12 April 2010 Internal T.I. 2010-0358181I7 - Clergy Residence Deduction

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Does an employee, whose main responsibility is to oversee the development of all external communication media for XXXXXXXXXX , qualify for a clergy residence deduction?

Position: No.

Reasons: Does not satisfy the conditions for 'status' test.

							April 12, 2010	

							Headquarters
							Corporate Financing Section
Taxpayer Services Directorate			V. Srikanth
750 Heron Road
Ottawa K1A 0L5									

Attention:  Yves Beauchesne			2010-035818	

Re: Clergy Residence Deduction

This is in response to your fax dated February 22, 2010, wherein you requested our views as to whether an employee (the "Taxpayer") of XXXXXXXXXX , who was appointed to oversee the development of all external communication media of the Church, qualified for a clergy residence deduction provided for in paragraph 8(1)(c) of the Income Tax Act (the "Act"). (XXXXXXXXXX .)

Specifically, the Taxpayer has filed the form T1213, entitled Request to Reduce Tax Deductions at Source, for the year 2010, to request a reduced tax deduction at source with respect to the clergy residence deduction he intends to claim on his T1 return. He has also provided you with form T1223, entitled Clergy Residence Deduction, wherein he has provided the amount of deduction he wishes to claim and the conditions he considers that he has satisfied in order to claim the clergy residence deduction pursuant to paragraph 8(1)(c) of the Act.

Our Comments

Generally, to be eligible for the clergy residence deduction, an individual must be a member of the clergy, a member of a religious order, or a regular minister of a religious denomination (the status test). When one of these conditions is met, the individual must be in charge of, or ministering to, a diocese, parish or congregation, or engaged exclusively in full-time administrative service by appointment of a religious order or religious denomination (the function test).

Further, in order to qualify for the clergy residence deduction, pursuant to paragraph 8(1)(c) of the Act, the individual must satisfy both the status and function tests.

Status Test

The Taxpayer in your submission claims to be a 'regular minister'. As explained in paragraph 5 of Interpretation Bulletin IT141R (Consolidated), entitled Clergy Residence Deduction, "a 'regular minister' is a person who:

• is authorized or empowered to perform spiritual duties, conduct religious services, administer sacraments and carry out similar religious functions. Religious functions may include participation in the conduct of religious services, the administration of some of the rituals, ordinances or sacraments, and pastoral responsibilities to specific segments of the religious organization;
• is appointed or recognized by a body or person with the legitimate authority to appoint or ordain ministers on behalf of or within the religious denomination; and
• is in a position or appointment of some permanence."

In Melo Pereira v The Queen, 2008 DTC 2924, Bedard J. makes the following comments when analysing who is considered a 'regular minister':

"This Court has reviewed the meaning of the term "regular minister" several times. Lamarre Proulx J., in Côté 6 [Côté v. Canada, [1998] T.C.J. No. 762 (QL)], appears to adopt the meaning of "regular minister" given by Lord MacDermott in Walsh v. Lord Advocate, [1956] 3 All E.R. 129 (H.L.), in paragraph 20 of her decision:

In my opinion the words "a regular minister" connote a class which forms but a part of the denomination in question and is acknowledged by that denomination as having a superior and distinct standing of its own in spiritual matters.... Lord MacKintosh puts this requirement very clearly when, speaking of the "regular minister", he says:

... he must have by virtue of his appointment as a minister what might be called 'a clergyman status' which sets him apart from and places him over the laity of his denomination in spiritual matters."

In the given instance, the Taxpayer is the 'XXXXXXXXXX . As per the job description, he is responsible, primarily, to oversee the development of all external communication media for XXXXXXXXXX . His responsibilities appear to involve technical rather than spiritual duties. There is no indication that he is involved in performing any kind of religious duties or services. Hence, in our view, based on the information submitted, the taxpayer does not satisfy the status test.

As indicated earlier, in order to claim a clergy residence deduction pursuant to paragraph 8(1)(c) of the Act, it is necessary for an individual to satisfy both the status and function tests. As noted above, in our view, the Taxpayer does not satisfy the status test. Therefore, he is not eligible to claim the clergy residence deduction provided for in paragraph 8(1)(c). No further analysis has been done to determine if the Taxpayer satisfies the function test.

For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency's electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the electronic library version, or they may request a severed copy using the Privacy Act criteria, which does not remove client identity. You should make requests for this latter version to Mrs. Jackie Page at (819) 994-2898. A copy will be sent to you for delivery to the client.

R.A. Albert, CA
For Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch