28 July 2000 Internal T.I. 2000-0037287 - 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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: Does taxpayer meet the function and status test such that he can avail himself of the 8(1)(c) deduction?

Position: It appears that he does.

Reasons: Provided the individual meets the status test, and provided he meets the function test as a result of 1) The individual is a minister and is engaged exclusively in full-time administrative service (paragraph 18 requires the function to be full-time) appointed by a religious organization (paragraph 20 of IT-141R) or

2) it is arguable that the individual could be considered to be ministering to a congregation.(see Koop, Klassen & Rushton (Youth for Christ Employee)

XXXXXXXXXX

Dear XXXXXXXXXX:

Re: Clergy's Residence Deduction

This is in reply to your letter of March 2, 2000, wherein you requested our opinion as to whether you are entitled to the deduction under paragraph 8(1)(c) of the Income Tax Act (the "Act"). You refer to Interpretation Bulletin IT-141R - Clergy Residence Deduction and have advised us that, in your opinion, you satisfy both the status and function test. We apologize for the delay in our response.

XXXXXXXXXX

Our Comments:

Generally, to be eligible for the clergyman's residence deduction, an individual must be a member of the clergy, a member of a religious order, or a regular minister of a religious denomination. When one of these conditions is met, the individual must be 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. We have not been provided sufficient information to determine if you meet either the status test or the function test. With respect to the status test, the fact that you have received a Bachelor of Religious Education Degree in Youth Work from the XXXXXXXXXX does not, in and of itself, mean that you are currently a member of the clergy or a regular minister of a religious denomination. With respect to the function test, it is not clear whether your functions as XXXXXXXXXX constitutes being "engaged exclusively in full-time" administrative services. In this regard, please refer to paragraph 18 of Interpretation Bulletin IT-141R which requires the person to be employed in a full-time administrative position. We do not have enough information to determine if your executive position in the XXXXXXXXXX, which would appear to be a seasonal activity, could be considered to be engaged in full-time administrative service. It is also unclear whether the appointment to the XXXXXXXXXX is all or only part of your directorship responsibilities.

The deduction provided for under paragraph 8(1)(c) of the Act corresponds to the value of the employment benefit included in the individual's income, where the employer provides the individual's residence. However, subject to certain limits, where the individual rents the residence, the clergyman's residence deduction corresponds to the rent paid and, where the individual owns the residence, to the fair rental value of the residence.

We invite you to submit either to us or to your local taxation services office additional information that would clarify the requirement that you meet both the status and function test.

We trust that these comments will be of assistance.

Yours truly,

Jim Wilson
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
- 2 -