Congregational Finances During the Pandemic 7 - The United Church of Canada L'Église Unie du Canada - United in Learning

Congregational Finances
During the Pandemic – 7
           The United Church of Canada
           L’Église Unie du Canada

                                           May 6, 2020
                                         Erik Mathiesen
                                           Clyde Harris

A New Creed
We are not alone,                     We are called to be the Church:
    we live in God’s world.              to celebrate God’s presence
We believe in God                        to live with respect in Creation,
                                         to love and serve others,
    who has created and is creating
                                         to seek justice and resist evil,
    who has come in Jesus
                                         to proclaim Jesus, crucified and risen,
          the word made flesh
                                                 our judge and our hope.
           to reconcile and make
                                      In life, in death, in life beyond death,
           new
                                            God is with us.
    who works in us and others
                                                  We are not alone.
    by the spirit.
                                                               Thanks be to God.
We trust in God.

  EHM ~ The United Church of Canada

What We’ll Cover Tonight May 6
    The latest
       –   Churches still not eligible for CECRA rent program
           or CEBA loans
       –   One more chance for sign on to 10% processing
    Tools and tips for TEWS (10%) and CEWS (75%)
       –   CRA online info and FAQ much improved.
       –   Using the online tools
Information is accurate as at 3:00 p.m. EDT.
Information may be affected by subsequent
announcements.

EHM ~ The United Church of Canada

Mea Culpa

    Advice re revenue definitions is generic and reflects
     our best understanding on what revenue to include
     and exclude based on CRA FAQ

    Now suggesting that you should do the 10%
     calculation as an input to the 75% calculation even if
     the actual processing is being done for you.

EHM ~ The United Church of Canada

CEBA Clarification
    $40,000 Canada Emergency Business Account
    Churches NOT ELIGIBLE . Some camps will be.
    Must be incorporated and have sales revenue on line
     4640 of T3010
    You have to be able to certify applicant :
     is not a union, charitable, religious or fraternal
     organization or entity owned by such an organization
     or if it is, it is a registered T2 or T3010 corporation
     that generates a portion of its revenue from the sales
     of goods or services;

EHM ~ The United Church of Canada

CECRA Clarification
    Canadian Emergency Commercial Rent Assistance
    Churches and other ministries NOT ELIGIBLE .
    Currently targets commercial rent arrangements

    We are receiving strong assurances that the program
    may –repeat may – be broadened to allow certain
    church lease arrangements to qualify. Nothing yet
    though.

EHM ~ The United Church of Canada

Canada Emergency Response Benefit

   Canada Emergency Response Benefit,
(“CERB”) available to laid-off staff irrespective
of eligibility for EI.
   It provides a flat benefit of $2,000 for workers
who have been out of work for 14 consecutive
days in any four-week period for reasons
relating to COVID-19.
   must have earned $5,000 in 2019.
   expanded to allow $1,000 income.

EHM ~ The United Church of Canada

Layoff Considerations

   check with your region – province-specific
employment standards to be adhered to.
   hopefully less pressure if CEWS (75%)
eligible
   many part-time and contract workers will be
better off in the short term
     core group benefits to continue (excl LTD
and RCP) funded by the church
Arrangements                       can be to keep up pension
payments
EHM ~ The United Church of Canada

Layoff Considerations (2)

   preparation of Record of Employment (ROE)
      –   fastest to do online at Service Canada
      –   snail mail process through ADP
      –   Service Canada has no paper left !
   New webinar at United-in Learning Signing on
to Issue a ROE Web (Yesterday)
   Repeat – check with region staff for province
specific requirements

EHM ~ The United Church of Canada

Logging into CRA Accounts or Service Canada

    Sign Up for Service Canada even if ROE is not required
       –   It might be necessary tomorrow
       –   When on Service Canada choose
              •   Switch to CRA Account
              •   Access provided to My Business Account
    Otherwise sign up for Represent a Client
       –   Check Change Owner
       –   Provide list of names (T1235)
       –   PDF file – only four pages otherwise to large for sending
    Your own income tax filings must be current to register
       –   Current year and one prior

EHM ~ The United Church of Canada

United Church $10,000 Emergency Loan

 intended to supplement federal funding programs and
respond to transition from them as federal programs
expire.
   Special case intervention now
Online          now. Application goes automatically to region
for review
eligibility          to be confirmed in consultation with the
region
   needs based and viability based

 THANK YOU United Church Foundation!
EHM ~ The United Church of Canada

United Church Emergency Loan

 This $10,000 loan

       –   will be interest free if paid in full by September 30,
           2021.
       –   if paid by September 30, 2021, $500 is forgiven for
           a total repayment of $9,500.
       –   Interest at 2% starts to accrue on October 1, 2021
       –   Principal and interest will be paid within three
           years from September 30, 2021.
       –   A payment plan will be developed with you.

