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 a part-time pastor qualify for the housing allowance and is he restricted other than by his earnings?
Position: If he qualifies, the only restrictions are those that also apply to full-time pastors.
Reasons: Provided the individual meets the status and the function test.
XXXXXXXXXX 2001- 006942
C. Tremblay, CMA
March 20, 2001
Dear XXXXXXXXXX:
Re: Clergy's Residence Deduction
This is in reply to your letter of February 8, 2001, wherein you advise us that the church proposes to hire a part-time pastor. You refer to Interpretation Bulletin IT-141R - Clergy Residence Deduction and conclude that the individual part-time pastor satisfies both the status and function test.
You state that, generally, the fair market rental value of your pastors' homes is determined by requesting written evaluations from qualified realtors and/or rental agents. In the case of a full-time position, the amount determined is the maximum amount allowed. You ask whether the same amount as determined by the real estate agent/realtor can be used where the pastor is employed in a part-time position.
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 (the status test). 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 (the function test). Further to paragraph 14 of Interpretation Bulletin IT-141R, as long as ministering to a congregation is an integral part of the employment responsibilities and expectations, the individual is considered to meet the function test. However, once the status and function test are met, there is no specific provision, in and by itself, requiring an individual employed as a part-time pastor to prorate the clergy residence deduction based on his or her percentage of employment with the church and the fair market rental value of his or her residence or living accommodation.
On December 21, 2000, the Department of Finance released legislative proposals to amend paragraph 8(1)(c) of the Income Tax Act, and, subject to further amendments, will limit the clergy housing deduction for an individual who meets both the status and function test described above, generally, to an amount not exceeding the least of:
(a) his or her remuneration for the year from that office or employment, (b) the greater of (i) $1,000 a month (to a maximum of 10 months) and (ii) 1/3 of the remuneration for the year while in that office or employment and (c) the fair market rental value of the residence or living accommodation (reduced by other amounts deducted in connection with that residence).
We trust that these comments will be of assistance.
Yours truly,
Steve Tevlin
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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