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April 30, 2016

� Accounting Issues

� Gifts and Receipts

� Reporting Requirements

� Common Errors in Completing T3010

� Summary of Penalties for Charities

� Parish Operating Receipts

� Questions

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� AccrualAccrualAccrualAccrual basis basis basis basis – revenues are recorded when received or earned; expenses are recorded when incurred.

� CashCashCashCash basisbasisbasisbasis - revenues are recorded when cash is received; expenses are recorded when cash is paid.

Exception: Cash method is used for gifts received.

3 conditions must be met:3 conditions must be met:3 conditions must be met:3 conditions must be met:

� gift must be made voluntarily

� there must be a transfer of property

(cash or gifts-in-kind)

� there must be a financial sacrifice

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Type of Gift that Generally Type of Gift that Generally Type of Gift that Generally Type of Gift that Generally Qualify for Tax ReceiptQualify for Tax ReceiptQualify for Tax ReceiptQualify for Tax Receipt

Charity Receipt TreatmentCharity Receipt TreatmentCharity Receipt TreatmentCharity Receipt Treatment

Cash (cash, cheques or PAD)

Receipted based on amount received less any advantage.

Gifts-in-kind/Non-cash gifts Receipted based on the fair value of the property prior to taxes, subject to deemed fair market value rule. Exceptions apply.

� Donated services are not property, so the services cannot be considered as a gift.

� Donor may issue an invoice for the services, be paid by the parish, then donate the money back to the parish (there is a cheque exchange)

� Two distinct transactions must must must must take place:

� a person provides a service to the charity

and is paid for that service;

� the same person makes a voluntary gift of

property to the charity

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Examples of Advantage (token of appreciation)

� Property: t-shirt, book, pen

� Use of a property: free rent

� Provision of service: free daycare services

� Other benefits: assumption of debt

The eligible amount of the gift may need to be reduced by the fair market value of the advantage, even if the advantage was donated to the parish.

Advantage Advantage Advantage Advantage ThresholdThresholdThresholdThreshold: 80% of the gift amount

If the value of the advantage returned to the donor is more than the threshold:

� there is no true intention to make a gift

�A tax receipt cannot be issuedtax receipt cannot be issuedtax receipt cannot be issuedtax receipt cannot be issued

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De Minimis ThresholdDe Minimis ThresholdDe Minimis ThresholdDe Minimis Threshold is the lesser of:� $75 or � 10% of gift amount

If the advantage is below the threshold, it is considered minimal and need not be deducted from donation amount.

De Minimis threshold does not apply to:� Value of the activity that is the object of the fundraising event (e.g., cost of dinner at a fundraising dinner, golf fees at a golf tournament fundraiser)

� Cash or near cash equivalents (e.g., gift certificates)

All the food and giveaways have been donated. If these were purchased, each meal and giveaway would cost the parish $40 and $7, respectively. At the event, attendee gave $50.

De Minimis Threshold: 10% x $50 = $5Advantage Threshold: 80% x $50 = $40

The $7 giveaway is more than the $5 de minimis threshold -the $7 must be deducted.

Cannot apply the de minimis rule to the object of the event –the value of the dinner must be deducted.

Eligible amount of giftEligible amount of giftEligible amount of giftEligible amount of gift: $0$0$0$0. The $47 (40+7) advantage is above the threshold. No tax receipt will be issued for any donations under $58.75 [($40+7)/80%] and a $58.75 donation would result in a tax receipt of $11.75

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� Value of advantage for fundraising event should go to Line 4630

A missionary from Anglican Church in India will be preaching in your parish. Your parish plans to collect an offering and sends the money to Anglican Church in India.

Can this gift be accepted and receipted?Can this gift be forwarded to AC in India?

General RuleGeneral RuleGeneral RuleGeneral Rule: No. Alternatives must be found.

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A church member has a daughter going on a short-term mission trip with Anglican Church in US. He designates $5,000 in the offering envelope with instructions to pass the money back to his daughter.

Can this gift be accepted and receipted?

Can this gift be forwarded to the daughter?

General RuleGeneral RuleGeneral RuleGeneral Rule: No. Alternatives must be found.

� Establish a donation and/or receipting policy

� One annual cumulative tax receipt may be issued for cash donations

� Gifts in kind require individual receipts

� Tax receipts are best issued to donors by the last day of February of the following year

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� Keep a record that shows how the value of gifts-in-kind was determined.

GiftGiftGiftGift----inininin----Kind over $1,000Kind over $1,000Kind over $1,000Kind over $1,000

professional appraiser is suggested. Name and address of appraiser must be included in the tax receipt.

� A statement that it is “an official receipt for income tax purposes”

� The name and address of the charity as recorded with the CRA

� The registration number issued by the CRA

� The serial number of the receipt

� The location where the receipt is issued

� The date or year the gift was received

� The date the receipt was issued

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� The full name, including middle initial, and address of the donor

� The eligible amount of the gift

� The signature of the authorized individual

� The name and website address of the CRA

� If gift has an advantage:If gift has an advantage:If gift has an advantage:If gift has an advantage:

� The amount of the gift

� The fair value and description of advantage received by the donor

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� For giftsFor giftsFor giftsFor gifts----inininin----kindkindkindkind:

� actual date of donation

�a brief description of the property

� the tax cost if the property was acquired by

the donor within 3 years, or as a tax shelter

�the name and address of the appraiser if appraisal of the gift has been done.

