http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001 Come back daily to see new posts and subscribe to our RSS feed. AdvancedMinistry Here is a wonderful way to encourage charitable giving. CRA has just introduced a Charitable Donation Tax Credit Calculator where donors can see exactly how much tax they will save when donation amounts are entered. Many taxpayers don't understand the difference between deductions and tax credits, or how amounts for non-refundable tax credits translate into tax savings. This is a great place to start the discussion. A link is included to the charitable donation rates for all provinces so it is a great teaching tool as well!  Advisors can help their clients plan strategically for charitable giving. Encourage clients to take advantage of provisions to donate appreciated securities on a tax free basis, and to group donation receipts with those of a spouse or common-law partner to maximize the high tax credit rate on one tax return. The higher rate is available when donations exceed $200. It often makes sense to save donation receipts for up to 5 years to use in a single tax year, so more donations will attract the higher tax credit. http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=20550 20550 Sat, 26 Feb 2011 08:45:00 +0000 The #1 way to find new money this fiscal quarter could quite possibly be through filing your tax return.   It is the most significant transaction of the year for millions of Canadians and yet millions of unsuspecting taxpayers leave thousands and thousands of dollars on the table over a lifetime of erroneous tax filing.  If you are ready to reverse that trend for yourself and your family, now is the time to jump in and learn more about how to pay only the correct amount of tax—and not one cent more!   Where to begin?  Often that’s with your prior filed returns. Thankfully, the Canada Revenue Agency (CRA) allows corrections to errors and omissions for a ten year period.  For example, in calendar year 2011, one can go back and adjust prior filed returns for tax years 2001 to 2009.  So as you get to know more about your taxes, keep that tax tip in your hip pocket.  You may in fact be able to recover thousands by adjusting those returns.   Tax sleuthing is a “nickel and diming” game, so know that the devil is in the tax details—small and large.  In my experience, the most missed tax deduction is the safety deposit box, found on Schedule 4 of the tax return.  If the cost is $75 a year, over ten years, that safety deposit box produces $750 in deductions and at a marginal tax rate of 40%, you’ll save $300 on your taxes—$30 a year—enough for Friday night pizza in most communities.   Moving expenses are also often missed, and they can be much more lucractive. That’s because real estate commissions—which can run into five figures—are included in the deduction, which is available if you moved at least 40 kilometers closer to the new work or self employment location and had income there.  Assume those commissions were $20,000; at a 40% marginal tax rate, that’s worth $8000 to you.  That might pay your legal fees, or some of the landscaping costs.   The most lucrative non-refundable tax credit, on the other hand, is the Disability Amount, available for those who are markedly restricted in their daily living activities by a disability.  This can also be transferred to their supporting individuals in some cases.  That credit is over $7000; a percentage of which will offset taxes payable.  This is approximately $1500 in real money, depending on your province of residence.  Missing this amount over a ten year period—and many families do—leaves you $15,000 short.   As you can imagine, this can go a long way to help those needing extra medical or home care throughout a period of chronic illness.   The above blog was produced by: Evelyn Jacks who is President of national educational institute, the Knowledge Bureau and author of Essential Tax Facts and Master Your Taxes.  She is also a member of the Federal Task Force on Financial Literacy. For more great information, please visit her blog http://www.evelynjacks.com/   http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=20302 20302 Sun, 20 Feb 2011 08:50:00 +0000   Canada Revenue Agency has a message for taxpayers who participate in gifting schemes – you will be audited! These gifting arrangements involve donation receipts that are issued for amounts that far exceed the money contributed to the "charity”. If the contribution is denied the taxpayer will have lost the amount given to the organization involved, the refund will have to be repaid and interest and penalties may apply.   For more information: http://www.cra-arc.gc.ca/nwsrm/lrts/2010/l101223-eng.html?