I. BACKGROUND INFORMATION CONSIDERED BY THE AD HOC COMMITTEE

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1 REPORT Edmonton Public Teachers Local No. 37 of the Alberta Teachers Association Telephone ; FAX ; Web Site local37.teachers.ab.ca DATE: February 13, 2015 TO: FROM: SUBJECT: Council of School Representatives Ad Hoc Committee Local Honoraria Proposed Changes to Local Honoraria The mandate of the committee was to review the current honorarium and allowance structure in place for Edmonton Public Teachers Local 37 Executive Committee and make recommendations for consideration. The Committee reviewed the current honorarium and allowance structure in place for the four large urban locals, Edmonton Public and Catholic and Calgary Public and Separate Locals. The rationale in comparing the 4 large urban locals was because of the release time in place for the local president and the Local office structure. Advice was also sought from the Alberta Teachers Association finance department. I. BACKGROUND INFORMATION CONSIDERED BY THE AD HOC COMMITTEE a. From the ATA as general guidelines The underlying principle around expenses and honoraria is that it should be aligned with Canada Revenue Agency (CRA) guidelines on taxable income and benefits. In brief: a) reimbursement of expenses are non-taxable b) any reimbursement of time is taxable (i.e. honorarium). For item a) above: expenses must be reasonable (CRA term) so there are no implied benefits received by the recipient, any personal benefits derived from a payment is a taxable benefit. What this means is even if there is evidence that an expense was incurred, the expense still have to be reasonable. If the claim is for a $300 dinner tab, CRA would still view this as a taxable benefit because it is not reasonable. To ensure reasonability and to avoid time consuming adjudication, the local s policy on personal expenses incurred for local business must be well articulated. By way of example mileage rate, subsistence rate or reasonable per diem allowance in lieu of (it cannot be both). Other expenses such as office allowance or other out of pocket expenses must be based on actual expenses. If only allowance, that is, the claimant does not need to provide receipt the claimant must still accumulate the receipts as expenses are incurred. The onus is on recipient to be able to provide documentation if required by CRA. Generally, any allowance more than $500 per year would be considered a taxable income. The policy must be explicit in setting out conditions on payment of expenses and any expense allowances. These conditions should include description of who might be entitled to claim an expense and why they might be entitled by outlining i.e. duties and responsibilities of local officers and committee members. Payment to other claimants who do not have an official position is not really an issue since these types of payments are one-off. 1

2 The Association has been advising other locals to get away from giving out allowances for out of pocket expenses. The CRA generally views these types of allowances as taxable benefits and their position is that while they recognize volunteers incur personal expenses in the fulfillment of their duties, they should not be receiving a personal benefit from non-profit organizations (NPO). In short if volunteers are paid an allowance, CRA will take their cut, and volunteers keep the rest for their expenses in recognition of their non-employment status. Because they are volunteers, they really are not supposed to get remunerated at all. For locals paying allowances and honorarium, just call it an honorarium and declare it as such. The rest must be based on actual receipts and activity that is well documented and reasonable as per local policy. The Association kept talking about policy because this is the first thing that regulators would look at to determine if rules are being applied consistently to all officials of the Non-Profit Organization. This is the first determination if a benefit is received, that is, if applied to one individual, but not everybody else. One final thought on individuals serving as volunteers for NPOs (which includes charities): because of NPOs tax exemption status, the general principle is that there cannot be a benefit derived from the organization by one individual or it becomes a for profit organization. Therefore, a volunteer is either just that, or an employee and therefore subject to income tax. The Association and all its subgroups are subject to annual federal NPO voluntary disclosures which the Association files every year. b. From Calgary Public Local 38 Guidelines: 6.B.3 Calgary Public Teachers, ATA Local 38 shall reimburse members for receipted child care expenses incurred, up to a maximum of $30.00 per event, while attending Local committee meetings or other activities approved by the President. This policy does not apply to attendance at General Meetings, ARA or Summer Conference. 6.B.4 Members of Calgary Public Teachers, ATA Local 38 Executive Committee, Chairs of other standing committees, Chairs of the Substitute Teachers and Extended Disability Groups, and members of the Negotiating Sub-Committee receive $35.00 per meeting to a maximum per diem of $70.00 plus travel expenses for attendance at meetings where they are acting in the capacity of their position. 6.B.5 All members of Calgary Public Teachers, ATA Local 38 not identified in policy 6.B.5 receive $25.00 per meeting to a maximum per diem of $50.00 plus travel expenses for attendance at meetings held on a normal school day. 6.B.6 Members of Calgary Public Teachers, ATA Local 38 receive $50.00 per meeting to a maximum per diem of $ plus travel expenses for attendance at meetings held on a non-school day. 6.B.7 The President and Executive Assistant of Calgary Public Teachers, ATA Local 38 and District Representatives shall not receive per diem as established in Local Policies 6.B.5, 6.B.6, and 6.B.7. Based on the guidelines, other than the office of the president, a per diem is allocated to executive members. 2