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Canada Revenue AgencyCanada Revenue AgencyCanada Revenue AgencyCanada Revenue Agency

� Annual Charity Return Package

� T4/T4A slips

� GST66E, Application for GST Public Services Bodies’ Rebate

� Tax Receipts (not filed but maintained)

WorkSafeWorkSafeWorkSafeWorkSafe BCBCBCBC

� Payroll and Contract Labour Report

Diocese of New WestminsterDiocese of New WestminsterDiocese of New WestminsterDiocese of New Westminster

� Parish Operating Receipts

� Financial statements

� Vestry Report

� Preliminary Assessment Form

� Final Assessment Form

� Monthly Remittance

Planning Schedule – p5 of Treasurer’s Manual

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� T3010T3010T3010T3010, Registered Charity Information Return

� TF725, Registered Charity Basic Information Sheet

� T1235, Directors and Like Officials Worksheet

� T1236, Qualified Donees Worksheet

� Financial statements signed by the treasurer

Charities Directorate: 1-800-267-2384

� To provide public information

� To assess whether the charity meets its annual spending requirement

� To assess whether a charity transferred any money to non-qualified donees

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If the Registered Charity Return Summary is materially incorrect, file T1240, Registered Charity Adjustment Request.

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� Using the wrong version of the T3010.

T3010 E (15) for year 2015.

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� Issuing tax receipts to registered charities creates discrepancy with Line 4500

� Recording 100% of Line 4950 on Line 5000 suggests that there are no administration expenses

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� Entering total salaries on Line 5010 or leaving Lines 5010 and 5020 blank

� Failing to include a copy of the financial statements in the return package, now a revocable offence

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- Minimum annual amount each charity must spend on charitable activities or as gifts to other registered charities.

� Formula: 3.5% of the average value of assets not used in charitable activities or administration in the last 24 months, if this amount exceeds $100,000.

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InfractionInfractionInfractionInfractionFinancialFinancialFinancialFinancial

Receipting Receipting Receipting Receipting SuspensionSuspensionSuspensionSuspension RevocationRevocationRevocationRevocation

Failing to comply with Income Tax Act �

Failing to file T3010 or financialstatements

�

Incorrect or incomplete T3010 �

Incorrect receipts �

False receipts � � �

Failing to meet the disbursement quota

�

Inadequate books and records �

InfractionInfractionInfractionInfractionFinancialFinancialFinancialFinancial

Receipting Receipting Receipting Receipting SuspensionSuspensionSuspensionSuspension RevocationRevocationRevocationRevocation

Payment to non-qualified donees �

Payment to ineligible individual �

Accepting gifts for a suspended charity �

Supporting terrorist activity �

Undue personal benefit � �

Carrying on an unrelated business � � �

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For employees that are not in the Diocesan payrollFor employees that are not in the Diocesan payrollFor employees that are not in the Diocesan payrollFor employees that are not in the Diocesan payroll

� Information returns (ie., slips and summaries) must be filed and slips must be given to employees by the last day of February by the last day of February by the last day of February by the last day of February in the year following the period to which the returns or slips relate.

� T4A are issued for fees or other payments for services, scholarships and bursaries to individuals

� T4/T4A need not be issued for remuneration under $500.

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� File twice a year

1st application – covers the first 6 months of your fiscal period

2nd application – covers the last 6 months of your fiscal period

� GST Refund should be reported in the financial statements as reduction of expenses, not an income

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Type of RecordsType of RecordsType of RecordsType of Records Retention PeriodRetention PeriodRetention PeriodRetention Period

Records of meetings, Governing documents and by-lawsChurch membership records

Permanent

General Ledger Permanent

Instructions for bequests and endowment gifts

Permanent

Other Records (bank statements, invoices/vouchers, donation records, T4’s, charity return, budgets)

7 years

� Develop written policy

� Back-ups should be kept offsite

� Monitor compliance with the backup policy

� Periodically test the backup to ensure the data is retrievable

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ASSESSABLE INCOMEASSESSABLE INCOMEASSESSABLE INCOMEASSESSABLE INCOME

� Operating Income a. Donations and gifts

b. Diocesan Grants

c. Investment Income (CTF income if used in operations)

d. 50% of church hall gross rental income

e. Rectory and land rental, net revenue

f. Fundraising and miscellaneous income

� Deficit funded by Restricted Funds

NONNONNONNON----ASSESSABLE INCOME ASSESSABLE INCOME ASSESSABLE INCOME ASSESSABLE INCOME

� Onward Donations (PWRDF, Care+Share, etc)

� Donations for Capital Purposes

� Donations for Special Purposes

� Unrealized gains on investments

� GST Rebate (should be reported as reduction of expenses, not an income)

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Level of RevenueLevel of RevenueLevel of RevenueLevel of Revenue Diocesan RequirementDiocesan RequirementDiocesan RequirementDiocesan Requirement

$750,000 or more Full Audit

$250,000 - $750,000 Review Engagement

Below $250,000 Audit or Review Engagement not required

If requested by:the Diocesan Treasurer and Business Administrator plus Legal Officer; ororororany two of the Bishop, Diocesan Treasurer or Chancellor

Audit

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� How to support and mentor new treasurers?

� Standard policy and procedures for recording donations, receipting gifts according to CRA rules, who should have access to confidential information.

� What government forms must we complete for charitable donations?

� Do we show capital gains on the CTF for assessment purposes?

� Procedures to follow when a parishioner wants to make a donation in kind

� Can the priest be one of the signing authorities in the parish?

� Do priest need to have petty cash in their office?

� Is there such things as priest discretionary fund?

� Treasury for the outreach

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� What insurance coverage should a parish have in case of injury to volunteers while working on church property?

� Are wardens protected by liability insurance?

� Other