The financial crunch - it is happening in many if not all of our District churches. The federal government has offered support to individuals & businesses. How about charities such as churches and ministries? There are 4 programs that you may be able to tap into. Some of this is still a work in progress (i.e. legislative details to be confirmed). Here's an overview of those programs.
1. Temporary 10% Wage Subsidy - this program is a three-month measure (March 18th - June 19th) that allows eligible employers to reduce the amount of payroll deduction required to be remitted to the Canada Revenue Agency (CRA). As a registered charity with an existing business number and payroll program account with the CRA on March 18, 2020 and you pay salary and/or wages to an eligible employee, the church/ministry can receive a subsidy equal to 10% of the remuneration you pay in that time period up to $1,375 for each eligible employee (maximum of $25,000 total per employer). For example, if you pay 3 eligible employees salaries that total $7,500 in a month, the wage subsidy for that month will be 10% of $7,500 or $750. If the total payroll stays the same in each month, you would pay $22,500 of remuneration. Therefore, 10% of the remuneration you pay over those three months is $2,250. The one thing to note about this is that the church does not need to apply for the subsidy - you will continue deducting income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums from salary, wages, bonuses, or other remuneration paid to your employees, as you currently do. The subsidy is calculated when you remit these amounts to the CRA. Once you have calculated your subsidy, you can reduce your current payroll remittance of federal, provincial, or territorial income tax that you send to the CRA by the amount of the subsidy. Learn more here - https://www.canada.ca/en/revenue-agency/campaigns/covid-19-update/frequently-asked-questions-wage-subsidy-small-businesses.html
2. Canada Emergency Wage Subsidy (CEWS) - the subsidy from this program covers 75% of an employee's wages (up to $847 per week) for employers who have suffered a drop in gross revenues of at least 15% in March, and 30% in April and in May. The program will be in place for a 12-week period, from March 15 to June 6, 2020. Eligible employers that see a drop of at least 15% of their revenue in March 2020 and 30% for the following months must apply for each specific period covered. What is revenue? Well, the federal government has stated that for registered charities , the calculation includes most forms of revenue - of course, churches are primarily supported by individual donors. If there are other revenues that a church generates, you will need to look at the details. Once chosen, the same approach applies throughout the program period. The subsidy amount for a given employee on eligible remuneration paid for the period between March 15 and June 6, 2020 is the greater of:
· 75% of the amount of remuneration paid, up to a maximum benefit of $847 per week; and
· the amount of remuneration paid, up to a maximum benefit of $847 per week or 75% of the employee's pre-crisis weekly remuneration, whichever is less.
In effect, employers may be eligible for a subsidy of up to 100% of the first 75% of pre-crisis wages or salaries of existing employees. Employers are expected where possible to maintain existing employees' pre-crisis employment earnings. If you are eligible for both the CEWS and the 10% wage subsidy for a period, any benefit from the 10% wage subsidy for remuneration paid in a specific period generally reduces the amount available to be claimed under the CEWS in that same period. Employers will be able to apply for the CEWS through the Canada Revenue Agency's My Business Account portal. The CRA has now created a subsidy calculator to determine the amount at https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy.html
3. Canada Summer Jobs - if you as a church/ministry were approved for the Canada Summer Jobs program, temporary changes to the program allow employers to receive an increased wage subsidy, so that employers may be eligible to receive up to 100 per cent of the provincial or territorial minimum hourly wage for each employee. Learn more here - https://www.canada.ca/en/employment-social-development/services/funding/canada-summer-jobs.html
4. Canada Emergency Business Account (CEBA) - subsequent to my initial recommendation for all churches to apply, the eligibility criteria is not clear that churches would qualify. This program provides interest-free loans to small businesses and not-for-profits of up to $40,000 to help cover operating costs during a period where revenues have been temporarily reduced. While taking out a loan may not necessarily be desirable, the important part in considering this loan program is that an approved borrower that repays the balance of the loan on or before December 31, 2022 will result in loan forgiveness of 25 percent (up to $10,000). To qualify, you will need to demonstrate that the church or ministry had total employment income paid in 2019 between $20,000 and $1.5 Million as well as meet other criteria to be an approved Borrower. Here is the question on the eligibility of a religious organization in this program - currently, the wording indicates that a "…charitable, religious…organization…" will need to provide evidence that it “…generates a portion of its revenue from the sales of goods or services…” . While there is no definition of what "a portion" is, in my opinion, it appears churches will have to prove that there is revenue from sales of some kind. It will be necessary to show in its revenues, either by a separate revenue line or clear proof elsewhere, that the revenue is not derived from donations - it is from sales i.e. facility rentals, the sale of coffee bar items, bookstore items, youth group t-shirts, event tickets, etc. You will need to contact your financial institution to apply for the loan. Learn more here - https://ceba-cuec.ca/
Click here for more information on the Government of Canada's COVID-19 Economic Response Plan.
Please be sure to contact me at our office about further details. And don't forget to check our website for more info on navigating other church finance issues during this pandemic - https://abnwt.com/covid-churchfinances
NOT LEGAL ADVICE. Information made available here is for information purposes only. It is not, and should not be taken as legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read here.
Phil serves as the Director of Finance & Administration with the ABNWT District of The PAOC. He has helped resourcing churches and ministries in all things finance and administration in order to serve the mission of the organization.