Young Associates founder and principal associate has been named one of the four faces of innovation in Canada by Metro News. The article profiles four innovative Canadians, praising Heather for her pioneering work in developing sound financial management best practices in the Canadian arts sector.
At first, Heather Young didn’t know much more about arts administration than the students she taught at Humber College in Toronto 20 years ago.
But what she quickly learned in trying to teach sound fundamentals of arts management was that hard information on the topic was difficult to muster — let alone make available to budding artists and art groups. As good innovators often do, she saw a need and filled it.
Young crafted her own materials, including Finance for the Arts in Canada, a textbook and reference guide to aid in running an arts organization. Her company, Young Associates — with a staff of 12 — now serves as a financial management resource for 90 Toronto companies. She’s soaked in years of knowledge working with arts groups in the city — something she believes is essential for innovation.
“Get to know your subject area as intimately as you possibly can,” she said. “You need to know the upsides and downsides of what you’re working on … and in particular the gaps in the available supports.”
Building on feedback from the sector, including organizations such as CAPACOA seeking a broader definition of who could qualify, this finalized version attempts to clarify what CRA finds as acceptable examples of appropriate purposes to merit charitable status.
First, there are three broad categories of arts-related activities that could qualify as charitable purposes under one or more of the four heads of charity, including:
Advancement of education;
Exhibitions, performances and presentations of artistic works;
Activities that enhance an art form or style within the arts for the benefit of the public.
In particular, CRA has clarified and expanded details in its arts forms and styles appendix, thus opening the door for more presenter members of CAPACOA to garner or maintain standing as a charity.
If you are interested in exploring these ideas in more detail, these links will be of value:
DIGit: Not-For-Profit Numbers is a weekly roundup of news and blog links related to not-for-profit financial management with a world-wide scope.
This week in DIGit: An interesting article in the New York Times about a museum in Brooklyn who is trying to figure out what to do with many donated pieces in its collection that are now deemed not of museum quality or fake. Also this week, an updated guidance from the Canada Revenue Agency about returning donations.
On November 30, I attended the Canadian Payroll Association’s 2012 session on Year-End & New Year Requirements. The binder provided to session attendees has been added to the reference collection at the Young Associates office. It contains a number of sections of information which are of interest to us and our clients:
Starting with changes to the maximum pensionable earning for both EI & CPP: the maximum pensionable earnings for CPP is raised to $51,100 and $47,400 for EI. The 2013 CPP rate is the same, but the EI rate is going up to 1.88% from 1.83%.
Additionally, the CRA will, as of January 2013, stop automatically sending out paper copies of the PD7A (payroll remittance forms) to those who are already filing electronically. It is strongly recommended that all companies register for “My Account”; it will allow immediate access to payroll account.
In order, to set up “My Account”, you will need to have permission to access your company’s information (RC59 filled out) and your 2011 Notice of Assessment from your personal return. This is the future of easy access to all your company’s CRA information.
After 2012, there will be no more mail out of the Web Access Code (WAC) – used to upload T4s/T4As etc. to the CRA – and the WAC will not expire. Employers must keep the final letter in a safe place for reference for following years. Also, T4 Desktop application is cancelled effective January 2013.
The CRA has made some improvements to the PDOC. It includes: an additional tax bracket for earners over $500k, tax exempt, year-to-date input field, and improvement to the results screens. They have also created a smart phone app for basic personal tax returns and are on Twitter.
Service Canada is moving away from using ePass. Moving forward, you will need to sign in using either their Sign In Partners (BMO Credit, BMO Debit, Scotiabank Online or TD Canada Trust easy Web) or by setting up a GC Key. This change took effect September 30, 2012.
There are changes to the way employees and employers contribute to CPP while the employee is receiving CPP payments (aged 65-70). Recommend reading on this topic: the updated information in Section 2, pages 32-35.
The changes to ROE Web are as follows: there is a new online credentials sign in, as mentioned in paragraph 5; ROEs filed online are no longer required to print off copies for the employees. Employees can access this information through their “My Service Canada Account”.
