Quarterly reportback on Diocesan Finances Saturday 23rd July 2016   AGENDA Welcome   General update on developments since 23rd April meeting: Peter Goldhawk Audits to 2014 complete, 2015 almost to be signed very soon Once 2015 audit has been finalised, a definitive current position will be produced Tax challenge from SARS for 2005 to 2014 has been finalised (more later) New Diocesan Executive Officer being sought for September start Taxation update – to 2014 thus far Sidney Place  Contributions notified for 2016 thus far Sidney Place Unauthorised debit balances with the Deposit Fund Peter Goldhawk

Quarterly reportback on Diocesan Finances - Saturday 23rd July 2016   AGENDA - continued Parish returns for 2015 still outstanding Peter Goldhawk Independent verifiers - Peter Goldhawk Appointment requires DFB approval Appeal for more volunteers Discussions regarding banking underway General / closure / Grace 

Quarterly reportback on Diocesan Finances Saturday 23rd July 2016   AGENDA Welcome   Update on developments since 23rd April meeting: Peter Goldhawk Audits to 2014 complete, 2015 almost to be signed very soon Once 2015 audit has been finalised, a definitive current position will be produced Tax challenge from SARS for 2005 to 2014 has been finalised (more later) New Diocesan Executive Officer being sought for September start Taxation update – to 2014 thus far Sidney Place  Contributions notified for 2016 thus far Sidney Place Unauthorised debit balances with the Deposit Fund Peter Goldhawk

Quarterly reportback on Diocesan Finances - Saturday 23rd July 2016   AGENDA Welcome   General update on developments since 23rd April meeting: Peter Goldhawk Audits to 2014 complete, 2015 almost to be signed very soon Once 2015 audit has been finalised, a definitive current position will be produced Tax challenge from SARS for 2005 to 2014 has been finalised (more later) New Diocesan Executive Officer being sought Taxation update – to 2014 thus far Sidney Place  Contributions notified for 2016 thus far Sidney Place Unauthorised debit balances with the Deposit Fund Peter Goldhawk

Taxation – what we told you in April Assistance from Deloitte on how to proceed was sought and received SARS letter of 10th February was responded to within the deadline. We have been exempted from submitting a tax return for 2005 and 2006 SARS have agreed to constitutional amendment being processed at Provincial Synod We have lodged a formal objection to the SARS assessments for 2009 – 2012 We have paid the tax and interest that we believe is due for 2009 – 2012 (R2.2 million) SARS have agreed to 2013 tax return being submitted by 29th April 2016 – on target SARS have agreed to 2014 tax return being submitted by 30th May 2016. Income tax return for 2015 will be completed on time in second half of this year. We are getting on top of tax issues thanks to Billy Joubert, Santha Moodley and Tammy Arendse at Deloitte, Terry Chamberlain (especially!) and David Butcher in the Diocesan Office, and Peter Goldhawk. Once SARS has issued revised assessments, tax payable will be recovered from parishes that had commercial income.

Taxation – what we told you in April Assistance from Deloitte on how to proceed was sought and received SARS letter of 10th February was responded to within the deadline. We have been exempted from submitting a tax return for 2005 and 2006 SARS have agreed to constitutional amendment being processed at Provincial Synod We have lodged a formal objection to the SARS assessments for 2009 – 2012 We have paid the tax and interest that we believe is due for 2009 – 2012 (R2.2 million) SARS have agreed to 2013 tax return being submitted by 29th April 2016 – on target SARS have agreed to 2014 tax return being submitted by 30th May 2016. Income tax return for 2015 will be completed on time in second half of this year. DONE We are getting on top of tax issues thanks to Billy Joubert, Santha Moodley and Tammy Arendse at Deloitte, Terry Chamberlain (especially!) and David Butcher in the Diocesan Office, and Peter Goldhawk. Once SARS has issued revised assessments, tax payable will be recovered from parishes that had commercial income. UNDERWAY

