Date: 19981210

Docket: 97-1446-IT-I

BETWEEN:

CAROLYN OSMOND,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for judgment

BONNER, J.T.C.C.

[1] The Appellant appeals from assessments of income tax for the 1991, 1992 and 1993 taxation years. Throughout that period, the Appellant was employed by Kingsway College (“Kingsway”), a body corporate which operated a secondary school. The Appellant was Business Manager of Kingsway, a full-time job involving duties of an administrative nature. Kingsway had close ties with the Seventh-day Adventist Church in Canada (“Church”). In computing her income for the three years under appeal, the Appellant claimed, under paragraph 8(1)(c) of the Income Tax Act ("Act"), deductions of $12,000 per year in respect of the fair rental value of the personal residence which she occupied. By the assessments under appeal the Minister of National Revenue ("Minister") disallowed the deductions, and the issue is whether he was justified in doing so.

[2] Paragraph 8(1)(c) is a most unusual provision for it exempts from taxation or allows the deduction in the computation of income of amounts which include the value or cost of personal shelter. Such amounts are, at least in the case of most Canadian taxpayers, of a quintessentially personal nature. The provision describes the taxpayers who are entitled to this tax treatment in rather vague and general terms, quite possibly because the legislature wished to avoid discrimination among taxpayers on religious grounds. In such a case it is of particular importance to attempt to determine the object of the legislation in order to give effect to section 12 of the Interpretation Act which provides that:

12. Every enactment is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects. R.S., c. I-23, s.11.

[3] Paragraph 8(1)(c) reads:

(1) In computing a taxpayer’s income for a taxation year from an office or employment, there may be deducted such of the following amounts as are wholly applicable to that source or such part of the following amounts as may reasonably be regarded as applicable thereto:

“...

(c) – where the taxpayer is a member of the clergy or of a religious order or a regular minister of a religious denomination, and is 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, an amount equal to

(i) the value of the residence or other living accommodation occupied by him in the course of or by virtue of his office or employment as such member or minister so in charge of or ministering to a diocese, parish or congregation, or so engaged in such administrative service, to the extent that such value is included in computing his income for the year by virtue of section 6, or

(ii) rent paid by him for a residence or other living accommodation rented and occupied by him, or the fair rental value of a residence or other living accommodation owned and occupied by him, during the year but not, in either case, exceeding his remuneration from his office or employment as described in subparagraph (i); ...

[4] Thus, in order to qualify for a deduction under paragraph 8(1)(c) an individual must pass three tests. The first relates to status and requires that he or she be: 1) a member of the clergy, 2) a member of a religious order, or 3) a regular minister of a religious denomination. The second relates to function and requires that he or she be: 1) in charge of or ministering to a diocese, parish or congregation, or 2) engaged exclusively in full-time administrative service by appointment of a religious order or religious denomination. The third requires that the amount deducted be one which may reasonably be regarded as "applicable" to the source of income.

[5] The assessments under appeal were made on the basis that Kingsway was not a religious order or a religious denomination, and that the Appellant was at no time engaged in full-time administrative service by appointment of a religious order or denomination. The Minister found as well that the Appellant was not a regular minister of a religious denomination and was neither in charge of nor ministering to a diocese parish or congregation.

[6] The position of the Appellant was that she met the status test in paragraph 8(1)(c) in two ways. Firstly she asserted that she was a member of a religious order. She defined that term as:

"... a group of individuals employed in a ministry or leadership role to carry out the mission of such order. Such individuals subscribe to and are committed to a creed or statement of faith and such religious order undertakes to carry on a particular ministry that is one of the ministries included in the overall mandate of the Christian Church".

Further she stated that:

"... in 1992, 1993 and 1994 I was a Commissioned Minister of the Church, which is similar to a commissioned officer in the Salvation Army, who is recognized as a "minister" for the purposes of paragraph 8(1)(c) of the Act in Interpretation Bulletin 141 issued by Revenue Canada, and I ministered to the needs of congregations within the Church in those years".

Her position with respect to her function was that she was "engaged exclusively in full-time administrative service for the College and for the Church". She did not assert that she was in charge of or ministered to a diocese, parish or a congregation. The Appellant did not address the question whether the amount which she sought to deduct was in any way "applicable" to the relevant source of income, her employment by Kingsway, as required by the opening words of subsection 8(1)[1].

[7] The Appellant represented herself at the hearing of the appeals and was the only person who gave evidence. She testified with great sincerity but it was clear that she had an unshakeable belief in the rightness of her cause. That belief coupled with her dual role as witness and advocate led her to state as fact conclusions which may not have been objectively justified. The Appellant testified that the Church is a body corporate formed under the laws of Canada. Kingsway was incorporated under the laws of Ontario at the behest of the Church. According to the Appellant, Kingsway was formed for the purposes of the mission and ministry of the Church. The Appellant stated that Kingsway was a member of the Church and that the Church was a member of Kingsway. It is not entirely clear what she meant by this. It does appear that Kingsway and the Church are each represented on the Board of the other. The two organizations work closely together and support each other. The Appellant stated that the Church audits the College to ensure that it complies with Church policy. The Church approves the "credentialing" of administrators who administer Church policy for the College. The Seventh-day Adventist school system is the source of sixty percent of the Church's baptisms. This fact appears to explain in large part the basis for the Appellant's view that Kingsway is a "mission" of the Church.

