As year-end approaches, the following is a list of actionable items to consider for your church if your fiscal year ends on December 31. If your church has a different fiscal year-end, this list is still useful for your consideration.
- Budget for the New Year. Most churches would have at least planned and prepared the 2019 Church Budget by October. If not, it is never too late to create the budget, have it adopted by the Church Council and approved by the congregation—preferably before the New Year kicks in. However, most churches have their New Year budget approved by the congregation in their New Year business meeting, often held at the end of January or early February.
- Prepare to issue new Clergy Residence Deduction forms, the T1223E for 2018 (if you have not done this yet) and 2019 fiscal year for ordained pastors and staff. For those staff who required deduction at source, the form T1213E should be issued at the same time for the New Year. Preferably, these two forms should be completed by mid-November of each year, as the CRA could take up to 30 – 60 days to approve T1213E applications.
- Tax donation receipts. If your fiscal year ends on December 31, please be reminded that your last date of issuing tax receipts should be December 31. Tax receipts issued after December 31 cannot be used by the church members to claim their tax credit for their 2018 personal income tax return.
- The year-end closing of church accounts. Steps should be taken to ensure that:
- All bank reconciliations are reconciled for 2018
- All receivables have been accounted for in the books and the bank account statements
- All payables for the year have been settled and there are no amounts owing
- All tax donation receipts for the year have been issued
- All cash take-ins have been deposited into the bank account and accounted for in the books
- Any surplus donations have been received before December 31 and tax donation receipts have been issued
- If the church accounts are to be audited in the New Year by an external auditor, all internal financial statements are prepared in advance of the audit, after the books are closed out
- In general, it is a good practice to zero out any trust accounts that have incurred a deficit for the year
- The T3010 needs to be filled in and submitted within six months from the ending date of the church’s fiscal year
Note the new mailing address for the Registered Charity Information Return (T3010):
Canada Revenue Agency
105 – 275 Pope Road
Summerside PE C1N 6E8
Please note that this change applies only to the information return. All other correspondence should be sent to:
Canada Revenue Agency
Ottawa ON K1A 0L5
Please also note that starting in June 2019, registered charities and their representatives will be able to complete and file Form T3010 online. To learn more about these service improvements and how you can prepare for them, go to Charities IT Modernization Project (CHAMP).
- Preparation of T4 and T4A income slips for church staff. As soon as the fiscal year has ended, T4 slips must be issued to all staff with an employment contract with the church. This would include all staff who have received employment salary from the church—all pastors, directors of ministries, administrators and summer camp staff. If your church has an extended ministry such as a day care center, the day care might need to issue their own T4 slips if they are a separate registered entity with the provincial authority. T4A slips need to be issued for staff who are registered with the CBWC Benefits and Pension Plan. The plan administrator, J & D Benefits Inc., will email the information required for the T4A slips from taxable benefits that are incurred by premiums paid by the church under the Benefits plan. The T4A slips should be completed by end of January.
- If you use a third-party payroll processing company, there is always a need to reconcile the last payroll within the payroll system if special payments or adjustments have been made on staff payroll amounts throughout the fiscal year. Please remember to check with your payroll service provider to ensure that year-end YTD payroll and statutory deductions for CPP, EI and Federal Taxes tally up with your payroll journals. If not, a reconciliation process needs to be initiated with the payroll service provider to ensure that your T4 information is correctly filled in and filed with CRA. This is to avoid any PIER notices being issued by CRA to your church in the New Year. Please ensure all T4 and T4A slips are filed on time, preferably by end of January.
If you have further questions or clarifications needed in closing out your church’s year-end activities, please contact the CBWC office for further assistance. Thank you, once again, for your generous service to serve the church and here is a scripture on good stewardship to encourage your heart, as we carry on for the Lord!
Whatever you do, work at it with all your heart, as working for the Lord, not for human masters, since you know that you will receive an inheritance from the Lord as a reward. It is the Lord Christ you are serving. Col 3:23-24 (NIV)