Côté v. R., [1999] 3 CTC 2152

Lamarre Proulx T.C.J.:

This is an appeal under the informal procedure in respect of the 1994 taxation year.

The issue is whether the appellant is a regular minister of a religious denomination and whether he is in charge of a congregation within the meaning of s. 8(1)(c) of the Income Tax Act (“the Act”), which reads as follows:

(1) Deductions allowed — 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) Clergyman’s residence — 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 the taxpayer in the course of or by virtue of the taxpayer’s office or employment as such a 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 that value is included in computing the taxpayer’s income for the year by virtue of section 6, or

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

The facts on which the Minister of National Revenue (“the Minister”) relied in arriving at his reassessment are set out as follows in paragraphs 3 and 4 of the Reply to the Notice of Appeal (“the Reply”):

[TRANSLATION]

3. In making this reassessment the Minister took into account inter alia the following facts:

(a) when he filed his tax return for the 1994 taxation year, the appellant claimed $4,500 for a clergyman’s residence:

(b) during the 1994 taxation year the appellant was employed by the Hotel Chateau Neuville;

(c) as the appellant was neither the senior pastor nor a person responsible for an administrative service, the Minister disallowed the $4,500 deduction claimed for a clergyman’s residence.

4. At the objection stage the appellant submitted an amended tax return for the 1994 taxation year, revising his clergyman’s residence deduction to $3,250, which was equivalent to the income he received from the Assemblée Chrétienne du Nord for that year.

The appellant’s Notice of Appeal states the following, inter alia:

[TRANSLATION]

1 am a pastor for the Assemblée Chrétienne du Nord, a church affiliated with the Pentecostal Assemblies of Canada. I hold credentials with that religious organization and am thus a member of a recognized religious order. I am in charge of a congregation and pay the cost of renting my apartment myself.

In his testimony the appellant described himself as a youth pastor with the Assemblée Chrétienne du Nord. He has held this position since 1993. He offered his services in late 1993 to the church’s committee; it decided to hire him and make him responsible for the youth congregation, which included some 20 young people ranging in age from 13 to 20. Meetings were held at the A.N. Morin secondary school in Mont-Roland on Fridays from 7:00 p.m. to 10:00 p.m. During the week and on weekends he visited the young people.

The appellant also took part in the congregation’s meetings on Sundays from 10:00 a.m. to 12:30 p.m. At these meetings, he assisted the senior pastor, Jocelyn Binette, who was a full-time pastor.

For these pastoral duties the appellant was paid a total annual amount of $3,250 in monthly cheques.

The appellant admitted subparagraphs 3(a) and (b) and paragraph 4 of the Reply. On the statement in subparagraph 3(b), he explained that he worked evenings, from 6:00 p.m. to midnight Sunday to Thursday, as a receptionist and social director at the time-sharing hotel. The total pay was $12,345.92.

He also an worked at lunch time three days a week — Monday, Wednesday and Friday — at the St. Joseph school of the Laurentides school board. He was paid $1,233.21 for this work. Exhibit 1-1 consists of the various T4s, which indicate the earnings he received from his various employers.

In the taxation year at issue the appellant completed his Bible studies to obtain a ministry licence and become an ordained minister. At that time he was at the level of a lay preacher. He said he could have performed marriage ceremonies if he had applied for authorization from the government. The senior pastor was authorized to do so.

As can be seen at page 16 of the transcript, the appellant described the various stages to be completed in order to become an ordained minister as follows: [TRANSLATION] “there are many, many stages: the first is the lay preacher, the second is recognition of ministry, after that there is a ministry licence which is granted until the person is an ordained minister”.

Marielle Gélinas, an appeals officer, testified at the request of counsel for the respondent. She stated that on June 20, 1996 she had telephoned Mr. Binette, the congregation’s full-time pastor. He told her that the appellant was a part-time pastor and was responsible for three youth cells in the Northern region. He also explained that the congregation did not have sufficient resources to pay the appellant any more than it did. He added that the appellant was engaged in Bible studies and needed two years’ practical experience before being consecrated as a pastor. The senior pastor told her that he himself was authorized to perform marriage ceremonies and that the appellant was not.

Exhibit 1-2 consisted of various letters received by the appeals officer or placed at her disposal. The first letters, dated September 14 and November 24, 1995, were written by the committee of the Assemblée Chrétienne du Nord and signed by two directors. Their content is identical. They state the following:

[TRANSLATION]

This is to confirm that Stéphane Coté has been in our employ since December 1993. In 1994 (beginning on January 1), he:

(1) held credentials as a preacher lay preacher (in the process of reclassification upwards to recognition of ministry) in good standing with the Pentecostal Assemblies of Canada, a charitable organization incorporated under the Religious Corporations Act, with which the Eastern Ontario and Quebec District is affiliated:

(2) performed pastoral duties for our corporation, the Assemblée Chrétienne du Nord (affiliated with the Pentecostal Assemblies of Canada), incorporated under letters patent pursuant to the Religious Corporations Act (R.S.Q., c. C-71, s. 2), working a minimum of 25 hours a week at these duties in 1994;

(3) worked in our church as youth pastor and musical director in 1994;

(4) preached the Gospel in other assemblies affiliated with the Pentecostal Assemblies of Canada.