Tax assessments and payments thus far Tax assessed for 2009 R 463 248.24 Tax assessed for 2010 R 892 805.48 Tax assessed for 2011 R 1 100 590.40 Tax assessed for 2012 R 1 218 325.64 Tax assessed for 2013 R 852 759.60 Tax assessed for 2014 R 1 186 674.72 Total tax due R 5 714 404.08 Add interest on late payment R 286 700.55 TOTAL DUE TO SARS: 2009/14 R 6 001 104.63 Taken by SARS on 27 Aug 2015 R -1 055 700.00 Taken by SARS on 2 Oct 2015 R -120 100.00 Payment by us on 16 Mar 2016 R -1 030 224.75 Balance now due 29 Jul 2016 R 3 795 079.88 Borrowed by the Diocese

Example of tax as presented in April   Collections 2 000 Dedicated Giving 2 200 Donations 1 000 (a) Rent from church hall (b) Gross Income 6 200 (c ) Hall expenses -600 TOTAL INCOME (pre-tax) 5 600 (d )=5% of (b) 5% of gross income 310 Calculation of tax Rent from hall Less hall expenses (e ) = (a) - (c) Profit from hall 400 (d) Less 5% of gross income -310 (f ) Taxable income from hall 90 (g) = 28% of (f ) Tax: 28% of taxable income 25 (g) / (e ) Effective tax rate (tax divided by trading profit) 6.3%

Example of tax as presented in April   Collections 2 000 Dedicated Giving 2 200 Donations 1 000 (a) Rent from church hall (b) Gross Income 6 200 (c ) Hall expenses -600 TOTAL INCOME (pre-tax) 5 600 (d )=5% of (b) 5% of gross income 310 Calculation of tax Rent from hall Less hall expenses (e ) = (a) - (c) Profit from hall 400 (d) Less 5% of gross income -310 (f ) Taxable income from hall 90 (g) = 28% of (f ) Tax: 28% of taxable income 25 (g) / (e ) Effective tax rate (tax divided by trading profit) 6.3% However… SARS applies an “Interpretation Note” that reduces the deductible expenses and therefore increases the tax payable

SARS reduces deductible expenses Total rent received 1 000 5% exempted 310 Exempted rent as % of total rent 31% Total expenses of trading 600 Disallowed – 31% of expenses -186 Deductible expenses (no longer 600 ) 414

Tax calculation required by SARS Effect: increases the tax Applies now No longer   Collections 2 000 Dedicated Giving 2 200 Donations 1 000 (a) Rent from church hall (b) Gross Income 6 200 (c ) Hall expenses -600 TOTAL INCOME (pre-tax) 5 600 (d )=5% of (b) 5% of gross income 310 Calculation of tax Rent from hall Less deductible hall expenses -414 Taxable profit from hall 586 400 (d) Less 5% of gross income -310 (f ) Taxable income from hall 276 90 (g) = 28% of (f ) Tax: 28% of taxable income 77 25 Effective tax rate (tax / trading profit) 19.3% 6.3%

Quarterly reportback on Diocesan Finances - Saturday 23rd July 2016   AGENDA Welcome   General update on developments since 23rd April meeting: Peter Goldhawk Audits to 2014 complete, 2015 almost to be signed very soon Once 2015 audit has been finalised, a definitive current position will be produced Tax challenge from SARS for 2005 to 2014 has been finalised (more later) New Diocesan Executive Officer being sought for September start Taxation update – to 2014 thus far Sidney Place  Contributions notified for 2016 thus far Sidney Place Unauthorised debit balances with the Deposit Fund Peter Goldhawk

