The following information is to be used as a guide for those wishing to honour a Guest financially:
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Honorarium: |
One-time payment to individuals NOT currently on Trent University Payroll. |
Residents of Canada: The individual will be issued a T4A. Non-Residents of Canada: Where the service was performed in Canada, honorariums paid to non-residents of Canada are subject to a flat rate income tax deduction and are reported on a T4A-NR. |
| Stipend: | One-time payment to individuals currently on Trent University’s Payroll for work done outside of their regular duties. | Payment will be treated as employment income, reported on a T4 and is subject to all statutory deductions. |
Form:
Submission:
- For payments from Research Accounts (beginning with 53 or 55), the completed form must be submitted to researchfinance@trentu.ca for approval and processing.
- For payments from Restricted Funds / Trust Accounts (beginning with 43 or 45), the completed form must be submitted to finance@trentu.ca for approval and processing.
- For payments from all other accounts, the completed form must be signed by the account holder and submitted to timesheets@trentu.ca for processing.
Definitions:
The term “honorarium” is often misunderstood in the University setting resulting in payments being incorrectly coded for income tax purposes. These errors can result in:
- The University being in violation of federal and provincial tax regulations that require mandatory deductions from employment income.
- The University being in violation of the Employment Standards Act (ESA) if the services/work performed is in fact employment in nature.
- A reassessment by the Canada Revenue Agency (CRA) with the University being required to pay the employer and employee share of taxes (i.e. Canadian Pension Plan (CPP), Employment Insurance (EI), Workplace Safety and Insurance Board (WSIB), and Employer Health Tax (EHT) plus fines and penalties.
- The University being in violation of purchasing requirements if the individual being paid is in fact an independent contractor.
- Damage to the University’s reputation.
Incorrect coding of payments can also negatively impact the individual receiving the payment as ultimately they will be responsible for paying income taxes on the amount. This can be a financial burden if this was not anticipated, especially if the amount is substantial. The individual can also be assessed fines and penalties for late payment of these taxes.
The purpose of this guideline is to provide more clarity regarding the definition and payment of honorariums and to provide a framework for consistent and fair treatment across the University.
What is an honorarium?
The term “honorarium” is not well defined by the Canada Revenue Agency (CRA). From a CRA perspective, payments for services made to an individual are either employment income or business income. The CRA does however support the notion of small payments that are not subject to the usual tax rules. The criteria for these payments include:
- They are nominal - $500 or less in a calendar year;
- They are made to an individual for voluntary services for which fees are not legally or traditionally required;
- They are not reflective of the value of the work done;
- They are made on a one-time or non-routine basis to an individual as a “thank you”.
When is an honorarium appropriate?
Keeping the above criteria in mind, examples where an honorarium payment would be acceptable include:
- payment, as a “thank you” or gesture of goodwill and appreciation, to a non-professional;
- guest speaker or lecturer,
- external party for a special classroom lecture or short series of such lectures,
- individual for conducting a seminar or workshop,
- guest speaker at an educational event or other similar function,
- guest speaker participating at outreach events,
- payment to a volunteer for assistance for set-up or supporting activities at special events;
- payment to an external examiner whose services are engaged on a one-time or very infrequent basis.
If you intend to pay an individual an honorarium more than once in a given calendar year and the total of the payments will exceed $500, please contact Payroll in Human Resources for direction. Please also be aware that as the University is considered a single employer by the CRA, should an individual receive multiple honorariums from various areas on campus and exceed the $500 nominal amount, any subsequent payments may be treated as employment earnings and amounts already processed may be converted to employment earnings.
If you have any questions concerning this form or the procedures which should be followed to ensure that Guests are compensated promptly, please contact payroll@trentu.ca.