$17b in church income goes tax-freeWednesday, October 13, 2021
BY AVIA USTANNY COLLINDER
Jamaica's churches report a combined $17 billion in assets, reflecting cash income as at July 2021, despite online worship sessions hitting the offering plates. The data did not include property values.
Data obtained from the Department of Cooperative and Friendly Societies (DCFS) show the funds were reported by 431 churches — an average of $39.3 million per church. It said its records reflect that for the year 2019, total income for churches amounted to $701 million, but cautioned that this figure should not be represented as a year on year trend of total incomes relative to the $17 billion for 2021 so far.
It was not clear how much of this income is generated from tithes and offerings. However, many churches in Jamaica are property rich and continue to operate businesses which are linked to providing services for the church community. The businesses range from plazas to light manufacturing as well as farming operations undertaken by some churches.
Still unclear from the data is how these assets are accounted for, whether they are tied into reporting as being part of the church or separated.
It is therefore a blessing, some would say, that churches in Jamaica are protected under section 10 of the Property Tax Act, as no tax is levied on church-owned buildings such as chapels, rectories, caretaker's cottages, schoolrooms, or church halls, along with lands attached, which are used as churchyard or burial grounds.
But, what of other properties owned and businesses run by churches? The religious organisations can protect income from garnishment by the Government, and its tax arm, by registering as a charitable body.
DCFS, in an official response received on October 8, 2021, told the Jamaica Observer, “Our most recently updated records reflect that churches registered with the department as charitable entities have a total of $16,958,778,530.78 in assets by way of total income earned.”
In general taxation matters, the regulator said, “The matter pertaining to the taxing of churches is one best addressed by TAJ (Tax Administration of Jamaica), which is the competent authority in this regard. Sometime ago, the TAJ had taken a position on the issue, which also led to the amendment of the articles to speak to reimbursement to directors and directors not being paid a salary from the RCO's [Registered Charitable Organisations] funds.”
The regulator outlined, “DCFS is the regulator per the Charities Act for RCOs; however, this does not take away the regulatory authority of the TAJ under the Tax Administration Act, and other pieces of legislation that the TAJ administers, nor does it restrict the hands of the JCA under the Customs Act and other regulatory bodies that may grant relief to RCOs.
Meris Haughton, director of communications at the Tax Administration Jamaica (TAJ), told the Business Observer, “They (churches) would not pay income tax and certain other taxes once registered under legislation. But for staff, they are still liable for deducting and paying taxes.”
Churches are exempt from property tax as well, she outlined, if property is being used for worship and other charitable purposes. Haughton said that schools and services provided by churches were charitable.
Asked if more commercial activities were also classified under charities, she said that would have to be researched.
In the past, the influential Jamaica Council of Churches (JCC) and the Jamaica Baptist Union cautioned the Government against interfering with the property tax exemption churches currently enjoy.
Under the Property Tax Act, exemptions from property tax are given to all buildings used for worship and as schoolrooms, as well as the lands immediately attached to them being used as churchyards and/or cemeteries.
It is said that some of the traditional churches are struggling to pay taxes for those lands owned that are not being used for worship and for burial.
Haughton explained, “We would not have data [on churches] because they don't pay mainstream taxes. Under the legislation they would not be liable if they are a church body, and even before the Charities Act, the Income Tax Act, and the property tax speaks to that as well. The Charities Act has made it easier to manage these bodies covering all their entitlements as a charitable organisation.”
The Business Observer reached out to individual churches on the matter of taxation but no response was received. Attempts were also made to reach the Jamaica Council of Churches and its representatives, but that body appears to have gone offline under COVID-19 conditions.