EHM ~ The United Church of Canada

Federal Government supports @May 6

This webinar and the April 29 edition is the only one
not out of date. The rate of change MAY be slowing
down. Maybe?
EHM ~ The United Church of Canada

Federal Government supports @May 6

10%
 https://www.canada.ca/en/revenue-
 agency/campaigns/covid-19-update/frequently-asked-
 questions-wage-subsidy-small-businesses.html

 75%
 https://www.canada.ca/en/revenue-
 agency/services/subsidy/emergency-wage-subsidy.html
 Excellent resource now. Be sure to read FAQ.

 EHM ~ The United Church of Canada

10% Subsidy processing
    All church payroll entities eligible for 10% wage
     subsidy
    1,090 pastoral charges will have the rebate
     processing done for them by ADP and the national
     office.
    A FURTHER OPPORTUNITY TO SIGN UP FOR
     THIS. Must send email in prescribed format.
    Obviously, only available for employees ON ADP
    Tools available online for those who choose to do it
     themselves

EHM ~ The United Church of Canada

10% Subsidy processing -tools
    https://www.united-church.ca/leadership/church-
     administration/pastoral-charge-payroll-service
    List of 1,090 pastoral charges having the rebate
     processing done now. “Report Change of Contact”
    A FURTHER OPPORTUNITY TO SIGN UP FOR
     THIS. There will be a second list
    Tools available online for those who choose to do it
     themselves
       –   Temporary Wage Subsidy worksheet
       –   TWSE-TA Form Managed Services

EHM ~ The United Church of Canada

10% Subsidy processing
    Second email invitation this week
       –   Will send to everyone
       –   Sorry for duplication
       –   Check list 1 !!
     1000+ subsidy payments imminent

 Can also wait with processing if your
     cashflow allows.

EHM ~ The United Church of Canada

10% Subsidy processing Example 1
ONE EMPLOYEE
$60,000 salary
       –   $5,000 per month or $1,153.85 per week
       –   Income tax withheld $1,200
       –   Eligible subsidy is $1,375 for the 3 month period

Will take 3 monthly transactions to realize the full
subsidy entitlement because max for any pay period is
10% of monthly wages ($500)

EHM ~ The United Church of Canada

10% Subsidy processing Example 2
THREE EMPLOYEES
$60,000 salary, plus two part-time at $12,000/yr
       –   $7,000 per month or $1,615.38 per week
       –   Income tax withheld still only $1,200
       –   Eligible subsidy is $4,125 for the 3 month period

Will take 6 monthly transactions to realize the full
subsidy entitlement because max for any pay period is
10% of monthly wages ($700)

EHM ~ The United Church of Canada

10% Subsidy processing MY CONCLUSION

    Have this done for you by authorizing ADP/GCO if
     you haven’t already
    If you are doing it yourself
       –   On ADP no problem
       –   If you have employees not ADP you will need to
           do those separately. Tax bucket might be a
           problem. Might need to draw on ADP tax bucket.
       –   Put all employees on ADP for future
Note: Those qualifying for the 75% subsidy still
need to use the 10% calculator

EHM ~ The United Church of Canada

Questions so far

EHM ~ The United Church of Canada

Federal 75% (CEWS)
    Eligibility
    Calculating Revenues
    Eligible Employees
    Eligible Remuneration
    Calculating the wage subsidy
    Claiming the wage subsidy
    Ensuring Compliance

EHM ~ The United Church of Canada

Federal 75% (CEWS)
    The 75 per cent wage subsidy will cover annual
     earnings up to $58,700 — or $1,129 a week in pre-
     crisis earnings. So the maximum subsidy for each
     employee would be $847 a week.
    By federal law, it is an option to keep staff on payroll
     but not top up to 100%.
       –   Not recommended
       –   Federal does not override provincial
           employment standards
       –   Note: if someone not working but paid, you
           can claim employer portion of CPP,EI
EHM ~ The United Church of Canada

Federal 75% (CEWS)
    There are three ways to apply all online:
       –   My Business Account
       –   Business representatives may apply using
           Represent a Client. (need Level 2 or 3)
       –   If neither are an option for you, use the Web
           Forms application with your web access code
Sign into the Web Forms application
Get a web access code (WAC) 1-800-959-5525