=eml20101223 http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=18867 18867 Sat, 15 Jan 2011 17:33:03 +0000 January 1, 2011, is launch day for E.I. special benefits for those who run their own business or work for a corporation and control more than 40% of the voting shares. Independent workers who are eligible for regular E.I., including taxi drivers, hair dressers and fishers, are not eligible. Maximum coverage of 15 weeks maternity, 35 weeks parental, 15 weeks sickness and 6 weeks compassionate care benefits will be offered. Parental benefits in Quebec are already offered separately. Only Canadian citizens and permanent residents may apply. Special E.I. benefits for the self-employed can be accessed once 12 months has passed from the date of registration. If you registered before April 1, 2010 you are eligible as of January 1, 2011. In order to receive benefits you must experience at least a 40% reduction in the time devoted to your business as a result of childbirth, newborn care, your own illness or care of a gravely ill family member. At the moment the minimum amount of self-employment earnings that you would have had to have earned in the calendar year before your claim is $6000. There is a two week waiting period to receive benefits in most cases. Some people have employment and self-employment earnings. You can apply for either as long as you qualify for both. To apply for self-employment special benefits your income from both sources will be considered. When applying for regular benefits only your employment earnings will be included. The premium rate currently is $1.73 per $100 of insurable earnings everywhere but Quebec to a maximum of $747.37 (based upon maximum insurable earnings of $43,200). No matter when you register for special EI benefits for the self-employed you will have to remit deductions based on your full year's earnings! Unlike CPP premiums for the self-employed, you do not have to remit the employer's portion. Weekly special benefits are 55% of average weekly self-employment earnings for the calendar year before your claim. For benefits calculated from the 2010 tax year the maximum weekly benefit is $457. Benefits may be lower if you continue to work or your business has earnings. Self-employment earnings are defined as gross earnings minus operating expenses. For sickness or maternity benefits deductions are dollar for dollar of earned income. For parental or compassionate care benefits in excess of $200 per week you can earn 25% of your weekly benefit before your earnings are deducted dollar for dollar. The amount that you can earn per week before claw back when your weekly benefit is less than $200 per week is $50. You must file bi-weekly reports during the entire benefit period and all earnings must be declared. If you cancel your participation in the program within 60 days of registering you do not have to pay any premiums. You can leave the program after the 60 days as long as you have not collected benefits; there will be no refund of premiums and you must pay until the end of the calendar year in which you terminate participation. Your eligibility will extend to that date as well. Once you have made a claim and collected special E.I. benefits for the self-employed you will have to continue paying premiums for the duration of your self-employed career. Are E.I. Special Benefits for Self-Employed Persons for you? Every situation is unique so do your homework before you decide. Consider the nature of your business – do you have a key employee who can keep the income flowing in your absence? What about your own financial situation – is there more than one wage-earner in the household? Is there a spouse with employment income who may choose to take parental leave? Look at the risk management measures that you have in place such as life, disability, critical illness and office overhead insurance and buy/sell agreements. Does special E.I. for the self-employed fill a gap in your planning and is the cost/benefit ratio reasonable? Your financial planner, accountant or book keeper may be able to assist you with these questions. http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=18508 18508 Wed, 5 Jan 2011 23:02:09 +0000 At this time of traditional giving, CRA is urging Canadians to exercise caution when donating to charity as the holiday season approaches, by avoiding fraud and tax receipts worth multiple times more than the actual donation. To avoid an unexpected tax headache down the line, Canadian taxpayers and their advisors should review the rules when giving to their favorite charity this holiday season:1. Confirm Registered Charity status: Consult the CRA Charities Listings or call 1-800-267-2384.2. Get proper receipting: An official donation receipt for cash must include a statement that it is an official receipt for income tax purposes, the name and address of the donor, the CRA registration number (Business Number) of the charity, the amount of the donation, the year of donation, the CRA name and charities website and a unique serial number. In-kind donations must include the fair market value of the gift. Contribution of your time or skill, fees for day-care, purchase of lottery tickets where proceeds benefit a charity and payment of certain tuition fees do not qualify.3. Avoid Charitable donation schemes: CRA reviews all tax shelter arrangements, which by definition include tax shelter donation arrangements such as gifting trust arrangements, leveraged cash donations, and buy-low, donate-high arrangements. CRA routinely reduces the tax credit claimed to the amount of the taxpayers' cash donation or less, and may also charge interest and penalties. To date, the CRA has denied approximately $1.4billion in donations claimed, auditing over 70,000 taxpayers. Canada Revenue Agency provides detailed information on its website on fraud avoidance. Of particular interest are the 3 videos in the series Giving to Registered Charities 101. They offer an easy to understand look at the benefits of giving as experienced by both the donor and the recipient. This is an ideal introduction for teens and young adults ? CRA even has a YouTube channel!  http://www.cra-arc.gc.ca/chrts-gvng/dnrs/menu-eng.html http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=17998 17998 Wed, 15 Dec 2010 22:47:14 +0000 Taxpayers should prepare to file their TD1 Personal Tax Credits Return before the end of December to ensure their withholding taxes on their January pay cheques are correct. Each year certain tax and benefit amounts are indexed to inflation. This year these credits and thresholds have increased by 1.4 %. The link to the form is http://www.cra-arc.gc.ca/E/pbg/tf/td1/README.htmlThe Basic Personal Amount for 2010 was $10,382 in 2010; it has been increased to $10,527 for 2011, or $877.25 a month. The actual annual dollar equivalent is $1579.05 on the federal side; provincial credits will increase these amounts. For seniors the following credits are important, and most are indexed for 2011: Age Amount: This has risen by $91 to $6537 Infirm Dependant Amount: An increase of $49 to $4282 Disability Amount: Up by $102 to $7341 Caregiver Amount: A $59 increase to $4282 Pension Amount: Remains at $2000Canadians are also curious about making claims under the Medical Expense Tax Credit. For 2011, eligible medical expenses in excess of 3% of net income--up to a ceiling of $2052?can be claimed. This ceiling level has increased by $28 for the 2011 tax year. Medical expenses are claimed in the best 12 month period ending in the tax year. Unchanged in 2011, the amounts of eligible donations claimable qualify for a federal non-refundable tax credit of 15% for amounts less than $200 and 29% for amounts over $200 to a maximum of 75% of net income. Unused donations can be carried forward for five years. To take advantage of tax savings sooner, best to make donations before year end. http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=17869 17869 Fri, 10 Dec 2010 08:52:41 +0000 Having trouble saving for a new home? Your RRSP might come to the rescue. The Home Buyers' Plan allows qualifying first time home buyers to withdray up to $25,000 from their RRSP on a tax-free basis, for the purpose of buying or building a home.The withdrawals may be a single amount or the taxpayer may make a series of withdrawals throughout the year as long as the total does not exceed the $25,000 maximum.Tax-free withdrawals from an RRSP may also be made to do home renovations to meet the needs of a disabled person. You don't even have to use the funds borrowed from your RRSP in any specific way: you only have to show that you did buy or build a qualifying home. That means you can buy furniture or take a vacation after all the renos, too!!But there is one small catch: the funds withdrawn must be repaid to the RRSP, over a maximum 15 year period. If you don't, amounts not repaid must be included in your income in the year due. Discuss this with your advisors. http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=17868 17868 Fri, 10 Dec 2010 08:49:27 +0000  Businesspersons who are both corporate shareholders and managers of their companies can take advantage of tax concessions by carefully planning how they receive their remuneration. An owner/manager who chooses to be paid in the form of  salary, bonus or management fees is, in effect, an employee of the business. Receiving a dividend, on the other hand, means an owner/manager is treated as a shareholder of the business. Depending on an individual?s circumstances, both means of payment have benefits but choosing the best method demands careful forethought, planning, and execution because the Canadian Revenue Agency (CRA) can challenge your decision.  Circumstances that may lead an owner/manager to take a salary rather than a dividend include:·  If an owner/manager has unused personal tax credits or deductions, a salary can reduce the business?s corporate income without imposing additional personal tax liability.·  If an owner/manager has no other significant source of income, a salary may not increase his or her personal tax for income but could reduce the business?s corporate tax.·  If the business?s corporate income tax obligation is too large to qualify for the small business deduction, taking a salary or bonus can reduce the corporate income tax to a level that ensures the business is eligible for the deduction.