Parish Annual Contributions for 2016 – (1) Increase 2015 Income % given BRYANSTON 890 916 0% 7 741 454 12% SUNNINGHILL 600 000 11% 5 386 837 ORCHARDS 920 228 4 347 819 21% ROSEBANK 518 955 -3% 3 373 071 15% CATHEDRAL 400 000 50% 3 305 877 WELTEVREDEN PARK 150 000 2 784 720 5% HALFWAYHOUSE 135 468 2 727 062 LINDEN 276 600 8% 2 707 245 10% PARKTOWN 456 000 4% 2 445 881 19% RANDBURG 160 000 2 168 841 7% PARKVIEW 342 077 -5% 1 898 913 18% NORTH RIDING 96 000 124% 1 566 181 6% FLORIDA 138 360 37% 1 434 170 BEDFORDVIEW 154 080 1 329 741 FOURWAYS GARDENS 84 000 -29% 1 274 844 ORLANDO HOLY CROSS 110 000 90% 1 106 738 MEADOWLANDS 156 000 1 047 996 BRAMLEY 40 000 -13% 933 000 KAGISO St Bartholomew 24 000   ? 932 086 3% PARKHURST 66 000 901 228 BOSMONT 51 600 30% 848 308 MOROKA 33 684 844 091 RANGEVIEW 35 124 -36% 819 750

Parish Annual Contributions for 2016 (2) Increase 2015 income % given CORONATIONVILLE 90 000 7% 778 839 12% DISCOVERY 18 000 -14% 774 349 2% MOHLAKENG 14 548 3% 722 705 PIMVILLE   696 172 0% NEWCLARE 693 656 DIEPKLOOF St James 48 000 13% 687 489 AUCKLAND PARK 44 844 19% 679 003 JABAVU 678 127 TLADI 672 021 ALEXANDRA 50 400 40% 668 049 8% ORANGE GROVE 63 600 6% 667 741 10% ORLANDO ST JOHN 28 800 20% 652 990 4% SENOANE 30 000 29% 628 789 5% DIEPKLOOF St Stephens 24 000 87% 625 302 MZIMHLOPHE 149% 622 956 EMDENI 546 484 YEOVILLE 541 914 ROODEPOORT 16 200 521 962 BEKKERSDAL 498 079 KENSINGTON - -100% 485 694

Schedule L: Parish Contributions The contributions shall be divided into two types: A parish contribution, which shall represent the amount needed to meet the stipends, the Diocesan portion of the pension contributions and such allowances as Synod may approve, of the clergy of that parish. Such contribution shall be paid by debit order on the 15th of each month and each parish shall ensure that sufficient funds are available to meet the debit order. A parish contribution to the diocese, which shall be an amount volunteered by the parish to contribute to the estimated expenditure of the Diocese for the following year, other than as set out in paragraph (a) above. If the [Diocesan Finance] Board is not satisfied that the contribution volunteered by the parish represents a fair proportion of the income of that parish, it shall delegate representatives of the Board to meet with the Churchwardens and Parish Council of that parish to discuss the matter, and attempt to agree a contribution to the satisfaction of both parties. In the event of failure to reach agreement, the matter shall be referred to the Bishop whose decision shall be final, and subject neither to appeal nor review.

Quarterly reportback on Diocesan Finances - Saturday 23rd July 2016   AGENDA Welcome   General update on developments since 23rd April meeting: Peter Goldhawk Audits to 2014 complete, 2015 almost to be signed very soon Once 2015 audit has been finalised, a definitive current position will be produced Tax challenge from SARS for 2005 to 2014 has been finalised (more later) New Diocesan Executive Officer being sought for September start Taxation update – to 2014 thus far Sidney Place  Contributions notified for 2016 thus far Sidney Place Unauthorised debit balances with the Deposit Fund Peter Goldhawk

Quarterly reportback on Diocesan Finances - Saturday 23rd July 2016   AGENDA - continued Parish returns for 2015 still outstanding Peter Goldhawk Independent verifiers - Peter Goldhawk Appointment requires DFB approval Appeal for more volunteers Discussions regarding banking underway General / closure / Grace 

The End Thank you for attending Next reportback: 10 September 2016