend plus the parish contribution to superannuation may be provided as an expense fringe benefit. Disclosure of Fringe Benefits payments The disclosure of fringe benefits is not required on Payment Summaries issued to locums and relieving clergy. Although the fringe benefits are not reportable on Payment Summaries for taxation purposes, locums and relieving clergy may be required to include fringe benefits in statements of income for other government agencies, for example Centre Link and Veteran Affairs. If in doubt, contact your government agency or financial adviser. Salary Superannuation Sacrifice Please note that these sacrifice arrangements do constitute a reportable superannuation payment and must be shown as such on the PAYG Summary for the year. Parish treasurers may note that, where requested in writing by a locum, up to 100% of locum fees (subject to age limits and the work test refer Page 1) may be contributed to their superannuation fund provided the locum: has entered into a salary sacrifice arrangement prior to the day commencing duties, and for those locums not under 65, have met the work test and has completed in the current financial year a voluntary contributions acceptance eligibility form provided by their superannuation fund. Failure by a locum to comply with the work test will cause the Superannuation Fund to return contribution payments to the parish. The request letter that forms the salary sacrifice agreement may take the following format: Dear Churchwardens, In regard to the locum fees payable to me for the provision of locum duties, I request that I may take the payments in the form of contributions payable by the parish direct to my superannuation fund as settlement for the service that I am providing. Please contribute at the rate of % to my Fund. The superannuation fund details are: Name of Fund: Account Number: Financial Guidelines for Locums - applicable 1 October 2011 Page 3

4 Telephone contact number for the Fund: (0 ) Address for the Fund: Yours... Superannuation payments must be forwarded to a complying superannuation fund. Payments should be attached to an advice to the superannuation fund setting out the payment details including a statement that the contribution is a salary sacrificed contribution. Travel Non reimbursement travel payments made in cash or cheque to the locum Parishes must reimburse locums or provide payment direct to suppliers for travel costs incurred while performing ministry duties including travel between their home and the church. Receipts for reimbursements or invoices for direct payments must be produced to show the travel costs incurred in travelling on ministry duties. Alternatively, parishes will not be required to withhold PAYG tax on the first 5,000 kilometres of travel the parish pays annually to each locum. To use this exemption, the payments must be made on a per kilometre basis and the rate paid must be no more than the prescribed rate per kilometre set by the ATO: These are NOT the rates approved by the Diocese for calculating travel payments. The Diocesan rate for locums is 74 cents per kilometre. Engine Capacity Cents per kilometre 1.6 litre or less 63 cents litres 2.6 litre 74 cents litre and over 75 cents Parishes should be able to use this exemption for all vehicles with engine capacity greater than litres as the Relieving Clergy Remuneration guidelines set out the minimum travelling rate at 74 cents per kilometre. That is, travel payments for 1.6 vehicles or less should have PAYG Deductions made. Travel allowances paid in cash are included in Gross Payments on the Payment Summary. Financial Guidelines for Locums - applicable 1 October 2011 Page 4

5 SECTION 2 Occasional Duties One or Two Worship Services: Whole Day: Assisting at Worship Services: Week Days: Parish Visiting: Travelling Expenses: Superannuation: $ per Worship service plus travelling. (Including three or more services), $222 plus travelling. Fee to be paid by mutual arrangement. $80.00 per Worship service plus travelling and other expenses. By mutual arrangement (suggested minimum of $35 per hour). If locum or relieving Priest is not receiving a travel payment from fulltime Diocesan/Parochial or Agency employment, travelling to be paid by the parish on logged kilometres at the rate of 74 cents per kilometre (note tax implications that follow). There is no limit. For locums less than 70 years of age the parish contributes superannuation at 9% of Stipend provided the stipend paid per month is $450 or more. For locums who are 70 years or over no superannuation contribution is required by the parish. Salary sacrifice superannuation contributions may be made subject to the work test criteria for all locums aged between 65 years and 75 years. The work test is that locums must be gainfully employed for at least 40 hours over a period of 30 consecutive days during the financial year in which the contributions are made. No superannuation contributions may be provided for locums over 75 years. Tax Arrangements Locums performing occasional duties have a choice of options in regard to the receipt of locum fees. Locums may choose to: 1. Occasional duties locum fees subject to PAYG withholding using the tax tables Any payment for services performed by a cleric for locum or relieving services for more than 2 days per quarter must have PAYG deducted. Locums that select this option should provide a Tax File (TFN) Declaration if they require the tax scales to be used to calculate the PAYG withholding. The amount of tax to be deducted will be based on the details provided by the locum in their Tax File Number Declaration. Locums may seek higher or lesser amounts of withholdings by completing the TFN or other variation withholding forms available through the ATO. Male clerics at least 65 years of age and female clerics at least 63 years of age at the end of the financial year may request a reduced rate of withholding due to the Senior Australian provisions. This is sought by completing the form titled Withholding Declaration and in particular question 10. Completion of this question provides a further threshold to aged pensioners and low income aged persons eligible for the Senior Australians tax offset. This relief is also available to Department of Veteran s Affairs veterans receiving a service pension or war widows/widowers income support supplement and is aged at least 60 years of age for males and at least 58 years of age for females at the end of the financial year. We understand a special tax scale is available from the Australian Taxation Office (ATO). It is up to the cleric to advise a parish to claim the approved variation and Treasurers should obtain a copy of the approval issued by the ATO. See below where to obtain the Special Tax Table for aged pensioners. Financial Guidelines for Locums - applicable 1 October 2011 Page 5

6 Copies of the Tax File Declaration and the Withholding Declaration are both available from the ATO by order on Telephone , or on the internet. Please note that the original of the Tax File Number Declaration is forwarded to the ATO while the Withholding Declaration is kept with a copy of the Tax File Number Declaration at the parish. Please note that a Tax File Number Declaration remains effective for a period of 12 months after the last payment made by the parish to the recipient. Treasurers should be aware that the tax free threshold is only available from one sponsoring employer. For example, a retired cleric that conducts locum services may already be receiving the benefit of the tax free threshold from a pension, and therefore cannot claim the tax free threshold from a parish. Where a Tax File Declaration is not provided the PAYG deduction is at the rate of 46.5%. Treasurers may consider issuing a Payment Summary immediately after the final payment if it is likely that the address of the cleric may change by the end of the tax year when other Payment Summaries are issued. 2. Occasional duties locum fees subject to PAYG Withholding where the rate of withholding has been reduced to nil Parishes will not be required to withhold PAYG tax on payments made to a cleric for locum or relieving services performed for a period of 2 days or less in a quarter with any one parish. (A day equates to any service/s performed on anyone day.) In these circumstances the rate of withholding on fees and payments made to religious practitioners has been reduced to nil and tax need not be withheld provided the services provided by the religious practitioner do not exceed two days in anyone quarter. A quarter being a three month period ending on 31 March, 30 June, 30 September or 31 December. Please note that the parish will still be required to complete a Payment Summary for each cleric and include the payments in its annual reporting to the ATO. Treasurers may consider issuing a Payment Summary immediately after the final payment if it is likely that the address of the cleric may change by the end of the tax year when other Payment Summaries are issued. IMPORTANT: A TFN declaration is still required if this option is chosen for remuneration. Where a TFN is not provided the tax table option will prevail and the PAYG deduction will be at the rate of 46.5%. As a guide to interpreting the withholding PAYG rules for payments made to a cleric for locum services, the following examples may be useful: Example One: A cleric provides casual locum services on 2 Sundays during the period 5 July 09 to 27 September 09. The cleric has not provided any other locum services during the quarter. The parish will not be required to withhold any PAYG amounts made to the cleric. Example Two A cleric provides casual locum services on 3 Sundays in the quarter ending 27 December 09. The parish will not be required to withhold PAYG amounts made to the cleric for the first and second Sunday. A PAYG withholding will be required for the third Sunday. Example Three: A parish requires locum services for 3 consecutive Sundays from 5 July 09. The parish through prior arrangement engages one cleric to provide all the locum services: The parish will be required to withhold PAYG amounts for all payments made to the cleric. Financial Guidelines for Locums - applicable 1 October 2011 Page 6

7 Example Four: A parish requires locum services for 8 consecutive Sundays from 26 July 09. The parish through prior arrangement engages three clerics to provide locum services: A cleric for the first 2 Sundays A second cleric for the next 2 Sundays and A third cleric for the remaining 4 Sundays. This parish has not previously engaged these clerics during this quarter. The parish will not be required to withhold any PAYG amounts from payments made to the first or second cleric. The reason is that both provided locum services for a period not greater than 2 days in the quarter. However, the payment to the third cleric will require the withholding of a PAYG amount according to the relevant PAYG withholding tax table. Please note that the payment to the third cleric must have PAYG withholding tax applied against the total payment for 4 days. However, in the case of each cleric there remains the option to provide an effective sacrifice in the form of fringe benefits. (See below). 3. Occasional duties locum fees as an effective salary sacrifice in the form of fringe benefits Parish Treasurers may remunerate relieving clergy by salary superannuation sacrifice (subject to age limits) or by eligible expense fringe benefit payments. The relieving cleric is allowed to sacrifice 100% of the locum fees. These payments will not be subject to PAYG or reportable as fringe benefits on Payment Summaries. Payment Summaries will not be required for payments made by salary sacrifice. Also refer below Disclosure of Fringe Benefits Payments for further information on fringe benefit payments. The following steps should be implemented to ensure that effective salary superannuation sacrifice and eligible expense benefit payments are in place: Prior to the commencement of duties, the relieving cleric should issue a letter addressed to the Churchwardens requesting that the remuneration be made available as a salary sacrifice and/or as an eligible expense fringe benefit. This letter should be in place prior to the commencement of locum duties to ensure the payments are effective salary sacrifice arrangements. An example follows: Dear Churchwardens, In regard to the locum fees payable to me for the provision of locum duties, I request that I may take the payments in the form of expense fringe benefits. Accordingly, I will provide a receipt(s) of personal expenditure for reimbursement or an invoice(s) that requires payment direct to a third party as settlement for the service that I am providing. Yours... Disclosure of Fringe Benefits Payments The disclosure of fringe benefits is not required on Payment Summaries issued to locums and relieving clergy. Although the fringe benefits are not reportable on Payment Summaries for taxation purposes, locums and relieving clergy may be required to include fringe benefits in statements of income for other government agencies, for example Centre Link and Veteran Affairs. If in doubt, contact your government agency or financial adviser. Salary Superannuation Sacrifice Parish treasurers may note that, where requested to by a locum, up to 100% of locum fees (subject to age limits and the work test refer Page 5) may be contributed to their superannuation fund provided the locum: has entered into a salary sacrifice arrangement prior to the day commencing duties and Financial Guidelines for Locums - applicable 1 October 2011 Page 7

8 for those locums not under 65, have met the work test and has completed in the current financial year a voluntary contributions acceptance eligibility form provided by their superannuation fund. Failure by a locum to comply with the work test will cause the Superannuation Fund to return contribution payments to the parish. The request letter that forms the salary sacrifice agreement may take the following format: Dear Churchwardens, In regard to the locum fees payable to me for the provision of locum duties, I request that I may take the payments in the form of contributions payable by the parish direct to my superannuation fund as settlement for the service that I am providing. Please contribute at the rate of % to my Fund. The superannuation fund details are: Name of Fund: Account Number: Telephone contact number for the Fund: (0 ) Address for the Fund: Yours... Superannuation payments must be forwarded to a complying superannuation fund. Payments should be attached to an advice to the superannuation fund setting out the payment details including a statement that the contribution is a salary sacrificed contribution. Travel Non reimbursement travel payments made in cash or cheque to the locum Parishes will pay travel direct to clergy for travel costs incurred while performing ministry duties including travel between their home and the church. Parishes will not be required to withhold PAYG tax on the first 5,000 kilometres of travel the parish pays annually to each locum. To use this exemption, the payments must be made on a per kilometre basis and the rate paid must be no more than the prescribed rate per kilometre set by the ATO: These are NOT the rates approved by the Diocese for calculating travel payments. The Diocesan rate for locums is 74 cents per kilometre. Engine Capacity Cents per kilometre 1.6 litre or less 63 cents litres 2.6 litre 74 cents litre and over 75 cents Parishes should be able to use this exemption for vehicles with above litres as the Relieving Clergy Remuneration guidelines set out the minimum travelling rate at 74 cents per kilometre. That is, travel payments for 1.6 litre vehicles or less should have PAYG Deductions made. Travel allowances paid in cash are included in Gross Payments on the Payment Summary. Financial Guidelines for Locums - applicable 1 October 2011 Page 8

9 SECTION 3 Payments for duties other then locum services With the assistance of our GST consultants Saward Dawson, the ATO has granted a PAYG withholding variation in respect of payments made to religious practitioners who are performing activities other than locum services. The activities include delivery of services, sermons and participation in other aspects of services. These arrangements are similar to the PAYG withholding variation for locums and relieving clergy. The rate of withholding on such payments has been reduced to zero. The variation means that tax need not be withheld provided the services of the religious practitioner are not in excess of two days in anyone quarter. The variation uses the same rules as under Section 2, Tax Arrangements, Item 2 commencing on page 6. For example, this variation may be applied to a minister of religion who has returned from a mission and is assisting at the service, providing feedback on the details of the mission. The variation may also be applied to a minister of religion from a college (chaplain) or armed services (chaplain) or a retired bishop/clergy with permission to officiate who are participating in an aspect of the service such as delivering the sermon. A Tax File Number declaration must still be completed and signed by the religious practitioner. At the end of each 30 June a PAYG payment summary must be issued to each religious practitioner. Remember payments to locums and relieving clergy are still subject to the same processes. Where clergy from one Anglican parish participates at another Anglican parish, we continue to encourage parish Treasurers to make any payment due directly to the cleric's parish. SECTION 4 Centrelink Reporting: For locums receiving a pension The new Centrelink rules for age pension, brought in by the Australian Government on 18 September 2009, provide for reporting every fortnight of any extra income. This has a direct effect on the level of pension the following fortnight. Parishes are now asked to pay their locums at the end of each fortnight, and ensure that a detailed Payment Advice (Pay Slip) is provided by the parish to the locum. The consequences of not doing so will mean that the locum s regular pension may be withheld until such proof is available. If an aged pensioner undertakes regular employment (such as a locum for an extended period of time), he/she must report the amount received every fortnight; and this has a continuous effect on the level of pension; this may be waived by a Centrelink officer if the income is erratic, the employment part time and occasional, but it is on a case by case basis; of course if the priest has a partner still working, their extra income counts against that person s pension, and the priest s; however, under a new provision called the work bonus (to encourage seniors to keep working), half of the first $500 of gross employment income before tax earned any fortnight, is disregarded in calculating the ongoing pension rate. These provisions provide fewer disincentives to priests on the age pension to engage in locum ministry. It also in effect encourages retired clergy to do locums which are only Sunday plus one or two days. It is a reasonable estimate that the penalty for extra income is 20% that is, if the locum or partner earns $250, $50 is deducted from their next pension payment. (Locums of course also have to show pension income in their tax return). NOTE: The earning capacity threshold is anticipated to increase for retirees in 2012, before a deduction is made please refer to Centrelink. Financial Guidelines for Locums - applicable 1 October 2011 Page 9