Cairns local David Leslie Hickson, 32, was charged with Mr Paterson's murder and interference with a corpse, after police executed a search warrant at his home.
Queensland police said Mr Paterson had disappeared but was never reported missing and believe the crimes occurred on November 7.
"If you could find it in your heart to give a little to this family, they will be eternally thankful," Mr Paterson's family said.
A total of $4966 had been raised from 125 donations, as of yesterday afternoon.
Hickson, who police believe was known to Mr Paterson, was remanded in custody after appearing in Cairns Magistrates' Court last Thursday.
The matter will appear before the court again on December 17.
The New Zealand Government stipulates that, if requested, New Zealand embassies and the Ministry of Foreign Affairs and Trade can aid a family following the death of a Kiwi citizen overseas, by advising on local burial or the cost associated with returning the remains to New Zealand.
However, all costs associated with the death of a New Zealand citizen overseas are the responsibility of the family.