Bish v. R., [1998] 2 C.T.C. 2447

McArthur T.C.J.:

1 This appeal is from an assessment for the 1994 taxation year and involves a claim for a deduction for a clergyman's residence pursuant to paragraph 8(1)(c) of the Income Tax Act.

2 David Bish and Mary Bish are married to each other and both are ordained ministers of the United Church of Canada. They were both employed in 1994. It is not disputed that they were members of the clergy ministering to a congregation within the meaning of 8(1)(c). In 1994 they lived together as husband and wife in the residence they owned jointly at 2336 Kawartha Heights Boulevard, Peterborough, Ontario. They continue to this day as ministers of the United Church and are now living in Hamilton, Ontario.

3 It is agreed that the fair rental value of the residence was $14,400 annually. This is the total amount that the respondent has determined that they are jointly entitled to deduct. The appellant argues that they are each entitled to deduct the $14,400. The relevant legislation is 8(1)(c) of the Act and, for the purposes of the present question, it reads in part:

In computing a taxpayer's income for a taxation year from an office or employment, there may be deducted, where the taxpayer is a member of the clergy ministering to a congregation, an amount equal to the fair rental value of a residence or other living accommodation owned and occupied by the taxpayer during the year.

4 In written submissions the appellant stated in part, and this is taken from the appellant's Notice of Appeal:

A plain meaning approach to paragraph 8(1)(c) does not make clear the requirement that a clergy couple apportion the residency allowance. Had Parliament intended that the deduction be allocated between taxpayers in our situation, it could have easily provided the appropriate wording in the original provisions or in any amendments. Revenue Canada from 1949, when the Act was instituted, appears to have been following a plain meaning approach to the reading of this law and thus has established over a forty year precedent to the interpretation of the Act. In changing to what would appear to be a purpose based approach to understanding paragraph 8(1)(c) Revenue Canada has not given the taxpayer reasonable notice of change in the application of the law. Both my spouse and I have each claimed full residency allowance separately since 1991. Other clergy couples have done so for decades without the challenge from Revenue Canada until recently.

I would also argue that Revenue Canada is not applying the law universally since only a small fraction of taxpayers in this category have been challenged. Therefore Revenue Canada is discriminating in its application of the law concerning residency allowances.

5 Counsel for the respondent conceded that there is an ambiguity in the legislation. He referred the court to Québec (Communauté urbaine) c. Notre-Dame de Bonsecours (Corp.) (1994), 95 D.T.C. 5017 (S.C.C.), at 5022 where the Supreme Court of Canada stated:

...there is no longer any doubt that the interpretation of tax legislation should be subject to the ordinary rules of construction. At page 87 of his textConstruction of Statutes(2nd ed. 1983), Driedger fittingly summarizes the basic principles:

...the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. The first consideration should therefore be to determine the purpose of the legislation, whether as a whole or as expressed in a particular provision. The following passage from Vivien Morgan's article ‘Stubart: What the Courts Did Next’ (1987), 35 Can. Tax J. 155, at pp. 169-70, adequately summarizes my conclusion:

• There has been one distinct change [afterStubart], however, in the resolution of ambiguities. In the past, resort was often made to the maxims that an ambiguity in a taxing provision is resolved in the taxpayer's favour and that an ambiguity in an exempting provision is resolved in the Crown's favour.Now an ambiguity is usually resolved openly by reference to legislative intent.

6 The appellant stated that the language of the Act is clear and if changes are to be made, they should be made by Parliament and not by the Minister of National Revenue.

Analysis

7 Ministers and clergy of all denominations make a significant contribution to society and I am sure they must depend on financial assistance such as provided by the clergy deduction in paragraph 8(1)(c). I have strived to accept the appellant's position but I cannot. I agree that an ambiguity is to be resolved openly by reference to legislative intent and by a common sense interpretation of the Act (Corporation Notre-Dame de Bon-Secours, supra).

8 In his very able argument, counsel for the respondent submitted a record of the Ways and Means Committee meeting on November 10th, 1949 that included the following quotation from Messrs. Graydon and Sinclair on pages 1633 and 1634.

There is another point I should like to raise. Provision is made for deduction of the value of the residence provided for the Minister or rented by the Minister but what about a house that the minister owns?

A minister who owns his own home is allowed the equivalent of the rent he would have to pay if he were renting a house of that type.

9 Had the appellant and his spouse been renting the residence, it is clear that only the rent paid would be allowed. In this instance that would be the amount of $14,400. I believe the legislative intent to be one residence, one deduction. Surely if a clergy person's residence was owned and occupied by five or six members of a religious order, each one of them could not obtain the deduction equal to the total rental value of the residence. The appellant is asking for double the fair rental value. Paraphrasing the Act for the present instance, it reads that a clergy person may deduct the fair rental value of a residence owned and occupied by him or her. The appellant owned the residence equally with his wife. He had a 50% interest in it. If they both claim the deduction, he is entitled to 50% of its fair rental value and his wife, who is also a clergy person within the meaning of the Act, qualifies for a 50% deduction.

10 While it is not relevant to the present situation a successful argument could be made by a clergy person seeking the entire deduction, notwithstanding that the clergy person owns the home jointly with his or her spouse and the spouse is not a member of the clergy.

11 It would be absurd to conclude that it is the intention of paragraph 8(1)(c) to give each of two or more clergy persons deductions equal to the full value of the residence. If clergy are to share a residence, they also share the deduction.

12 In Stubart Investments Ltd. v. R. (1984), 84 D.T.C. 6305 (S.C.C.), Estey, J. at page 578 relied on the following passage from Driedger's Construction of Statutes (2nd ed. 1983) at page 87:

Today there is only one principle or approach namely the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act and the intention of Parliament.

13 It cannot be successfully argued that the Minister of National Revenue is estopped from changing policy after years of allowing the deduction, as requested by the appellant. The law is clear from an abundance of jurisprudence that there is no estoppel against the Crown under these circumstances.

14 For these reasons the appeal is dismissed.