13 September 2002 Ministerial Correspondence 2002-0151504 - FUNCTION TEST

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 CCRA.

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

Principal Issues

Do all positions within a denomination qualify for the 8(1)(c) deduction if the denomination that employs them considers the individuals to do spiritual ministry?

POSITION TAKEN

No, only those individuals who meet the function test for that year.

REASON FOR POSITION TAKEN
Test as required in 8(1)(c)(ii)

Signed on September 13, 2002

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable Elinor Caplan, Minister of National Revenue has asked me to reply to your correspondence addressed to XXXXXXXXXX, concerning the criteria for the Clergy Residence Deduction. XXXXXXXXXX forwarded a copy of your correspondence to Minister Caplan on June 13, 2002.

An employee in a particular year who meets both the status and function tests, as described in paragraph 8(1)(c) of the Income Tax Act, may deduct a clergy residence deduction in that year. The status test requires that an individual be a member of the clergy, a member of a religious order, or a regular minister of a religious denomination.

The function test requires that an individual who has met the status test be employed by the religious order or religious denomination and be:

a) in charge of a diocese, parish or congregation,

b) ministering to a diocese, parish or congregation, or

c) engaged exclusively in full-time administrative service by appointment of a religious order or religious denomination.

Even though, as you stated, all individuals appointed to a position in the XXXXXXXXXX do spiritual ministry in various ways, not all positions meet the function test as described above. Only those officers who are in charge of, or who minister to a parish or congregation or who are appointed exclusively in full-time administrative service would meet the requirements under paragraph 8(1)(c) of the Act. A number of job functions, such as accounting specialists, grounds keepers, data analysts, clerical workers, property assistants, research assistants and teachers do not qualify.

Although an employee will usually continue to meet the status test, an individual's employment duties may change from year to year, and the entitlement to this deduction may also change from year to year. For example, an employee may be engaged exclusively in full-time administrative service by appointment of a religious denomination in one year and not the next, even when the employer remains constant. The duties may no longer be administrative in nature or, if administrative, they may no longer be full-time or exclusive.

I trust my comments have clarified the policy of the Canada Customs and Revenue Agency on this matter.

							Yours sincerely,

							Bill McCloskey
							Assistant Commissioner
							Policy and Legislation Branch

C. Tremblay
957-2139
2002-015150
September 5, 2002