3 II. COMMITTEE PROPOSAL AND RECOMMENDATIONS a. Local President The committee reviewed the allowance, release time, travel/car allowance, salary and benefits and professional development allowance of the EPTL president in comparison to the other 3 urban local presidents. It should be noted that the Edmonton Catholic Local president is the only president with half-time release; the other 3 local presidents all are released full time to fulfil their duties for the local. Recommendation 1 That the president allowance be changed from 100% of the minimum principal s allowance to 100% of the maximum principal s allowance. NOTE this would place the EPTL president on the same allowance scale as the other two local presidents that are on full-time release. Recommendation 2 That the EPTL president remain at full-time release. NOTE The duties of the president, in the second largest local in Alberta are such that full-time release would be necessary to serve the needs of the local and its teachers. Recommendation 3 That the travel/car allowance be changed from $ up to $ NOTE Currently the EPTL president travel/car allowance is significantly lower than that of the other 3 local presidents. This would put the travel/car allowance to the same level as two of the other local presidents. Canada Revenue Agency considers 55cents per km for the first 5000 km, and 49 cents per km thereafter as reasonable, the local needs to follow CRA guidelines. Recommendation 4 That the salary and benefits remain the same, but to be reviewed after the next signed Collective Agreement. NOTE The current formula reflects the years of education and experience, however it was noted that if this were to be changed to something similar to two of the other locals (Salary equivalent to the maximum salary on the basic salary schedule) this may entice additional candidates to seek the office of the president. 3

4 b. Vice-Presidents The committee reviewed the allowance of the EPTL vice-presidents in comparison to the other 3 urban local vice-presidents. It should be noted that the EPTL vice-presidents allocation is almost double that of the other vice-presidents of the other 3 locals, however it is the belief that the Local is receiving value for the positions. Recommendation 5 That the allocation for the vicepresidents remain the same 20% each of the minimum principal s allowance and of this amount be less an annual $700 allocation for kilometers which would be non-taxable. NOTE while it is recognized that these are volunteers and as volunteers will incur personal expenses in the fulfillment of their duties, they should not be receiving a personal benefit from non-profit organizations (NPO). The addition of a per diem of $700 is to help off-set the tax implications and to recognize fuel costs and wear and tear on vehicles and to recognize that CSR reps receive $25.00 per CSR meeting (which is a one year pilot). This is in recognition of attending the following monthly meetings CSR, TO, Executive Committee. The non-taxable amount for car allowance that is paid as a reasonable per km rate is taxable. CRA considers 55 cents per km for the first 5000 km, and 49 cents per km thereafter as reasonable. Should this allowance be chosen business km must be logged as well as total km per year. The Local would then provide a T2200 Declarations of Conditions of Employment that states that it is required to use a personal vehicle for business purposes. This would allow the individual to claim a portion of vehicle expenses for the year to help offset the taxable allowance paid. The allowance should be included in Box 14 of the T4 and noted in the additional boxes at the bottom of the form as a taxable benefit. Recommendation 6 That the allocation for the vicepresidents be reviewed after the next signed Collective Agreement. NOTE there may be changes to the minimum principal s allowance that may impact the EPTL vice-presidents allocation. c. Past President The committee reviewed the allowance of the EPTL past president in comparison to the other 3 urban local past presidents. It should be noted that the EPTL past president allocation is almost double that of the other past presidents of the other 3 locals, however it is the belief that the Local is receiving value for the position. 4