A letter dated November 27, 1995 and signed by the same directors states the following:

[TRANSLATION]

This is to confirm that one of the pastors associated with our church, Stéphane Coté, has been employed by the Assemblée Chrétienne du Nord since 1993 and leads several weekly meetings, various home meetings and all activities connected with the operation of a youth program. He also co-ordinates musical activities.

The last letter is dated April 11, 1996 and was signed by Jocelyn Binette, the senior pastor. It states the following, inter alia:

[TRANSLATION]

We wish to confirm once again that pastor Stéphane Côté has been employed by our church, the Assemblée Chrétienne du Nord, since December 1993.

He is a member in good standing of our religious denomination and as an associate pastor is responsible for several duties in respect of which he is in charge of our congregation. You will find attached a summary of his duties, which he has performed since being hired.

The Assemblée Chrétienne is duly incorporated under the Religious Corporations Act (R.S.Q., c. C-71, s. 2) and is affiliated with the Pentecostal Assemblies of Canada.

Duties and Responsibilities of Pastor Stéphane Côté

° Pastor responsible for our congregation’s youth.

• He occasionally teaches and preaches the Gospel to our congregation at our Sunday meetings.

• He is in charge of prayer meetings made available to our congregation.

¢ He plays an active role in our regular meetings.

• He shares responsibility for visiting members of the congregation and newcomers.

Analysis

The evidence should have been more complete. It would have been necessary to see the document under which the Assemblée Chrétienne du Nord was constituted, and its by-laws. In their letter of November 24, 1995, reproduced in paragraph 13 of these reasons, the directors of that assembly state that it is affiliated with the Pentecostal Assemblies of Canada. However, there is no description of the rules established by this religious denomination regarding the various stages to be completed by those who want to practise as a minister of the religious denomination. The same letter states that the appellant had the status of a lay preacher in their community (in the process of reclassification upwards to recognition of ministry). There was no explanation either in the letters or at the hearing of the status of a lay preacher of the congregation or of the studies and training required to become a lay preacher. As regards the status of a minister, the appellant explained, as the senior pastor had done to the Minister’s officer, that he was then engaged in Bible studies in order to be consecrated as a pastor and become an ordained minister.

Section 8(1 )(c) of the Act does not require a minister to perform his duties full-time, in contrast with what is required of someone engaged in administrative service for a religious denomination. The appellant did not spend all his time on his pastoral duties but did spend time on them on a regular basis; his appeal cannot fail on this ground.

Nor does section 8( 1 )(c) state that only a person at the head of a ministry for a congregation can receive the deduction allowed in that section. In the church hierarchy there are duties and certain powers correspond to those duties. In my view, for a person to have full powers over performance of the liturgy is not necessarily an essential condition of s. 8(1)(c) of the Act. What matters is that the person be a regular minister of the religious denomination.

The meaning of “regular minister” was considered in depth in Walsh v. Lord Advocate, [1956] 3 All E.R. 129 (U.K. H.L.). Under a provision of Great Britain’s military service legislation, a regular minister of a religious denomination could be exempted from military service. The question thus was what was meant by “regular minister”. Mr. Walsh was a Jehovah’s Witness. Among Jehovah’s Witnesses all members have the title of minister or servant of God and his Gospel, and that religious denomination makes no distinction between clergy and lay members. The House of Lords unanimously ruled, as the lower courts had done, that “regular minister” within the meaning of the Act refers to a member of the religious denomination having superior and distinct standing in that denomination in spiritual matters and that, if a religious domination makes no distinction between clergy and lay members, the concept of a regular minister of a religious denomination cannot apply.

I quote the following extracts from the reasons for judgment of Lord MacDermott in Walsh, supra, at p. 135:

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.

This decision was cited and followed by Judge Beaubier of this Court in Kolot v. R., (1992), 92 D.T.C. 2391 (T.C.C.), at p. 2394, and by Judge Goetz in Small v. Minister of National Revenue (1989), 89 D.T.C. 663 (T.C.C.), at p. 669.

We know that the appellant is not an ordained minister in his religious denomination, but a lay preacher. We also know that he participates as such in the pastoral work of his church. However, as has just been said, it is not the title which determines the status of a regular minister: the person must be a member of a group which has a superior and distinct standing of its own in spiritual matters in his church. I will refer to this group as “clergy” to make these reasons easier to read.

It is well known that churches have lay members who assist members of the clergy or perform quasi-ecclesiastical duties. That does not make them members of the clergy of that church. To determine which members belong to the clergy and which belong to the lay assembly, it is necessary to know how the church or religious denomination in question is organized.

The evidence did not show how the religious denomination to which the appellant belongs is organized. Accordingly, we do not know how someone acquires the status of a member of the clergy of his church or what a member of its clergy is entitled to do as contrasted with the lay members of the church. Nor was there any evidence as to the training of a lay preacher or as to his function under the rules of the appellant’s church. I thus cannot be certain that the appellant belongs to the class of clergy of his church as opposed to its lay members.

The appeal must accordingly be dismissed.

Appeal dismissed.