24 November 2004 External T.I. 2004-0091791E5 - Clergy 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.

Principal Issues: Does an individual who is confirmed in a separate ceremony and authorized to perform minister functions entitled to the 8(1)(c) deduction?

Position: YES

Reasons: Not required to be ordained in that denomination and church considers individual a "regular minister"

									2004-009179
XXXXXXXXXX 								C. Tremblay, CMA
(613) 957-2139
November 24, 2004

Dear XXXXXXXXXX,

This is in reply to your letter of August 19, 2004 wherein you ask whether XXXXXXXXXX are eligible for the clergy housing deduction under paragraph 8(1)(c) of the Income Tax Act (the "Act"). In your E-mails of November 16 and November 17, 2004, you state that the individuals were confirmed to their position by the apostolic team XXXXXXXXXX. Further, you state that the individuals are authorized to perform spiritual duties that the regular pastor performs and are considered full-time ministers by the church.

Our Comments:

The particular circumstance in your letter on which you have asked for our views is a factual situation. As explained in Information Circular 70-6R5, it is not this Directorate's practice to comment on transactions involving specific taxpayers other than in the form of an advance income tax ruling. Further, an income tax ruling can only be considered where the transactions are submitted in the manner set out in Information Circular 70-6R5. However, we have considered your enquiry and provide the following comments, which are of a general nature only.

In order to qualify for the deduction under paragraph 8(1)(c) of the Act, the individual must satisfy both the status test and the function test.

STATUS TEST:

Only a member of the clergy, a member of a religious order or a regular minister of a religious denomination would meet the status test pursuant to paragraph 8(1)(c) of the Act. In our view, and further to paragraphs, 3, 4, 5 and 6 of Interpretation Bulletin IT-141R (Consolidated), whether or not a person is a "regular minister" depends upon the structure and practices of the particular church or religious denomination. It is not necessary that the process of appointment be referred to as ordination or that the appointment be by someone higher up in the ecclesiastical hierarchy; it may be done by the congregation itself.

FUNCTION TEST:

In order to avail themselves of a deduction under paragraph 8(1)(c) of the Act, individuals who have met the status test as "regular ministers" should be authorized to perform all of the duties of a regular minister. Accordingly, a regular minister of a religious denomination must be authorized or empowered to perform spiritual duties, conduct religious services, administer sacraments and carry out similar functions. Religious functions may include the participation in the conduct of religious services, the administration of some of the rituals, ordinances or sacraments, and pastoral responsibilities to specific segments of the religious organization. The position should also be one of some permanence.

Generally, the Canada Revenue Agency relies on the employer to attest that the requirements for the clergy housing deduction are met in the year. This is achieved when the employer or his representative signs the prescribed form T1223 stating that the individual is an employee and has performed the requirements of a regular minister in the particular year.

We trust our comments are of assistance.

Yours truly,

Steve Tevlin
for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Planning Branch