There is an interesting program that was introduced in Budget 2011; it is called Working While on Claim Pilot Project. This allows an individual to keep a portion of their EI payment in addition to their other earnings.
Example: Blake has been laid off from his full-time job and is collecting EI benefits of $450.00/week. He has found a part-time job that pays $600.00/week.
Under the new pilot project his EI benefits will be reduced by 50% of his additional earning, leaving him with a combined weekly income of $750.00.
[$450 – ($600.00 x 50%)] + $600.00 = $750.00
There is a good possibility that SIN cards are going to be phased out in the near future, but at this time there is no deadline.
There will be changes in GST/HST over the next couple years. The first change will be British Columbia reverting back to 7% on March 31, 2013. Secondly, Nova Scotia is reducing their HST from 15% to 13% over the next 2 years, down to 14% in 2014 and 13% in 2015. Lastly, PEI will be implementing an HST of 14%, effective the date of implementation.
And, lastly the penny began to be phased out in the fall of 2012 and the Royal Canadian Mint will stop distribution. While the penny will retain its value, gradually cash transactions with be rounded to the nearest $0.05. Non-cash transactions, cheques, EFTs, and debit or credit card payments will still paid to the cent. There is no requirement for employers to round to the nearest $0.05 when paying by cheque or direct deposit; however, employers paying in cash will gradually have to round payments to the nearest $0.05.
There is a Year End and a New Year Checklist in the binder.
Back in November, I attended a symposium called L3C and the Arts at Columbia University in New York City. The event was designed to be discussion around how a new form of incorporation (the L3C) in the US can be used for arts organizations. I Live tweeted the event and the Storify of the tweets from the day can be found below.
Low-Profit Limited Liability Company (L3C) is a form of incorporation that is a hybrid between a for-profit business and a not-for-profit business. It was formed by augmenting the existing Limited Liability Company (LLC. We don’t have the equivalent in Canada; essentially it’s a hybrid of a sole proprietorship and a corporation). The L3C differs from the LLC in that the articles of organization (similar to articles of incorporation in a Canadian Not-For-Profit) must state one of the IRS’s charitable purposes. Because of this, an L3C can receive the money that charitable foundations must give each year (called Program Related Investments, or PRIs).
Basically, an L3C allows a company to accept investment and payout investors while still being able to receive funding from foundations. Champions of L3Cs say that it’s a great way to diversify revenue sources and raise capital to start an organization while critics of L3Cs say the form of organization isn’t so attractive because there isn’t the ability to issue tax receipts for donations.
The L3C and the Arts symposium brought together the co-founder of an L3C organization, a lawyer involved in the drafting of the L3C legislation for several states, the executive director of a theatre arts services organization , the executive director of a theatre organization with an L3C subsidiary organization, and the head of Columbia’s theatre program. After being briefed on the technical aspects of the L3C, the discussion then turned to how the L3C can work in the arts world.
Here’s some main points that brought up for how the L3C can work in the arts:
The L3C is an interesting new tool to consider when forming new organizations, but will not work for all circumstances.
An existing NFP should not change it’s form of organization to an L3C. It should be considered for organizing a new company or a new subsidiary business.
The main drawback for arts companies is the inability to issue tax receipts for donations.
It may be a good form for independent artist and smaller collectives, such as those who use crowd funding sites like indigogo to raise money.
Art forms that have a higher capital potential (like film) may be more suited for the L3C than art forms with a lower capital potential (like visual arts organizations). Performing arts falls between film and visual arts.
I tried to keep a Canadian perspective in mind when listening to the discussion. The L3C form would not work exactly in Canada mainly because Canadian not-for-profits do not rely as heavily on foundation revenue as in the US. But, the discussion on how hybrid forms of organization can work in the arts was quite interesting and applicable for Canadian not-for-profits, especially with the introduction of the hybrid Community Contribution Companies in British Columbia.