By Susan Smith , Staff Reporter 
NORTHON COKE... Leaders from many recently established churches do not realise that some of the money received from
collections is taxable.
EVEN CHURCHES have had to improve their financial management to handle the pace of modern Jamaica.
This is a direct result of the rapid growth in their business activities as well as the drive by the revenue services in tracking down taxable income, even among non-profit organisations.
Many churches now employ an administrator to monitor their financial resources, and to provide funds for outreach programmes and benefits for members. Contrary to popular belief, such administrators are not there simply to count the collection.
"We too have to pay all the statutory deductions and meet the Government's requirement," said Pastor Patrick Red-wood, chief financial officer of Whole Life Ministries and treasurer of the Full Gospel Churches in Jamaica.
The post of business administrator has become the second most important behind that of the pastor. And critically, by appointing administrators to oversee the financial operations of the church and its ministries, pastors can remove themselves from the possibility of being accused of financial misdeeds.
"We have to prepare annual financial statements for the Government and ensure that the inflows and outflows of funds are properly accounted for," Pastor Redwood added.
PROBLEMS
Ethlyn Northon Coke, principal of the tax department at Deloitte and Touche, said churches are becoming more aware of the need for tax services.
Traditional churches are finding new ways of making money to fund their outreach programmes. Most of these are registered as non-profit organisations but many assume that because they are churches, they are non-taxable.
To obtain charitable status under Section 12H of the Income Tax Act, the activity under consideration must be for a scientific, religious or educational purpose, she said. Other activities carried out by a church are not tax-exempt. Nevertheless, quite a number of churches have been establishing outreach programmes which are taxable. Operations such as bookshops, bakeries and others of this nature are considered to be outside the purposes stipulated.
EASILY TRACED
This level of ignorance has placed some churches under the harsh lash of the law and they are easily traced by the revenue bodies.
"It's easier for the revenue department to catch a church because it's in an established location," Mrs. Norhton Coke said. "You can't catch higglers, they are more mobile."
A church administrator being more knowledgeable of the tax law would help to bridge the gap in these situations. Mrs. Norton Coke also observed that leaders from many recently established churches do not realise that some of the money received from collections is taxable.
"Most of the newly-formed churches see no need to pay," she said. "They assume that their salary out of the church collection is non-taxable too."
She explained that the sum of money removed from the collection to pay the pastor and his staff is taxable because it is treated as income.
"The leaders of these churches, even certain high- profile pastors are being caught by the tax-payer audit," she said. This is because they assume that whatever they were paid out of the church collection was non-taxable.
"Many people don't understand the concept. That's how they have been running into problems and therefore they need to have proper administrators who understand the tax laws," she said. Similarly, churches with the charitable status under Section 13Q of the Income tax Act should file tax returns on hefty collection or donations. Many of the more recently established churches fall in this category and are unaware of the requirements.
DIFFERENCE MADE USING ADMINISTRATOR
Many churches use a financial controller or administrator to manage their affairs and don't have a problem, Mrs. Northon Coke said. Pastor David Henry of Swallowfield Chapel said that having a finance team to oversee the church's many projects was the only option for successful management of the financial resources.
"From a Christian perspective, one has to be a good steward of resources," Pastor Henry said. He believes that the system of accountability is important as the church needs to be scrupulous about handling money.
Whole Life Ministries, which initiated the Build Jamaica Fund and operates a printery, a credit union, bible school and a girls home, would not have achieved so much without a chief financial officer and a support team, according to Pastor Redwood. Not every church has the desired 'charitable organisation status'.
Some of the more traditional ones have the status under Section 12H of the Income Tax Act while the newer ones often fall under Section 13Q of the Act.
To the church, the former is considered more flexible because it attracts less taxation from the Government, but according to Mrs. Northon Coke it is more difficult to attain. But unless churches appoint administrators who are knowledgeable of these laws and the hindrances they pose, few will see the need to change them.