5 Recommendation 7 That the allocation for the past president remain the 20% of the minimum principal s allowance and of this amount be less an annual $700 allocation for kilometers which would be nontaxable. NOTE while it is recognized that this is a volunteer and as a volunteer will incur personal expenses in the fulfillment of his/her duties, he/she should not be receiving a personal benefit from non-profit organizations (NPO). The addition of a per diem of $700 is to help off-set the tax implications and to recognize fuel costs and wear and tear on vehicles and to recognize that CSR reps receive $25.00 per CSR meeting (which is a one year pilot). This is in recognition of attending the following monthly meetings CSR, TO, Executive Committee. The non-taxable amount for car allowance that is paid as a reasonable per km rate is taxable. CRA considers 55 cents per km for the first 5000 km, and 49 cents per km thereafter as reasonable. Should this allowance be chosen business km must be logged as well as total km per year. The Local would then provide a T2200 Declarations of Conditions of Employment that states that it is required to use a personal vehicle for business purposes. This would allow the individual to claim a portion of vehicle expenses for the year to help offset the taxable allowance paid. The allowance should be included in Box 14 of the T4 and noted in the additional boxes at the bottom of the form as a taxable benefit. Recommendation 8 That the allocation for the past president be reviewed after the next signed Collective Agreement. NOTE there may be changes to the minimum principal s allowance that may impact the EPTL past-president s allocation. d. Divisional Representatives The committee reviewed the allowance of the EPTL Divisional Representatives in comparison to the other 3 urban locals. It should be noted that Edmonton Catholic Local does not have divisional representatives and Calgary Public pays a per diem. The EPTL allowance is almost double that of the other local that pays an allowance. It is recognized that they provide a needed and important voice in Local deliberations and decision making. 5

6 Recommendation 9 That the allocation for the divisional representatives remains the 10% of the minimum principal s allowance and of this amount be less an annual $300 allocation for kilometers which would be non-taxable. NOTE while it is recognized that these are volunteers and as volunteers will incur personal expenses in the fulfillment of their duties, they should not be receiving a personal benefit from non-profit organizations (NPO). The addition of a per diem of $300 is to help off-set the tax implications and to recognize fuel costs and wear and tear on vehicles and to recognize that CSR reps receive $25.00 per CSR meeting (which is a one year pilot). This is in recognition of attending the following monthly meetings CSR and Executive. The non-taxable amount for car allowance that is paid as a reasonable per km rate is taxable. CRA considers 55 cents per km for the first 5000 km, and 49 cents per km thereafter as reasonable. Should this allowance be chosen business km must be logged as well as total km per year. The Local would then provide a T2200 Declarations of Conditions of Employment that states that it is required to use a personal vehicle for business purposes. This would allow the individual to claim a portion of vehicle expenses for the year to help offset the taxable allowance paid. The allowance should be included in Box 14 of the T4 and noted in the additional boxes at the bottom of the form as a taxable benefit. e. Principal Representative The committee reviewed the allowance of the EPTL Principal Representative in comparison to the other 3 urban locals. It should be noted that Edmonton Catholic Local does not have a principal representative and Calgary Public pays a per diem. The EPTL allowance is almost double that of the other local that pays an allowance. It is recognized that this position provides a needed and important voice in Local deliberations and decision making that impacts the administration of schools. Recommendation 10 That the allocation for the principal representative remains the 10% of the minimum principal s allowance and of this amount be less an annual $300 allocation for kilometers which would be nontaxable. NOTE while it is recognized that these are volunteers and as volunteers will incur personal expenses in the fulfillment of their duties, they should not be receiving a personal benefit from non-profit organizations (NPO). The addition of a per diem of $300 is to help off-set the tax 6

7 implications and to recognize fuel costs and wear and tear on vehicles and to recognize that CSR reps receive $25.00 per CSR meeting (which is a one year pilot). This is in recognition of attending the following monthly meetings CSR and Executive. The non-taxable amount for car allowance that is paid as a reasonable per km rate is taxable. CRA considers 55 cents per km for the first 5000 km, and 49 cents per km thereafter as reasonable. Should this allowance be chosen business km must be logged as well as total km per year. The Local would then provide a T2200 Declarations of Conditions of Employment that states that it is required to use a personal vehicle for business purposes. This would allow the individual to claim a portion of vehicle expenses for the year to help offset the taxable allowance paid. The allowance should be included in Box 14 of the T4 and noted in the additional boxes at the bottom of the form as a taxable benefit. f. Committees The committee reviewed the allowance of the EPTL Committee Chairs (excluding vicepresidents and past-president) in comparison to the other 3 urban locals. Again, it should be noted that Calgary Public pays a per diem. The EPTL allowance in some instances is almost double that of the other locals. Recommendation 11 That the allocation for the committee chairs remains the 10% of the minimum principal s allowance and of this amount be less an annual $500 allocation for kilometers which would be non-taxable. NOTE while it is recognized that these are volunteers and as volunteers will incur personal expenses in the fulfillment of their duties, they should not be receiving a personal benefit from non-profit organizations (NPO). The addition of a per diem of $500 is to help off-set the tax implications and to recognize fuel costs and wear and tear on vehicles and to recognize that CSR reps receive $25.00 per CSR meeting (which is a one year pilot). This is in recognition of attending the following monthly meetings CSR, Executive, and Committee. The non-taxable amount for car allowance that is paid as a reasonable per km rate is taxable. CRA considers 55 cents per km for the first 5000 km, and 49 cents per km thereafter as reasonable. Should this allowance be chosen business km must be logged as well as total km per year. The Local would then provide a T2200 Declarations of Conditions of Employment that states that 7

