5 February 2013 External T.I. 2012-0447881E5 - 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: 1) Whether a member of the clergy who performs occasional liturgical services would satisfy the function test of ministering to a congregation, diocese or parish on a part-time or assistant basis.

Position: 1) No.

Reasons: 1) With respect to the function test, the ministering activities performed by a member of the clergy must be an integral part of his or her employment responsibilities, regardless whether they are employed on a full-time or part-time basis.

XXXXXXXXXX
2012-044788
T. Baltkois

February 5, 2013

Dear XXXXXXXXXX:

Re: Clergy Residence Deduction

We are writing in response to your letter of May 11, 2012 in which you requested our comments as to whether an ordained priest ordinarily residing and performing employment duties in Canada and, who has been assigned to work in another country to XXXXXXXXXX, would satisfy the function test where he also provides occasional liturgical services to parishes in that country.

The facts provided further indicate that this individual resides and performs employment duties in another country XXXXXXXXXX months of the year, returns to Canada for the XXXXXXXXXX months, and files a Canadian tax return. While living and working abroad, his employer provides him with a monthly stipend to assist with his living expenses.

In your letter, you have stated that the individual satisfies the status test as a member of the clergy. At issue is whether providing occasional liturgical services could be considered ministering to a diocese, parish or congregation on a part-time or assistant basis as discussed in paragraph 14 of Interpretation Bulletin IT-141R (Consolidated), Clergy Residence Deduction, for purposes of the function test.

Our Comments

The phrase "ministering on part-time or assistant basis" in paragraph 14 of IT-141R concerns whether an individual's employment is part-time in nature and is not in reference to the amount of ministering an individual performs. For purposes of satisfying the function test, the ministering activities performed by a member of the clergy must be an integral part of his or her employment responsibilities and expectations, regardless whether they are employed on a full-time or part-time basis.

In the situation described, a member of the clergy has been assigned the responsibility of XXXXXXXXXX by his employer and also performs occasional liturgical services in addition to these responsibilities. Where ministering duties performed by a member of the clergy are incidental to and not an integral part of his or her overall job responsibilities, it is our view that the function test would not be satisfied and that he or she would not be eligible to claim the clergy residence deduction provided for in paragraph 8(1)(c) of the Act.

We trust these comments will be of assistance to you.

Yours truly,

Nerill Thomas-Wilkinson, CPA, CA
Manager
for Director
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch