22 January 2007 External T.I. 2006-0187791E5 - Amounts received by Priest for services

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: 1) Whether an employee or self-employed. 2) Are amounts received taxable? 3) Are income tax withholdings required by the Payer?

Position: Question of fact

Reasons: Depends upon facts and whether an employee or self-employed.

XXXXXXXXXX 							2006-018779
								Joy Bertram
January 22, 2007 

Dear XXXXXXXXXX:

Re: Employed or self-employed?

We are writing in response to your letter of February 15, 2006, wherein you requested our opinion on whether certain payments and benefits received by you for performing services as a priest are considered taxable income and whether you are an employee or self-employed. We apologize for the delay in responding.

You indicated you are a citizen of XXXXXXXXXX and have been a resident of Canada since XXXXXXXXXX. You are in Canada under a visa, which expressly states that you are only authorized to perform religious duties at the religious organization of XXXXXXXXXX, located in XXXXXXXXXX. The religious organization arranged and paid for your visa and indicated that you would not be in Canada otherwise. You receive an honorarium of $XXXXXXXXXX per month from the religious organization for providing services as a priest. On request, you also perform special ceremonies offsite, for which you receive XXXXXXXXXX% of the receipts. The religious organization provides you with living accommodations free of charge on its premises. The contract between yourself and the religious organization is verbal. The religious organization is of the view that you are an employee. You indicated that you received a ruling from the Agency's Tax Services Office that indicated your earnings are not insurable or pensionable.

Our Comments

Written confirmation of the tax implications inherent in particular transactions is given by the Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out Information Circular 70- 6R5, Advance Income Tax Rulings, dated May 17, 2002. The determination of the income tax treatment of payments described and whether you are an employee or self-employed is a question of fact. However, based on the limited information provided to us, we are prepared to offer the following general comments, which may be of assistance.

There is no single conclusive test that can be universally applied to determine whether a person is an employee or self-employed. However, the four tests discussed in the Agency's publication RC4110, Employed or Self-Employed, namely control, ownership of tools, chance of profit or risk of loss and integration, can assist in making the determination. We recommend that you consult this document and ask officials at the Tax Services Office who provided the original CPP/EI ruling for additional assistance. You may provide them with a copy of this letter and we will provide any assistance that they may require. We would note, however, that not all income from an office or employment is necessarily insurable and pensionable. Consequently, it may be the case that the income you received is taxable as income from an office or employment notwithstanding the CPP/EI ruling.

We trust our comments will be of assistance to you.

Yours truly,

Randy Hewlett
Manager
Business and Personal Section
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch