Guidelines for Honoraria Usage


PURPOSE:

The purpose of this guideline is to provide a framework for consistent and fair treatment when providing a nominal payment to an individual who has been invited to provide a unique service to the College.  The individual must be a volunteer and have the right to turn down the offer to participate.

 

CONCEPTS:

Definition:   Honorarium is defined as a thank you gesture of nominal value for voluntary services.

An honorarium is typically a payment made on a special or non-routine basis to an individual to recognize or acknowledge the contribution of gratuitous services to the College.  It is a token of appreciation with a nominal value (see CRA Perspective below) assigned to it and is not equivalent to a professional fee.

Examples of Honoraria:

A nominal payment to a guest speaker or lecturer as a “thank you” as a gesture of good will and appreciation:

  • A special classroom lecture
  • Conducting a seminar or workshop
  • Serving as a guest speaker at an educational event
  • Participating as a guest speaker at outreach events
  • Assistance for set up at supporting activities at special events.

Agreement:

An honorarium is not based on an agreed amount between the individual providing services and the person seeking services.

The honorarium must not be based on a unit of measure such as hours volunteered or number of students assisted.  It must be a flat nominal amount and must not appear as compensation for work performed.

If payment is agreed upon, this constitutes a contractual business service agreement and will involve invoicing and related business taxes or will be other employment income if performed by an employee.

The agreement to be a volunteer should be in writing prior to the service being performed with no reference or mention of payment.  If expenses are to be incurred the agreement must discuss method of reimbursement as a separate item (expense reimbursement with receipts or invoice).

CRA Perspective:

1. Unofficially CRA recognizes that nominal payments (<$500) are not subject to the usual tax rules:
  • Token payments of nominal sums (<$500) are not reflective of work performed and are not an incentive or compensation therefore no income need be reported or taxes deducted
  • In one year if sum of token payments exceed $500 they become taxable (see next section)

2. Officially from a CRA perspective any services provided either one time or cumulative over a calendar year with payment >$500 are considered as Business income or Salary income.
  • Therefore an Honorarium is:
    • Business income for external individuals - and is put on Box 28 of a T4A
    • Other Salary income for employees  - and is put on Box 14 of the employee’s T4
      • This is used when an employee is volunteering for a role not related to their job
      • It is recommended that employees do not volunteer

The College faces CRA fines and penalties if the honorarium is not properly included as either business income or salary income with the appropriate deductions.

 

PROCEDURE:

To process an Honorarium gift

  1. Honorarium Form must be completed
  2. A written volunteer agreement/email or Volunteer Form (see Note below) must be attached
  3. Submitted to Financial Services for processing. 

Recipient Options:

  • Employee of OC – If the individual is an employee then the honorarium will be added to the employee’s taxable income and reported on their T4. 
  • Independent – If the honorarium is for an external individual it will be processed by Accounts Payable and tracked for T4A reporting (if the amount exceeds $500 in a calendar year)
  • Business – Honorariums can be processed through the volunteer’s business.

The Honorarium Form and Volunteer Form can be found on myOkanagan > Employee tab > OC Express - Forms > Finance





Updated March 13, 2015