Notice to the Profession: BAO provides guidance to cemeteries on the Care and Maintenance Fund

Helpful information

The Bereavement Authority of Ontario (BAO) is providing this notice to you as a guidance document for required contribution rates to your cemetery’s Care and Maintenance Fund.

A Care and Maintenance Fund is a trust fund that helps ensure the long-term upkeep of a cemetery. The income from the fund pays for maintenance of the cemetery while it has sales of its services and products, and after it no longer has sales.

A cemetery operator is required to make contributions to the fund from the sale of interment rights for in-ground graves, crypts, tombs, niches, markers and scattering rights.

The law, the Funeral, Burial and Cremation Services Act, 2002 (FBCSA), outlines how much is required to contribute from the sale of each of these items. This will be either a percentage of the item’s price (for example, 40 per cent of the price) or a set dollar amount – whichever is greater.

In this notice, we provide guidance on several common issues related to contributions to the fund. This notice is the second in a series of communications about the fund. It includes content from our June 27 article in the BAO’s LifeLine newsletter to licensees, plus additional information.

The BAO Financial Compliance (FC) team will also be hosting a webinar for any cemetery operators, staff and volunteers to join and ask questions. We will announce the date and time once it is set. A recording of it and its presentation materials will also be shared with you following the webinar.

We welcome you to contact us for more information. There’s a lot to go through here, so please keep this document handy and even print it for your reference and/or contact us at Trust@TheBAO.ca.

You may print our PDF of it by clicking here.


Under contributing and under pricing

Under contributing to the legally required Care and Maintenance (C&M) Fund is one of the most common errors made by cemetery operators, a BAO Financial Compliance review has found.

The review showed that many cemeteries often contribute less than is required by law for standard plots, cremation plots and niches, which can lead to problems in the long-term upkeep of cemeteries.

A large part of the problem is under pricing of interment rights. Quite often, we see smaller and volunteer-run cemeteries keeping their old prices and grossly under pricing interment rights, leaving very little for C&M funds and general operations of the cemetery.

We understand the desire to keep interment rights at a low price for the community, but this often comes at a price to taxpayers, if and when a cemetery is later turned over to the municipality.

When cemetery volunteers are no longer able to care for the cemetery and no one else is willing or able to step in and do so, the municipality must take it over and often with very little C&M funds. The cemetery then becomes a taxpayer burden. This is currently a big problem in Ontario, with several municipalities having voiced concerns to the provincial government over the costs of taking over and maintaining small volunteer-run cemeteries.

When all lots are sold in a cemetery, the only guaranteed income to cover operating costs is the interest generated by the C&M Fund. In an ideal situation, the income from investments will be sufficient to cover the following costs: lawn care equipment; lawn maintenance; grass seeding; snow clearing; tree maintenance and/or removal; repair of unstable marker foundations; resetting of crooked or fallen monuments; raising of sunken flat markers; relevelling of sunken graves; fence repair; labour costs; and more.

“Please consider all of these costs when setting your prices, and compare prices of interment rights in neighbouring cemeteries, to ensure your prices represent fair market value. Also, make sure you educate your purchasers on the fact that a cemetery must be cared for in perpetuity – not just for their generation,” says Michelle Crognale, Manager, Licensing and Education, BAO.

Guidance

The BAO is committed to guiding cemeteries, many of them small and/or volunteer-run operations, to help them comply with the FBCSA.

Rather than punitive measures, our Financial Compliance team is taking a proactive advisory approach with licensees to better enable cemeteries to fully comply with the FBCSA.

We understand that it’s not always easy to comply as required. Care and Maintenance Fund contributions can seem complex, for smaller and volunteer cemeteries in particular, which may not have the resources or staff to manage such financial matters.

Examples of C&M Fund contribution rates

The FBCSA requires that a cemetery must contribute either a percentage of the price, as shown on the cemetery’s required price list, or a dollar amount to the C&M Fund.

Contribution rates to the C&M Fund range from 15 to 40 per cent or a dollar amount – whichever is greater – from $30 for scattering of cremated remains to $830 for a tomb, crypt or compartment in a public mausoleum.

In-ground graves have a C&M Fund contribution requirement of 40 per cent of the selling price, or $290 for lots larger than 2.23 square meters or 24 square feet, or $175 for those smaller. The greater of the 40 per cent of the price or the flat dollar amount must be contributed.

We encourage cemetery operators, staff or volunteers to use our Care and Maintenance Fund Calculator on our BAO website.

Price list

C&M Fund contributions must be based on the price of interment rights as listed on your price list. This means that regardless of any discounts or adjustments made to the consumer’s final payment, the C&M Fund percentage must be applied to the price listed on your official price list.
Example: If a cemetery offers a 10 per cent discount on interment rights, but the price list states the original price as $1,000, the C&M contribution calculation should be based on $1,000, not on the discounted price of $900. Therefore, the C&M contribution would be 40 per cent of $1,000, which amounts to $400.
It is crucial for all cemetery operators to adhere strictly to this guideline to ensure compliance with regulatory requirements.

C&M Fund contribution is a margin of the price – not a markup

Keep in mind that the C&M Fund contribution is built into the price the consumer pays. It’s not added on like tax.

For example, if an interment lot is priced at $1,000, the C&M Fund contribution would be 40 per cent of the price ($400). So, the consumer pays a total of $1,000, of which $400 goes towards the C&M Fund.

Hamza Majid, Manager, Financial Compliance, BAO, says, “Cemeteries must price their sales in accordance with the Care and Maintenance Fund contribution included. The consumer should not be charged $400 above the $1,000 price on your price list. We noticed some cemeteries wrongly charging the C&M Fund contribution as a mark-up on top of the price. This results in an under contribution to the fund and an overcharge to the consumer.”

Using the same example, if the consumer pays $1,400 and the cemetery puts $400 in the C&M Fund, this will mean that an under contribution of $160 has been made (1,400 x 40% = $560).

For complete details of the different contribution rates, please refer to the BAO Care and Maintenance Fund Calculator webpage.

Marker contributions

“We have also observed that cemeteries often delegate the collection of the Care & Maintenance Fund contribution for markers to monument suppliers as part of the marker sale and installation process. However, monument suppliers are not covered under the FBCSA, nor are they licensed by the BAO,” Majid explains.

“It is the cemetery operator who is ultimately responsible for ensuring that the contribution is properly collected and deposited into the Care & Maintenance Fund within the timelines specified under the legislation. This responsibility cannot be transferred, even if a third party collects the funds on the cemetery’s behalf.”

HST

The C&M Fund contribution deposit should not include the Harmonized Sales Tax (HST). Remember also not to include the HST in your calculation for the C&M Fund contributions. Consumers may still be charged HST on the total price paid, however the C&M Fund contribution that the cemetery deposits into the fund should not include tax.

“While consumers may still be charged HST on the total price paid, it’s crucial that the cemetery’s deposit into the C&M Fund reflects the net amount, excluding tax. Including HST in the deposit means remitting less than required to the Canada Revenue Agency (CRA). This discrepancy should be carefully avoided,” says Majid. “We recommend that cemetery operators contact the CRA or your professional accountant for information about the HST.”

Long-term upkeep

Properly collecting C&M Fund contributions is required by law and vital to cemetery maintenance and long-term upkeep of a cemetery. But some cemeteries are under contributing to the C&M Fund by 19 to 29 per cent.

“This has a devastating impact on long-term upkeep of a cemetery during its active years and especially after sales are no longer being made due to lack of space or other matters,” Majid notes.

Cemetery operators are also required to:  

• Make deposits into the C&M Fund within 60 days of each purchase of scattering or interment rights. For grave markers, the C&M Fund contribution must be made within 60 days of installation. Remember, as a cemetery operator you are responsible for collecting the accurate C&M amount, and then depositing it into the C&M Fund;
• Ensure that the money is invested in an interest-bearing or dividend-earning account or in Guaranteed Investment Certificates (GICs), for smaller cemeteries with less than $50,000 in their total C&M Fund – as per section 84 of the FBCSA;
  • The objective is to invest the monies to grow in perpetuity.
• Once the total of C&M funds reaches $50,000, the C&M funds may no longer be kept in a bank account, but must be placed in a trust fund that is managed by a third-party trustee. For more information, please read through the “Application to Transfer Cemetery Care & Maintenance Trust Fund/Account” on this BAO webpage, under Other Forms.
• Submit an audit report if/when your cemetery C&M Fund goes above $500,000. For more about this read March 13, 2024 Notice to the Profession – or contact us at Trust@TheBAO.ca.   

Borrowing from the C&M Fund

“We also remind cemeteries since Jan. 1, 2022, they can borrow from the C&M Fund to increase the capacity of their cemeteries,” Majid says.

This cemetery forms webpage, under the Other Forms tab, provides:

• Instructions to complete application form – To obtain Registrar’s consent to borrow capital from the Care and Maintenance (C&M) Fund account to increase the capacity of the cemetery;
• Application form – To obtain Registrar’s consent to borrow capital from the Care and Maintenance Fund account to increase the capacity of the cemetery.

Price lists

An additional common issue identified in the BAO FC review includes unclear or overly complicated cemetery price lists by some municipalities. “We recommend that price lists be as concise as reasonably possible,” Majid advises.

The BAO reminds cemeteries, and all licensed operations, that your price is required to be provided to the public. This can be done by posting your price list on your website homepage. BAO FC staff will be asking to see your price list on a regular basis and will advise you to make it available.

If you don’t have a website, which is common among smaller cemeteries, then you must provide a printed price list and have it available for the public.

It doesn’t have to be fancy – just plain-type printed pages of your current price list will do.

“We have compliant sample price lists, which we will share with cemeteries needing guidance,” he says.

In fact, the samples are part of our website. Cemetery operators and volunteers are asked to read our BAO Sample Price List for Cemetery and Crematorium Operators found on the BAO Forms page in the Cemetery and Crematorium Sample Documents website section.

How to comply

We at the BAO know there’s a lot to do, especially for a smaller and/or volunteer-run cemetery. Don’t be shy, please do contact us for guidance.

Compliance checklist

Please refer to our BAO Compliance Checklist webpage, specifically these two links:

• Cemetery Operators;
• Cemetery Operators who do not Accept Prepaid Monies.

Our Financial Compliance team is also planning educational sessions and direct consultations with cemeteries who need guidance. More information is to come.

Contact

Got more questions or need something explained? Please email us at Trust@TheBAO.ca. If you prefer a phone call, please email us your number and we will call you.