[8] The Appellant was appointed to the position of business manager of Kingsway by the Board of Trustees of Kingsway. She had been recruited for that position by the Treasurer of the Church and by the President of Kingsway. When she was selected she was issued the credentials of a commissioned minister of the Church. She indicated that the issuance of the credentials was based on entry into full-time denominational administrative service. The Appellant indicated that she serves on at least seven committees or councils of the Church and asserted that such service was a major part of her job as an officer serving the Church. No doubt the relationship between the Church and Kingsway was very close but it nevertheless remains the case that the Appellant was employed and paid by Kingsway, an organization distinct from the Church. In the absence of direct evidence to the contrary I assume that the Appellant's committee work was voluntary in nature.

[9] In my view a fair, large and liberal construction and interpretation of paragraph 8(1)(c) will, so far as is consistent with the words chosen by the legislature, attempt to ascribe a meaning to the provision which avoids favouring one religious denomination or sect over others. For that reason dictionary definitions, which tend to be neutral and comprehensive, are probably the best guide to the meaning of terms such as "religious order" so long as those definitions assist in the attainment of the objects of the legislature.

[10] Subparagraph 8(1)(c)i) is intended to exempt from tax as a benefit under section 6 of the Act the value of dual-purpose accommodation which is frequently provided to taxpayers of sort described in paragraph (c) in a manse, rectory, convent or monastery. Such accommodation is often more than personal shelter. It can be and often is of assistance to such persons in fulfilling their roles as religious leaders or in adhering to the communal lifestyle frequently followed by members of at least some religious orders. Subparagraph (ii) on which the Appellant's claim rests is intended to offer equivalent tax relief in the case of those taxpayers described in paragraph (c) to whom accommodation is not provided. Subparagraph ii) does not contain the words "... in the course of or by virtue of his office or employment...". Nevertheless the amount deductible must, by virtue of subsection 8(1) be "wholly applicable to that source", that is to say, the office or employment.

[11] I will deal first with the question whether the Appellant enjoyed the status of "regular minister" within the meaning of paragraph 8(1)(c). Although evidence of the relative standing of ordained ministers within the church and that of commissioned ministers was not as clear as desirable, it appears that ordained ministers possess powers to preside at rites or ceremonies which commissioned ministers do not. It seems that, although more may be expected of commissioned ministers than of ordinary members of the church with regard to knowledge of laid down doctrine, the designation commissioned minister is one which is of significance only in respect of persons who serve as administrative officials of the Church or of schools forming part of the Seventh-day Adventist Church school system.

[12] In Walsh v. Lord Advocate[2]the House of Lords considered the question whether an individual was a "regular minister of a religious denomination" within the meaning of a statute which conferred exemption from compulsory military service on "a man in holy orders or a regular minister of any religious denomination". Although the statutory context is different, I am of the opinion that the following definition of the term "regular minister" which was adopted by Lord Macdermott (at page 135E) is equally applicable to paragraph 8(1)(c):

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. The expression itself, the earlier reference to "a man in holy orders", and the obvious desire of the legislature to attach the exemption to a circumscribed and identifiable category of some special quality, seem to me to justify this view which, to state it in another way, postulates the co-existence in the same denomination of at least two elements, namely, a ministering or clerical element and a lay element to which it can minister.

The Appellant, as commissioned minister, appears to belong more to the lay element than to the ministering element of the church and therefore does not fall within the paragraph 8(1)(c) term "regular minister".

[13] The Appellant made reference to the treatment by the Department of National Revenue of Salvation Army officers and to the reference to them in a bulletin published by that department. I do not find the bulletin of any assistance in interpreting paragraph 8(1)(c) for it sheds no light on the considerations which led the author of the bulletin to conclude that such officers are considered to be ministers. The issue before the Court is whether the Appellant is entitled to the paragraph 8(1)(c) deduction and I can find nothing in the bulletin indicative of a longstanding administrative practice which would support the view that the words "regular minister" describe a class broad enough to include commissioned ministers of the church.

[14] I turn next to the question whether the Appellant was a member of a religious order. No authority was cited which supports the Appellant's argument that a denomination bound by a statement of faith and committed to a ministry such as operating a Christian college qualifies as a religious order for purposes of paragraph 8(1)(c). Religious orders may engage in teaching but not all organizations formed to educate in accordance with the doctrines of a particular religion constitute religious orders. In my opinion a religious order is a group or society or community of people which usually forms part of a religious denomination but which in all cases is a distinct entity united by one or more vows. The evidence does not suggest that any particular vow is unique to the Board of Kingsway or to the managers of the College or to the commissioned ministers employed by Kingsway. All such persons may be commissioned ministers but commissioned ministers are apparently not bound or committed by vow to do or be anything which sets them apart from other adherents of the Seventh-day Adventist religion. In Oligny v. H.M.Q.[3]my colleague Dussault, J.T.C.C. thoroughly reviewed the relevant dictionary definitions and made the following observation at page 1752 with which I respectfully agree:

It appears clear from these definitions that, in order to form a religious order, persons must submit to particular rules uniting them, rules that are normally more compelling, usually vows, than those generally uniting the adherents to a religion or particular denomination.

The Appellant's submission is that persons who operate Kingsway College constitute a religious order. I should have thought that such persons are, quite simply, a group of officials or employees who operate a school. That occupational grouping does not, in my view, resemble or constitute a religious order. It follows that the Appellant was neither a member of nor engaged in full-time administrative service by appointment of a religious order.

[15] The Appellant made frequent references to the taxation of other individuals including one of her predecessors as business manager of Kingsway. She claims that they were allowed the paragraph 8(1)(c) deductions in circumstances similar to hers. Whether they were is beside the point[4]. The test is: was the Appellant entitled under the statute? In my view she is not.

[16] For the foregoing reasons the appeals will be dismissed.

Signed at Ottawa, Canada, this 10th day of December 1998

"Michael J. Bonner"

J.T.C.C.

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