Withholding tax obligation: payment to religious practitioners performing marriage services

Is there a requirement on an entity that carries on an enterprise as a wedding planner, to withhold tax from payments made to religious practitioners under section 12-47 of Schedule 1 to the Taxation Administration Act 1953 (TAA) for conducting marriage services?

Yes. The entity that carries on an enterprise as a wedding planner is required to withhold tax under section 12-47 of Schedule 1 to the TAA on payments made to religious practitioners for conducting marriage services. The amount required to be withheld is varied to nil where the payment is made by an entity that is not a religious institution, to a religious practitioner for work or services preformed by the religious practitioner (except for the performance of chaplaincy and/or counselling services).

The client carries on an enterprise as a wedding planner. As part of that enterprise, they engage a religious practitioner to perform the wedding of their clients. The religious practitioner is registered under the Marriage Act 1961 (MA 1961) to solemnise marriages in Australia. The religious practitioner is not engaged as an employee of the client. Payment for the performance of the ceremony is made directly to the religious practitioner by the enterprise. The entity making the payment is not a religious institution.

Section 12-47 of Schedule 1 to the TAA provides that an entity must withhold an amount from payments made to religious practitioners if the activity is done by the religious practitioner in pursuit of their vocation as a religious practitioner and as a member of a religious institution.

Whether an activity is done by a religious practitioner as part of their vocation is a question of fact, to be determined in each case. If the relevant activity is only performed because the person is a religious practitioner, it is considered that the activity is done by the religious practitioner in the pursuit of their vocation as a religious practitioner.

The authority for the religious practitioner to conduct marriage services comes from the MA 1961. Under section 32 of the MA 1961, ministers of religion are authorised to solemnise marriages provided they are registered. To become registered they must be from a recognised denomination and be nominated by that denomination. As the minister of religion has been registered, the conduct of marriage ceremonies is considered to form part of the duties of his vocation as a religious practitioner.

Consequently, the entity has engaged a religious practitioner to perform a wedding for their clients. In these circumstances, the entity has an obligation to withhold an amount from the payments made for the purposes of section 12-47 of Schedule 1 to the TAA. Therefore, the entity, in this case, is required to withhold tax from the payments made.

Note: Under section 15-15 of Schedule 1 to the TAA, the Commissioner has varied to nil the amount required to be withheld from withholding payments that are made under section 12-47 of Schedule 1 to the TAA by an entity that is not a religious institution, to a religious practitioner for work or services, except for the performance of chaplaincy and/or counselling services.