8 it is required to use a personal vehicle for business purposes. This would allow the individual to claim a portion of vehicle expenses for the year to help offset the taxable allowance paid. The allowance should be included in Box 14 of the T4 and noted in the additional boxes at the bottom of the form as a taxable benefit. Recommendation 12 That the allocation for the committee chairs be reviewed after the next signed Collective Agreement. NOTE there may be changes to the minimum principal s allowance that may impact the EPTL Committee Chairs allocation. g. Professional Development Allowance The committee reviewed the allowance of the EPTL for professional development allocation for both the president and for the executive. President: Recommendation 13 That the professional development allowance be increased from $ to $ and keep the 1 year carry-over. NOTE While the president can access the executive professional development budget line, this budget line is generally used for the strategic planning that occurs in the fall. Further, it was acknowledged that the president could access the EPSB SDF for professional development, but this is a pilot project. However, the current allocation should be increased to reflect the increasing costs of attending relevant professional development that may take the president further away from the Edmonton area or Alberta and be on par with the other urban locals allocation. The professional development allowances are used to offset actual expenses incurred this will not be taxable. Executive: It should be noted that 3 of the urban locals have Staff Development Funds that teachers can access. Edmonton Catholic does not have a SDF. In addition, the EPTL SDF is a two-year pilot project. The other locals have a professional development budget line, but the allocation is based on a per person basis. The EPTL professional development budget line also encompasses the fall strategic planning meeting. Recommendation 14 That the professional development budget line be parsed out to two budget lines, separating out the strategic planning day. 8

9 NOTE this allocation does not accurately reflect that it is a professional development line for the executive as the fall planning day is encompassed within the allocation. Over the past four years the breakdown of the $9000 that was accessed for the strategic planning/executive planning day was as follows: 2011/2012 = $3, (we received a $2,000 Strategic Planning Grant towards it as well) 2012/2013 = $4, /2014 = $2, /2015 = $3, Recommendation 15 That the professional development budget line be reviewed and increased after the next round of bargaining negotiations. NOTE after the next round of negotiations it will be determined if the SDF will proceed past the pilot phase. III. OTHER Recommendation 16 That an expense claim form and cover sheet be developed and adopted for all Local expense claims. NOTE the Local has a fiduciary responsibility to the membership and this would ensure that prudent accounting practices are in place. Recommendation 17 That all expenses, complete with appropriate forms, must be submitted to the Local treasurer within 90 calendar days of the event taking place. NOTE this is sufficient time to submit expenses. Recommendation 18 That the recommendations passed take effect for the next EPTL Executive, July 1, NOTE if the recommendations were to take effect immediately or retroactively, it would appear to be selfserving for the current executive. The natural transition would be for the EPTL Executive that takes office July

10 IV. FURTHER CONSIDERATION The committee recognizes that the following are outside the mandate of the committee but as they were discussed the committee felt compelled to provide recommendations for consideration. Recommendation 19 That a committee be struck to review the detailed job descriptions for Executive currently in the guidelines. NOTE this is ensure that the role and responsibilities are clear and attainable given the communication parameters within which the Local works; and given that the allowances for some of the executive positions, other than the president, currently exceed those from the other 3 large urban locals it would be prudent to review what services are provided from the positions currently in place. Recommendation 20 That the local president provide a written monthly report on president activities to Executive, similar to what the ATA president provides to PEC. NOTE the president currently provides a verbal report to Executive, this would formalize and streamline the process. This would be provided in the package of materials that are posted and would provide time to review what the office of the president has been focusing/working on behalf of the members. V. FINAL RECOMMENDATION Recommendation 21 That the local executive honorarium and allowance Ad Hoc Committee be dissolved. NOTE the mandate of the committee has been fulfilled. 10