EHM ~ The United Church of Canada

75% Subsidy processing – revenue
    Principles
       –   Revenues should be recognized once through the
           layers of the church
       –   Revenues over which congregation has discretion
       –   Full “pass through” revenues shouldn’t count
       –   Bequests though infrequent are normal.
       –   Can elect to include or exclude gov’t income.
       –   Exclude mission support grants (non arms length)
    Exclude M&S, or donations to another charity
    Exclude non cash investment gains/losses
EHM ~ The United Church of Canada

75% Subsidy processing – revenue
    Extraordinary items
       –   Sale proceeds from a sale of assets
       –   Focused, restricted capital campaign
       –   Grants from non arms length church bodies
              •   Capital assistance grants
              •   Faithful Footprints
    UCW?
       –   Do you consolidate UCW on T3010?
       –   Does UCW offer tax receipting?
       –   If yes to either – definitely include.
EHM ~ The United Church of Canada

75% Subsidy processing – Eligibility
    https://www.canada.ca/en/revenue-
     agency/services/subsidy/emergency-wage-
     subsidy.html
    Types of eligible employers
       –   Definitely includes charities
       –   Loss of 15% of Revenue in March 2020
              •   Compare to March 2019 or
              •   The average of January and February 2020
              •   Be consistent in calculations

EHM ~ The United Church of Canada

75% Subsidy processing – Eligibility
    Types of eligible employers
       –   Loss of 30% of Revenue in April and/or May 2020
              •   Compare to April (or May) 2019 or
              •   The average of January and February 2020
              •   Be consistent in calculations
    Who are eligible employees
       –   All who are on payroll if they have not had a
           period of 14 or more days without pay in the
           application period
       –   More details for more circumstances

EHM ~ The United Church of Canada

75% Subsidy processing – test period
    March 2020 vs
       –   March 2019
       –   Average of Jan and Feb 2020
    If 15% decline threshold met, do not re-test in April
    If NOT MET in March, calculate April (must be 30%)
    If not met in March or April, calculate for May (30%)
    Be consistent in revenue definitions and document
     rationale for all inclusions and exclusions

EHM ~ The United Church of Canada

Internal Considerations –who applies?
    Our internal pastoral charge structure doesn’t always
     mesh with the outside world.
    Federal programs look to WHERE PAYROLL
     RESIDES
    Pastoral charge applies for wage subsidies but may
     not have revenue unless that is where charitable
     status resides
    April 11 federal changes helps multi point charges.

Try a consolidated income statement

EHM ~ The United Church of Canada

Multi-point Pastoral Charge – PC has charitable status

                                                        1.   CRA reporting is consolidated for the
                                                             points below
                                                        2.   RP # should be same as RR#
                                                        3.   TEWS straightforward
                                        Church 1
                                                        4.   CEWS eligibility straightforwardact
                                       Church 2

                                        Church 3

The United Church of Canada – Mission through Finance                                              31

Multi-Point Pastoral Charge – Individual charity status

                                                   Church 2
                                                    T3010
                                Church 1                       Church 3
                                 T3010                          T3010

                                                    Pastoral
                                                    Charge

    Each point has its own number and files own T3010
    Pastoral charge is a shared admin facility and only payroll number is
     visible to CRA

    Consolidate financials to calculate
     revenue decline
The United Church of Canada – Mission through Finance                        32

Federal 75% (CEWS)
    The CEWS will be processed at the payroll program
     (RP) account level, so you will have to file a separate
     application for each RP account.
    Do a separate version of the CRA online calculator
    For cases where some employees on ADP and some
     not, you will need to have separate workpapers and
     consolidate them for your application (depending on
     whether different RP numbers)

EHM ~ The United Church of Canada

75% CEWS processing – calculator
    What is eligible remuneration
       –   All amounts paid to employees on which payroll
           deductions were made and will be reported on T4
       –   Baseline Remuneration is the average weekly
           eligible remuneration paid between January 1 and
           March 15, 2020 (Exclude any period of 7 or more
           consecutive days if employee not paid.)
    Calculate your subsidy

       –   Claim Period – March 15, 2020 to April 11, 2020

EHM ~ The United Church of Canada

75% CEWS processing – calculator
    Calculating your subsidy:
       –   Gross payroll for eligible employees
              •   Understand the three calculation situations
                     –   $1,129.33 a week or more
                     –   $1,129.33 or less and no reduction in pay
                     –   $1,129.33 or less with a reduction in pay

EHM ~ The United Church of Canada

75% CEWS processing – calculator
    Calculate the values using the spreadsheet
       –   Download the calculation spreadsheet
       –   Enter the claim period (dropdown menu)
       –   Suggest not to use the batch entry
       –   Go to Weekly tab to enter each individual
              •   Monthly salaries x 12 / 52 = weekly salaries
              •   Employee at Arm’s Length must be answered
              •   All pay figures on a weekly basis
              •   All weeks must have an entry even if 0.00

