Should GST on Fast Offering payments in Canada be recorded?

I have been auditing some wards and seeing some who claim GST on Fast Offerings and some who do not. My understanding is that we should not claim GST on fast offerings as we are paying for expenses that are not in the church's name. In Canada the Church gets 50% of the GST back therefore it is important that we are claiming GST only in situations that the tax law allows. Please advise.

matthewjohnmay wrote:I have been auditing some wards and seeing some who claim GST on Fast Offerings and some who do not. My understanding is that we should not claim GST on fast offerings as we are paying for expenses that are not in the church's name. In Canada the Church gets 50% of the GST back therefore it is important that we are claiming GST only in situations that the tax law allows. Please advise.

This issue was discussed at length in the thread Fast Offering funds and tax. Near the end is a clarification from a Church employee that explains that we are to record the all sales tax (US) and GST (Canada) that is paid.

In Canada, we have always been advised, by Price Comin & Johnson - Church accountants, that tax is NOT to be applied to FO checks. Since the latest note from the administation office states that tax is to be claimed for ALL disbursements, I asked for clarification from LUS. The response was "The Church does not receive reimbursement for FO expenses. The unit does not need to record the tax on FO expenses".

Freedom55 wrote:In Canada, we have always been advised, by Price Comin & Johnson - Church accountants, that tax is NOT to be applied to FO checks. Since the latest note from the administation office states that tax is to be claimed for ALL disbursements, I asked for clarification from LUS. The response was "The Church does not receive reimbursement for FO expenses. The unit does not need to record the tax on FO expenses".

Unfortunately, this is yet another example of getting conflicting information from what should be a reliable source. The person who gave that clarification I linked to was a Church employee in LUS, who gave one answer; you talked to another Church employee in LUS, who gave the opposite answer.

I mentioned in the other thread that it wasn't a particularly big deal if we recorded tax that we shouldn't -- the Church could always analyze the data and decide to exclude FO tax amounts if that was truly their policy. But now with CUBS, it's a somewhat different situation. If the Church really doesn't think the entries in MLS for tax associated with FO expenses are appropriate, then the amounts allocated to the different categories are wrong in MLS.

So what do we do to get the truly correct answer? Call again and go for best 2 out of 3? That doesn't sound very reliable, especially since you might happen to talk with the first analyst or the second, which hardly makes the test statistically valid. The Sales tax wiki article currently says that sales tax (for Utah and NC) and GST are to be recorded on all expenses, and references a 1999 letter (which I don't have). It would be nice to get it right, but I'm not sure whom to trust.

I agree, it's somewhat like a child asking the same question to a different parent to see if the answer changes. Since we have, in the past, received clear instruction from the Church accountants in Canada that we are not to add the tax to FO expenditures, I'm comfortable with continuing that practise. I'm confident that they have a better working knowlege of the tax laws than I do.

18 Feb 2011 - Quick update - i was speaking to one of the Church accountants today and raised this question. The response was that the Church (at least in Canada) cannot claim a tax refund for expenses where the Church is not the "end-user". That makes more sense to me than just a blanket "don't claim for FO payments because I say so".

Hope that helps.