·  An owner/manager who wishes to contribute to an RRSP must take a salary to qualify.Taking dividends instead of a salary is a choice that makes sense in other circumstances. For example, an owner/manager with no other source of income who receives dividends may pay minimal taxes or even none at all. Determining how to withdraw remuneration from a business while receiving the most advantageous tax benefits is a decision best made in conjunction with an accountant. However, categorizing the way one chooses to take remuneration from a business is not the end of the matter for an owner/manager.While seeking a tax advantage may be attractive, on its own it is an insufficient reason for selecting the means of receiving money from a business. There must be a sound business rationale and process to justify whichever decision is made: otherwise, the CRA may simply reverse the choice made by an owner/manager and find that a dividend is actually a salary or vice versa.A business can only deduct remuneration paid out as salary, bonus, or management fees if it can demonstrate that the owner/manager has provided services of a requisite value. Factors affecting whether the CRA would permit such a deduction include:·  The reasonableness of a bonus in relation to the profit earned by the company and the services performed by the owner/manager.·  The services provided by an owner/manager must be real and identifiable. ·  Any bonuses accrued for a particular year must be established within a reasonable time frame after the company?s profit for that year has been determined. In all such circumstances, it is recommended the business prepare an employment or management agreement which stipulates the owner/manager?s entitlement to the bonus, salary, or management fees and details the services provided in exchange for such remuneration.A different protocol applies if a business pays dividends to an owner/manager. Most importantly, the transaction must be documented as a dividend resolution and entered into the company?s record book. (A dividend resolution is a directors? resolution that authorizes a dividend to be paid to a specific class or classes of a corporation?s shareholders. In British Columbia the Business Corporations Act requires that a dividend resolution must be filed within a company?s minutes and all directors? resolutions and minutes must be kept at the company?s records office.) The CRA can demand proof that a decision to pay a dividend has been made at a duly constituted directors? meeting. If there is no proper evidence of such a meeting and such a resolution being passed, the CRA can declare the dividends to be a salary instead.If your corporation remunerates its shareholders with dividend payments, we strongly recommend that your lawyer or accountant prepare appropriate dividend resolutions and that you properly file them in the company?s minute book. Failure to do so could have unintended and possibly significant tax consequences for an owner/manager.                http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=17863 17863 Thu, 9 Dec 2010 19:47:38 +0000 The Canada Revenue Agency (?CRA?) allows a corporation to write off a management or shareholder bonus payable in the year of the accrual, provided it is paid out within 179 days from the corporate year-end.If the bonus if not paid out within 179 days, the accrual is denied and the CRA will add the bonus back to corporate income. The bonus would then only be tax deductible during the fiscal year in which it was paid.If a corporation?s year-end falls within 179 days of the calendar year, a bonus payable may provide for a tax deferral.For example, let us assume a Company has a corporate year-end of September 30, 2006 and currently has a profit of $100,000. The shareholders of the Company would like to wipe out any profit to avoid corporate tax. Therefore, the shareholders can issue a management bonus payable of $100,000. This will reduce corporate taxable income to zero and result in a ?payable? in the amount of $100,000. This is a tax deduction to the corporation on its September 30, 2006 tax return.If the bonus is paid out 179 days following September 30, 2006, we have a date of March 26, 2007. Therefore, the corporation has received a tax deduction in one year and the recipient (shareholder or manager) receives the bonus and is taxed on it the following year. This provides for a tax deferral.Of course, the requirement for corporations to withhold and remit tax on the bonus drastically reduces the benefit of using this deferral method. http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=17862 17862 Thu, 9 Dec 2010 19:36:33 +0000 The 2009 Federal budget announced a temporary 100% Capital Cost Allowance (CCA) rate for computer equipment and systems software.Computer equipment or systems software purchased after January 27, 2009 and before February 1, 2011 will be eligible for the 100% CCA rate, provided that the equipment and software would otherwise be included in Class 50 (55% write-off).In addition, the equipment will not be subject to the half-year rule in the year of acquisition allowing for the full write-off in the year of acquisition. http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=17731 17731 Sat, 4 Dec 2010 17:22:51 +0000 Looks like the public is getting up set about the amounts of salary the ED makes. After reading the article on the Hamilton Spectator website, read the commets.http://www.thespec.com/news/local/article/279162--siso-looks-for-new-leader http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=17409 17409 Fri, 26 Nov 2010 09:28:53 +0000 With the arrest of the Executive Director I wonder if this is possibly the beginning of the end for SISO.How can any credibility be brought back to an organization who, on the outside, seemed to be doing great work yet on the inside be in turmoil.  