              •   Totals transferred to Instructions and Results
EHM ~ The United Church of Canada

75% CEWS processing – calculator
    Calculate the values using the spreadsheet
       –   Make note of Results shown on first tab
       –   go back to the web page and enter values in
           Section 2c required fields
    Premiums and Contributions
       –   100 % refund of employer premiums and
           contributions to EI and CPP
       –   Only for employees furloughed with full or partial
           remuneration

       –   Enter in boxes EI and QPIP or CPP and QPP
EHM ~ The United Church of Canada

75% CEWS processing – calculator
    Deductions for this time period
       –   10% TWS for Employers
              •   Assumption is made that everyone applied
       –   Total amount Employees received under ESDC’s
           Work-Sharing benefit Program
    Get results
       –   Calculate your total wage subsidy
       –   Print results page for use when applying

EHM ~ The United Church of Canada

75% Subsidy processing – applying
    Before you apply
       –   Business details and direct deposit must be
           correct on your RP account
       –   Have the Results handy from the calculation of the
           estimated subsidy

EHM ~ The United Church of Canada

75% Subsidy processing – applying
    Applying for CEWS
       –   Sign into My Business Account
       –   Represent a Client for Representatives
       –   Sign into the Web Forms application
              •   requires a Web Access Code

EHM ~ The United Church of Canada

75% Subsidy processing – applying
    Form RC661 E Attestation form to be signed by owners or
     managers or senior official and keep with records
    Part I – General
       –   The claim has been reduced by the 10% TWS
       –   All records and calculations must be retained for Audit
              •   Revenue reduction
              •   Employee remuneration
       –   Maintain records for amount of wages paid to employees
           from the subsidy, and report these amounts on the
           employees’ T4s and T4 Summary
       –   If later determined eligibility requirements not met or the
           amounts were overstated, all amounts to be repaid.

EHM ~ The United Church of Canada

75% Subsidy processing – applying
    Form RC661 E Attestation
    Part II – CEWS Program Rules Elections
       –   A) Check all Elections that apply
              •   Box 1, 2, and 4 may apply to multipoint charges
              •   Box 3 deals with joint ventures and not likely to apply
              •   Box 5 to be checked if using the Cash method
              •   Box 6 concerns “prior reference period”
              •   Box 7 check if excluding government funding
       –   B) Employer has not made any of the above elections
    Part III – Attestation Statements
       –   Enter amount from line H of application
       –   Sign with Title
EHM ~ The United Church of Canada

75% Subsidy processing
    After you apply
       –   Deposits expected to start on May 6th
       –   Cheques could take significantly longer
       –   For 2020 T3010
              •   This would be on line 4540 Schedule 6, T3010
              •   T4 will have an Other Information box to report
                  the amount of the subsidy attributed to them
       –   Must keep records for Audit purposes
              •   Fraudulent claims – return amount plus 25%
              •   Complete record of all assumptions
EHM ~ The United Church of Canada

Questions so far

EHM ~ The United Church of Canada

Internal Considerations –governance

    Wage subsidy applications do not require
     region approval
    Any loan applications REQUIRE
       –   congregation board approval
       –   region approval (perhaps expedited)
       –   Online application by someone authorized
           to “bind the applicant”

EHM ~ The United Church of Canada

Reconciling all this later this year
       –   So much happening at once
       –   Inevitable that there will be some duplication or
           errors in claims
       –   Reconciliation in the fall for
              •   Maximization of 10% wage subsidy ($1,375 per
                  employee)
              •   Reconciling 10% adjustment on 75%
       –   Keep books and records substantiating
              •   Eligibility calculations/determinations
              •   Your calculations

EHM ~ The United Church of Canada

Summary of what you need to do for wage
subsidies
       –   PROCESS the 10% transactions (have ADP/GCO
           do or do it yourself)
       –   Determine your 75% subsidy eligibility and for
           which periods.
       –   If eligible for the 75%
              •   Use CRA spreadsheet for overall calculations
              •   Use ADP/church spreadsheet for 10%
                  adjustment
              •   File online by whichever method will work
              •   Keep complete records for each filing

EHM ~ The United Church of Canada

Contacts for action
    Deferring monthly withdrawals of assessments
       –   assessments@united-church.ca
    Suspending church loan payments (if national)
       –   mpimpinella@united-church.ca
    Stewardship queries
       –   djagger@united-church.ca
    United Church emergency loan
       https://www.united-church.ca/community-faith/being-
         community/united-church-emergency-support

EHM ~ The United Church of Canada

Questions and Closing

EHM ~ The United Church of Canada