Church & Taxation

[brabble]

I have seen two current affair type reports on Churches in Australia not paying taxes, which we don’t here in Australia. Apparently as far as one can invest in media reports some Churches are investing funds in lucrative business ventures (e.g. The Catholic Church - to quote only one example - it was report owns a large carpark in the centre of a state capital city). Further according to the media, some Churches are quite transparent about where funding comes from and how it may be dispersed, others are far from that.
I am wondering what the system is in other countries re Churches paying tax and governmental regulations/procedures involved, if any, in stating income sources and dispersal etc.?

He is Risen! Joyous Easter Season to all!

 

[rhiamom]

Well, here in the US of A churches are exempt from taxes as well, BUT they are supposed to operate as a non-profit organization. I think they have to file financial papers to back that up, but I may be wrong on this point. This does not mean that they are not allowed to accumulate any wealth. Money must be put aside, and even invested, to finance church buildings and repair, support of missionary work, things like that. They may, indeed, operate at a profit and become wealthy. This is not the norm, though, as most churches rely on weekly collections and the occasional fundraiser for their money. They get none from any government, unlike in, for example, Germany where you pay a church tax.

 

[vern_humphrey]

In the US Churches can claim tax-exempt status, and their finances are subject to government audit.

The point about accumulating wealth is well-taken. For many activities (hospitals, schools, and so on) a sound financial plan includes establishing a trust fund to provide a steady source of income for the activity. To attempt to finance these things out of the weekly collection plate is folly.

 

[brabble]

Thank you Vern Humphrey and Rhiamom for your replies and time given to my post. I have learnt a few things.

In the USA (or other countries) is a Church actually permitted to invest in a capital investment private sector business venture as an investment to provide profit to be used for legitimate purposes . . . running the Church administratively and also dispersing funds to charitable ventures and such things? If they retain profit from such a venture, they then would become profit making and for sure if any profit is retained in assets and/or liquidity? and if so, would they be subject to any level of taxation? and especially would they be subject to taxation for wealth accumulated perhaps over a certain point in assets and liquidity i.e. a certain percentage of wealth accumalated perhaps subject to tax? I would be most interested to in a confirmation that Churches in other countries are required/not required to submit/publish financial statements of sources of income and means of dispersal also fixed and liquid assets held.

This does not as yet anyway seem to be a ‘hot’ media issue here (South Australia)but with the recent other scandals in Christian churches loosing somewhat front page momentum, I feel sure the media will make it a ‘hot’ issue if at all they can and as hot as they can (and perhaps,** perhaps** it needs come into the light.) There was much media interest and hype too in the *Passion of The Christ *and *Da Vinci Code *and simply because anything adverse/contraversial especially to do with Christian is selling newspapers etc.
Seems from TV report last night that The Little Pebble (I think he is called - tho they did point out he is disapproved in Rome) is apparently bringing in massive wealth from welfare (children/unemployed members of his church in the main it seems) for example which tho strictly not my thread, does point to media interest in the general area.

 

[vern_humphrey]

brabble:

In the USA (or other countries) is a Church actually permitted to invest in a capital investment private sector business venture as an investment to provide profit to be used for legitimate purposes . . . running the Church administratively and also dispersing funds to charitable ventures and such things? .

Yes – depending on how it’s structured., the investment itself might be taxible. For example, if the Church owns stock in General Motors, General Motors is not tax-exempt. But the Church profits from that stock is.

brabble:

If they retain profit from such a venture, they then would become profit making and for sure if any profit is retained in assets and/or liquidity? .

The profit goes to an entity which is chartered for charitable purposes. Such an entity must be set up and approved by the Internal Revenue Service before they can engage in fund-raising activities.

To say they “retain profit” is a tautology – there is no “they” to do the “retaining.”

brabble:

and if so, would they be subject to any level of taxation? and especially would they be subject to taxation for wealth accumulated perhaps over a certain point in assets and liquidity i.e. a certain percentage of wealth accumalated perhaps subject to tax? I would be most interested to in a confirmation that Churches in other countries are required/not required to submit/publish financial statements of sources of income and means of dispersal also fixed and liquid assets held…

No. In the US only certain assets or property (such as “personal property” – cars, and real estate) is taxed. There is no overall “asset tax.”

brabble:

This does not as yet anyway seem to be a ‘hot’ media issue here (South Australia)but with the recent other scandals in Christian churches loosing somewhat front page momentum, I feel sure the media will make it a ‘hot’ issue if at all they can and as hot as they can (and perhaps,** perhaps** it needs come into the light.) There was much media interest and hype too in the *Passion of The Christ *and *Da Vinci Code *and simply because anything adverse/contraversial especially to do with Christian is selling newspapers etc.
Seems from TV report last night that The Little Pebble (I think he is called - tho they did point out he is disapproved in Rome) is apparently bringing in massive wealth from welfare (children/unemployed members of his church in the main it seems) for example which tho strictly not my thread, does point to media interest in the general area.

There will always be charlatans who seek to profit by pretending to be charitable. In fact, in my humble opinion, many famous charities are borderline at best.

 

[Lisa_N]

Even exempt organizations must pay taxes on “unrelated business income” so say a hospital owns a pet shop. That income doesn’t relate to their exempt purpose and thus if they make money on the pet shop it is taxed.

Churches incidentally do not have to file Form 990 so it’s quite possible some of them have unrelated business income that is never reported.

At any rate the THEORY is that IF they do invest in businesses that throw off this kind of income they will be taxed.

Lisa N

 

[brabble]

Hi Vern Humphrey! . . . first, I had to look up ‘tautology’ in the dictionary and I am not to sure I am any the wiser but I’ll stay with it until I DO get it! (Psychiatrist said to me once “Learn to lie to protect yourself!” “mmmmmmmmm” I thought, “interesting!” He was a Catholic psychiatrist lecturing then at our seminary here.)

What I meant was and excuse my misleading statement - if a Church actually owns (sets up/buys) a business venture from which it is gleaning profit. Apparently, and I am still in the research process for reliable sources including this site, in Australia approved churches pay no tax whatsoever at any point, for any reason at all.

I got ‘cornered’ on the issue yesterday and was quite ignorant of this area of administration. I am learning however now! Thank you.

As a PS and a different subject entirely! can anyone explain to me how to isolate quotations from a post one is answering - as in the process I note from other posts i.e. quotation boxes commencing “quotation from (name inserted)” I did state in some other post somewhere I am an armchair everything! . . .oft very indeed armchair!

 

[brabble]

Hi Lisa N - Thanks for the info which fills me in more. I am taking it you are in the North West of the USA and if so, could you fill me in on a Form 990?

 

[vern_humphrey]

brabble:

What I meant was and excuse my misleading statement - if a Church actually owns (sets up/buys) a business venture from which it is gleaning profit. Apparently, and I am still in the research process for reliable sources including this site, in Australia approved churches pay no tax whatsoever at any point, for any reason at all.

The thing which would be subject to taxation is the profit. The entity which pays the tax is the recipient. If the profit flows to a charitable entity, then it would not be taxed.

I got ‘cornered’ on the issue yesterday and was quite ignorant of this area of administration. I am learning however now! Thank you.

As a PS and a different subject entirely[/I]!

can anyone explain to me how to isolate quotations from a post one is answering - as in the process I note from other posts i.e. quotation boxes commencing “quotation from (name inserted)” I did state in some other post somewhere I am an armchair everything! . . .oft very indeed armchair!
/QUOTE]

See above – note how I pasted in "

) The paragaph above would look like this:

vern:

See how I have put in my own name, and closed the start of the box with a “]”?

It’s just a simple cut and paste. If you don’t get a quote box when you try it, it’s usually because you left out part of the beginning or end coding.

 

[brabble]

Thank you to those who have responded to this thread. I haven’t had tim to catch up with it. I’ll be absent from my computer for roughly 48hrs or so and I’ll catch up then. Thanks again, I know more now than originally for sure.

 

[brabble]

Thank you to those who have responded to this thread. I haven’t had tim to catch up with it. I’ll be absent from my computer for roughly 48hrs or so and I’ll catch up then. Thanks again, I know more now than originally for sure.

It worked! It worked! It worked! Thanks so much Vern Humphrey, just viewing and rather proudly my preview of post complete with official looking quotation box! I am learning so much, so much from the threads in this forum. A great place to be!
P.S. These smileys fascinate me! aren’t they great little critters! I wish we had one, though, with a smile and awink and the tongue
firmly in the cheek!

Dear Vern Humphrey and all - Just back in this thread for a bit and more time at my computer than I had anticipated. Thank you to all who have passed info on to me. I think the problem perhaps here in Australia that the media has isolated for focus is brought about because if a Church is registered as a charity, that is where it ends apparently. There is no requirement to submit finanancil statements revealing income and expenditure sources and recipients etc.
Hi Vern Humphrey - thank you very much for the instructions - this is how I am learning more and more about the computer which my son has given me and avery sophisticated piece of machinery . . . the quote box has worked and I’m feeling now a bit of a professional which is completely illusory and sooner or later fact will point this out to me. So much these machines can do!