Reverend Robert H Adam v. Minister of National Revenue, [1974] CTC 2299

A W Prociuk (orally: May 21, 1974):—This is an appeal by Reverend Robert H Adam from the respondent’s reassessment of the taxation years 1970 and 1971, wherein deduction of payments of $732 in 1970 and $756 in 1971 in respect of rental of a residence from Briarcrest Bible Institute at Caronport, Saskatchewan were reduced to $30 and $70 respectively.

The relevant section of the Income Tax Act applicable to the issue herein is 11(1)(q), which reads as follows:

11. (1) Notwithstanding paragraphs (a), (b) and (h) of subsection (1) of section 12, the following amounts may be deducted in computing the income of a taxpayer for a taxation year:

(q) where a 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 by virtue of section 5, 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);

The appellant, an ordained minister, testified in support of his appeal. Briarcrest Bible Institute, hereinafter referred to as “the Institute”, was incorporated under the laws of the Province of Saskatchewan as an interdenominational educational institution. The emphasis of all its programmes is on the Bible and theology. It offers a 2-year general Bible programme, a 3- or 4-year Bachelor of Religion education programme and a 1-year certificate course for advanced students. The 1974-75 catalogue of the Institute was filed as Exhibit A-1, where the objectives, programmes and courses are set out in some detail.

The appellant at all times material hereto was employed by the Institute and his duties could be summarized as threefold: (1) As Registrar of the Institute requiring 4 to 5 hours a week to supervise work carried out by the Assistant Registrar and the secretary of the Registrar’s office. (2) As a teacher lecturing in biblical and church- related subjects requiring 11 to 12 class hours per week; in addition to this he conducted half-hour chapel services at 8:30 in the morning before lectures. The Institute chapel also serves as its church for the community as well as people in the surrounding district. He also took his turn at conducting regular church services on Sundays in the chapel, said services attended by students, staff and people from the district. Other functions included workshop services, religious and personal counselling to students and officiating at marriage ceremonies in the chapel when required by parties of his faith. (3) As a minister, preaching at other places as directed by the Institute board in the furtherance of the Bible Institute objectives. He was paid a yearly salary by the Institute and in addition to that he received a sum of $30 in 1970 and $70 in 1971 from the Institute for conducting services elsewhere in the surrounding districts.

The respondent took the position that the appellant, except for his weekend preaching activities, was not in charge of or ministering to a diocese, parish or congregation or engaged in full-time administrative service by appointment of a religious order or a religious denomination during the two years and, consequently, was limited to deducting only that extra remuneration in each year referred to above.

The appellant submitted that in addition to his other duties he ministered to the congregation of students at the Institute during the entire time of his employment and was entitled to the deduction of the total amount of rent'paid in each year from his income as provided for in the said paragraph 11 (1)(q).

In the case of Atwell v MNR, [1967] Tax ABC 862; 67 DTC 611, R S W Fordham, Esq, QC was faced with a similar situation. At page 863 [612] Mr Fordham stated as follows:

At Ashbury College, which then had 280 pupils, the appellant taught four subjects and, in addition, had certain responsibilities of a religious or spiritual nature. According to his evidence, which was not refuted in any way, appellant conducted a service almost every morning in the school chapel for the benefit of the junior school, which had some 115 boys, and did likewise on Sundays, prepared boys for confirmation and generally acted as a Spiritual adviser and guide to the boys of which he had charge throughout the school term. At the services held on Sundays, parents of some of the boys were usually present. From time to time, the appellant would be called upon to officiate on a Sunday at some church in the Ottawa diocese where there happened to be a vacancy in the pulpit that required filling for the day. He also performed various other priestly offices.

Then, at page 864 [612], Mr Fordham stated as follows:

Turning to Section 11(1)(q), it may be noted that its provisions are largely disjunctive and with the result that the first part thereof is not as restrictive as might at first appear. Counsel for the respondent readily acknowledged that appellant was “a member of the clergy”. Proceeding from there, it is to be noted that such a clergyman is not required to be “in charge of and ministering to a . . . congregation”; instead, the section reads, “or ministering to a . . . congregation”. The latter part of the section is thus made alternative by the use of the preposition “or”. Hence, as I read the provisions involved, it suffices if the taxpayer concerned is a member of the clergy ministering to a congregation.

I. find myself in agreement with Mr Fordham’s interpretation of paragraph 11 (1)(q) and his application of same to the facts of that case as he found them.

In the instant appeal, considering the evidence in its totality and the special circumstances of the appellant’s position, I have come to the conclusion that the appellant has discharged the onus placed upon him by the Act and I, therefore, allow the appeal and refer the matter back to the respondent for reassessment accordingly.

Appeal allowed.