I am sure in the coming months we will get the full story. http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=16958 16958 Sat, 13 Nov 2010 11:35:11 +0000  Anyone with "earned income" can contribute to an RRSP, up to and including the year that the contributor turns 71 years of age.  Contributions can be made to a spousal RRSP up to and including the year that the spouse or common-law partner turns 71 years of age.  This maximum age was increased from 69 to 71 by the 2007 Federal budget, giving people an additional two years to contribute.Generally, earned income includes a taxpayer's income (earned while the taxpayer was resident in Canada) from the following:-income from office or employment reported on a T4 slip (line 101 of the tax return)-other employment income (line 104) - this includes foreign employment income, which must be reported in Canadian dollars.       -Employment income on a US W-2 slip may have been reduced by contributions to a "401(k), 457 or 403(b) plan, US Medicare and Federal Insurance Contributions Act (FICA)".  These amounts are not deductible on a Canadian tax return, and the gross employment income before these deductions would be included in earned income.-income (less loss) from a business carried on by the taxpayer, either alone or as a partner actively engaged in the business-income (less loss) from rental of real property-royalty income regarding a work or invention of which the taxpayer was the author or inventor-taxable support payments received-CPP or provincial disability pension income-amounts received under a supplementary unemployment benefit plan (not federal Employment Insurance)-lessdeductible support payments madeIf the taxpayer was not resident in Canada, but had income from employment performed or a business carried on in Canada, this may also constitute earned income, unless it was exempt from income tax in Canada due to a tax treaty with another country.Immigrants to Canada can get more information about Canadian income tax and RRSPs from the CRA publication T4055 - Newcomers to Canada.The maximum RRSP contribution amount that can be deducted is called the "RRSP deduction limit", and is also known as "contribution room" or "deduction room".  Your deduction limit is found on your Notice of Assessment or Notice of Reassessment from Canada Revenue Agency. Your 2010 limit would be on your 2009 Notice.  The deduction limit is calculated as:-18% of "earned income" for the preceding year, to an annual maximum (see following table)-less the "pension adjustment" amount, for participants in a Registered Pension Plan (RPP) or Deferred Profit Sharing Plan (DPSP)-less any "past service pension adjustment", for participants in a RPP or DPSP-plus any "past service pension adjustment" reversals-plus unused deduction room carried forward from the previous year http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=16736 16736 Sun, 7 Nov 2010 10:16:34 +0000  Just don?t make the assumption that you are right or that you were advised by a friend because he does it. When it comes to the CRA they make the rules. Payback such as CPP, tax and EI could cripple your business if you are not careful. If it is consistent, you could face fraud charges. These are the questions that should be asked when tryingto understand the working relationship between employed and self-employed ­and whether the intent of the parties isreflected in the facts. These questions relate to: ? the level of control the payer has over the worker; ? whether or not the worker provides the tools andequipment; ? whether the worker can subcontract the works or hireassistants; ? the degree of financial risk taken by the worker; ? the degree of responsibility for investment andmanagement held by the worker; ? the worker?s opportunity for profit; and ? any other relevant factors, such as written contracts. Look at the answers separately and then together.Consider whether or not they reflect the statedintention.  When there is no common intent, the CRA will decideif the answers are more consistent with a contract of serviceor with a contract for services.  