The tax man thinketh
Alan went to see the tax man this morning. They were really pleasant. There were several outcomes:
1) It is far from clear to them whether we should fill in a French tax return this year. They are going to study the tax treaties between Britain and France and ring me, perhaps tomorrow, perhaps next week. Meanwhile we must just wait to hear.
2) We hit against a little philosophical problem. Missionaries do not receive salaries. They receive "support". This is virtually a theological concept which does not translate easily into taxman or bank language.
Thus:
If we declare our support as Alan's salary, then Pat's fees at language school and any other ministry expenses she incurs cannot be set against Alan's tax.
If we declare our support as a split salary, then that works for the taxman, but it means the bank will not want to give us a big enough mortgage because they will apply some formula like 3 times Alan's half plus 1 times Pat's half, rather than 3 times the whole figure. (Plus they know that we only get one sum of money into the account each month!)
Also our salary is somewhat inflated by the presence of our rent (we'll pay tax on that) and our ministry fund, which is there to pay for such things as mileage for ministry, books to give away, phone, internet etc., language school, training courses, conferences and the like. So far we've only really paid out for language school.
Anyway, a quick discussion with a missionary pastor in the area established what he was told to do:
He declares all their support as his salary.
He separates off their ministry fund into a separate account and does not declare it at all - he simply administers it, paying the expenses etc. from it.
He declares their rent as a benefit received in kind, and pays tax on the amount over a certain threshold.
So - I may not have to submit a French tax form this year, but if I do it will be horrifically complicated because I will also need to declare my British earnings between 1 Jan 2005 and 31 Aug 2005, and the tax paid on it so that they can do whatever the treaty says they should.
I said to the nice lady, "the second time I do this will be a lot more simple".
"Yes", she said, "I have several British friends and once you are in the system and it is all working OK it's fine."
1) It is far from clear to them whether we should fill in a French tax return this year. They are going to study the tax treaties between Britain and France and ring me, perhaps tomorrow, perhaps next week. Meanwhile we must just wait to hear.
2) We hit against a little philosophical problem. Missionaries do not receive salaries. They receive "support". This is virtually a theological concept which does not translate easily into taxman or bank language.
Thus:
If we declare our support as Alan's salary, then Pat's fees at language school and any other ministry expenses she incurs cannot be set against Alan's tax.
If we declare our support as a split salary, then that works for the taxman, but it means the bank will not want to give us a big enough mortgage because they will apply some formula like 3 times Alan's half plus 1 times Pat's half, rather than 3 times the whole figure. (Plus they know that we only get one sum of money into the account each month!)
Also our salary is somewhat inflated by the presence of our rent (we'll pay tax on that) and our ministry fund, which is there to pay for such things as mileage for ministry, books to give away, phone, internet etc., language school, training courses, conferences and the like. So far we've only really paid out for language school.
Anyway, a quick discussion with a missionary pastor in the area established what he was told to do:
He declares all their support as his salary.
He separates off their ministry fund into a separate account and does not declare it at all - he simply administers it, paying the expenses etc. from it.
He declares their rent as a benefit received in kind, and pays tax on the amount over a certain threshold.
So - I may not have to submit a French tax form this year, but if I do it will be horrifically complicated because I will also need to declare my British earnings between 1 Jan 2005 and 31 Aug 2005, and the tax paid on it so that they can do whatever the treaty says they should.
I said to the nice lady, "the second time I do this will be a lot more simple".
"Yes", she said, "I have several British friends and once you are in the system and it is all working OK it's fine."
Comments
However NI will be LOTS! Our contribution is, I think, about 100 euros a month, but the "employers" contribution which I hope will be paid by the mission our of our support rather than out of the money we actually receive, is about 300 euros a month.