Indicators that the worker is an employee ? The relationship is one of subordination. The payer willoften direct, scrutinize, and effectively control manyelements of how the work is performed. ? The payer controls the worker with respect to both theresults of the work and the method used to do the work. ? The payer determines and controls the method andamount of pay. Salary negotiations may still take place inan employer-employee relationship. ? The worker requires permission to work for other payerswhile working for this payer. ? Where the schedule is irregular, priority on the worker?stime is an indication of control over the worker. ? The payer determines what jobs the worker will do. ? The worker receives training or direction from the payeron how to do the work. The overall work environmentbetween the worker and the payer is one ofsubordination. ? The payer chooses to listen to the worker?s suggestionsbut has the final word. Indicators that the worker is a self-employed individual ? A self-employed individual usually works independentlywithin a defined framework. ? The worker does not have anyone overseeing them. ? The worker is usually free to work when and for whomhe or she chooses and may provide his or her services todifferent payers at the same time. ? The worker can accept or refuse work from the payer. ? The working relationship between the payer and theworker does not present a degree of continuity, loyalty,security, subordination, or integration, all of which aregenerally associated with an employer-employee relationship. For full details go to:  http://www.cra-arc.gc.ca/E/pub/tg/rc4110/README.html If you need assistance or clarification feel free to give us a call on 905 870-1832.     http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=16725 16725 Sat, 6 Nov 2010 12:41:28 +0000 A revised Registered Charity Information Return has been developed in response to changes announced in the federal budget of March 4, 2010. This new Form T3010-1 will be used by charities with fiscal periods ending on or after December 1, 2010 and will be mailed to charities early in January 2011. http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=16648 16648 Thu, 4 Nov 2010 13:38:31 +0000 The "Tax Free Zone" is also known as the Basic Personal Amount, a sum expressed in dollars but then multiplied by the lowest tax rate to arrive at the amount of tax savings that it represents. For example, the Federal BPA for 2010 is $10,382 and the lowest federal tax rate is 15%. Therefore the dollar value of the amount is 15% of $10,382 or $1557.75. This amount is deducted from any tax payable. Provincial basic personal amounts and tax rates vary. For example, in Nova Scotia the basic personal amount for 2010 is $8231. Multiplying that amount by the lowest provincial tax rate of 8.79% results in a tax reduction of $723.50. A resident of Nova Scotia, therefore, benefits from a combined federal and provincial tax reduction of $2281.25. Of course, since this is a non-refundable tax credit the reduction in taxes only applies if the taxpayer is assessed at least that much in the first place! http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=16318 16318 Sat, 23 Oct 2010 13:55:21 +0000 You have probably heard it said often that ? the Tone at the Top sets the pace for the organization.? It?s just as true for nonprofits as it is for business. Take for example, the matter of clarity and transparency in the organization?s reporting, internally and externally. If the Board Chair, the Board of Directors, and the ED are all pushing clarity and transparency, then that becomes the characteristic of the whole organization. And if that is not the case, then we tend to want to get away with whatever we can. So, let?s say were dealing with the ?cost-to-raise-$1? standard of performance. There is two ways to represent that: one is to report more obvious costs of fundraising, such as website and internet costs, printing costs, travel, hotels and meals, etc. The other way is to include salaries and benefits of the professionals and volunteers involved in cultivation and solicitation at all levels. Case Study #1 George S., the ABC Charity?s grant writer sees that the I Care Foundation wants to know the organization?s overall cost-to-raise-$1 in the application that they are currently preparing for the Foundation. So George goes to his Manager of Development, Mary, for the information, and she goes to the Financial Officer, Frank, in turn. The first thing these three do is look at how the ED, Herb T. has talked about the organization?s fundraising expenses in the past. The Annual Report had no listing for fundraising expenses at all. The narrative of that report spoke in glowing terms about the revenue?s raised, but not a word about expenses. The expense chart didn?t list fundraising expenses either; these were buried inside other, more general figures. Looking at the organization?s audited financial statement, one could not discern that there was anything at all expended for fundraising. It all looks like program and administrative expense. Consequently, Mary and Frank work together to get just the figures for the upfront costs of special events and direct mail. They add in the special coffee-table brochure they made up last year and the cost of the planned giving newsletter and the corporate menu of benefits. Then they project those costs over all the money that the development department brought in: direct mail, special events, major gifts, planned gifts, grants and corporate contributions. The result is that they come up with a cost of about $0.05 to raise $1 and look really golden. The Foundation loves it! They get the grant because the foundation didn?t look into the details of how that cost to raise $1 was determined. And the whole thing starts at the top of the organization because Herb has repeatedly shown that he doesn?t want to tell the public how much is being spent on fundraising. Case Study #2 Melanie Z, the grant writer for Long-Established Charity Enterprises applies for the same grant from the I Care Foundation. She goes to her Manager of Development, Eugenia, for direction and she, in turn, goes to the Financial Officer, Marty for help. They sit down at a similar conference table to work this out. And they all are aware that the ED, Paula has repeatedly said that fundraising is an important, even a vital, part of the organization?s work and has urged clarity and transparency in all reporting. In their annual report LECE has always separated fundraising expenses from other expenses and has included salaries and benefits there and noted them. In the pie-charts for revenue, we see fundraising revenue broken out, and we see a similar section of the expenses chart related to fundraising. Paula has set the standard that all fundraising is a ?profit center? and should be accounted that way. Consequently Melanie and Marty put together a cost of fundraising that comes out at about $0.35 to raise $1 and they put that on the application to the Foundation. And they don?t get the grant, because someone at the Foundation failed to note the difference in reporting. What?s the lesson? Well, what it?s NOT is that Foundation is careless. The lesson is that leadership at the top determines how clarity and transparency in reporting is done throughout the organization and is reflected on things like grant applications. This in turn is reflected in how others outside view the organization. And, yes, if you hide the fundraising expenses your cost to raise $1 will look pretty good on paper and you?ll get the grant. But is that what you want to do? Is it ethical? Is it the truth? The lesson ALSO is that, in this instance, you have to go to the Foundation staff and interpret and clarify how you have arrived at that cost-to-raise-$1 figure, and make sure they are aware that there are different ways nonprofits can represent this cost. You need to tell them that while you?ve put in ALL the expense, other nonprofits may tend to skimp on clarity and put in only what they have to in the way of fundraising expenses, and help these foundation staff see the difference between the two methods of calculating this important performance index. In the application itself, you can break out all the various components and then create a commentary paragraph to explain the situation and head off unwanted and unwarranted comparisons between the reporting methods of various nonprofits. Honesty is the best policy. And it starts at the top. AND it may take a relationship and some words of interpretation to help others understand the results of your honesty. So being honest, clear and transparent takes more work and is harder to do. But consider this, when you got into nonprofit work, was it ease of life you had in mind? Ask your ED that question. Acknowledgements: The above article was written by John Fike and clearly illustrates the need for Tone at the Top.    http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=16185 16185 Mon, 18 Oct 2010 14:12:33 +0000 Have you experienced fraud within your organization? If so what did you experience? And what sector do you work in? i.e. Private, Public or Charitable/Nonprofit.My experience has shown me that fraud exists in all sectors. We will be presenting more information to this site as things move forward.ThanksJames   http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=16145 16145 Sat, 16 Oct 2010 11:25:45 +0000 The Canada Revenue Agency issued a release advising Canadians who plan to file their tax returns electronically, (or who do not submit information slips and receipts with their paper-filed return) to keep their tax records in case they are contacted by the Canada Revenue Agency (CRA). Once tax returns are filed, the CRA begins work to verify the income reported, as well as the credits and deductions claimed. These reviews are an important way the CRA ensures that Canadians are paying their taxes. Last year, the tax returns of approximately 2.7 million individuals were reviewed and an additional $700 million in taxes was assessed by the CRA. Some initial reviews of deductions and credits are conducted when returns are filed, and before taxpayers receive their Notice of Assessment. However, the majority of reviews take place later in the year, as the CRA works to verify the information on an individual?s tax return and compare it with the information provided by other parties, such as an employer or a spouse or common-law partner. It is important that we work together to ensure that we have an audit proof tax return for 2010. For more information contact me on 905 870-1832 or info@finlay-associates.com http://www.finlay-associates.com/index.cfm?i=13291&mid=25&blogid=5001&comments=15806 15806 Fri, 8 Oct 2010 10:06:26 +0000