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: Whether the position of Human Resource Manager, qualifies as a full time administrative service for the purpose of clergy residence deduction pursuant to paragraph 8(1)(c) of the Act.
Position: It is a question of fact if the management level administrative personnel are engaged exclusively in full-time administrative service by appointment of a religious order or religious denomination.
Reasons: Not enough information is available to determine whether or not the employee meets the status test and whether or not the appointing authority is a religious order or a religious denomination for the purpose of function test.
XXXXXXXXXX 2009-030729
V. Srikanth
March 19, 2009
Dear XXXXXXXXXX :
Re: Clergy Residence Deduction
This is in response to your letter dated January 11, 2009, in which you requested a technical interpretation as to whether your full-time position as a Human Resource ("HR") Manager, is engaged exclusively in full-time administrative services, as related to the clergy residence deduction provided for in paragraph 8(1)(c) of the Income Tax Act (the "Act").
Our Comments
Written confirmation of the tax implications inherent in an actual proposed transaction is given by this Directorate only where the transactions are the subject of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, entitled, Advanced Income Tax Rulings. Your request was not submitted in this format. However, as stated in paragraph 22 of IC 70-6R5, we do provide written opinions on general enquiries which are not advance income tax rulings and, we are prepared to provide you with the following comments.
Generally, to be eligible for the clergy residence deduction, pursuant to paragraph 8(1)(c) of the Act, 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). There are several elements to the function test and we provide our concerns regarding satisfaction of these elements for your position as described below.
The Canada Revenue Agency (the "CRA") has interpreted the phrase "administrative service" in paragraph 18 of the Interpretation Bulletin- IT-141R (Consolidated) -Clergy Residence Deduction. Although it is not limited to the senior level of management of an organization, performance of specific staff functions such as accounting, grounds keeping, information technology and clerical work do not qualify as administrative service. IT-141R further explains that the words "exclusively and full-time" imply that the person does not have some other form of appointment, business or occupation that is in addition to, and impinges upon, the administrative work performed.
You have provided us with a list of "Essential duties and responsibilities" of the HR manager. From the job description, it appears that the HR manager may determine organizational policies and coordinate various activities of the organization at the management level. However, nothing in your submission indicates that your position as an HR Manager, is a full-time position as required for the purpose of deduction pursuant to paragraph 8(1)(c) of the Act.
Paragraph 20 of IT-141R, further, states, that a person's administrative responsibilities must be by appointment of a religious order or a religious denomination. Recommendation or commendation (as distinct from appointment) of a person, for administrative responsibilities with another organization, does not constitute appointment by the order or denomination that makes the recommendation or commendation. The appointment need not be to employment with the denomination or order. The appointment can be to a position with an entity that is controlled by, and that is an integral part of the denomination. It should be in accordance with the practices and procedures of the particular religious organization.
We, however, do not have any information about who appoints the HR manager and if the appointing organization is a religious order or a religious denomination, for the purpose of deduction provided for in paragraph 8(1)(c) of the Act. Whether an organization is a religious order or not, is a question of fact, and we do not have any information to comment on the nature of the appointing body. Thus, based on the job description in your submission, we are unable to comment if your position qualifies as a position "engaged exclusively in full-time administrative services", for the purpose of clergy residence deduction, pursuant to paragraph 8(1)(c) of the Act.
Further, regardless of the fact that an employee may have met the function test by being appointed to a full-time administrative service by a religious order or a religious denomination, the employee would not qualify for the deduction under paragraph 8(1)(c) of the Act, if he or she has not met the status test. For an employee to meet the status test, he or she would have to either be a regular minister of the religious denomination or a member of a religious order. From the given submission, we are not in a position to determine whether or not you satisfy the status test.
Therefore, based on the above discussion, and the information provided, we cannot comment further on whether your position as an HR Manager, may be considered to be "engaged exclusively in full time administrative services" as related to the clergy residence deduction provided for in paragraph 8(1)(c) of the Act.
We trust our comments will be of assistance to you.
Yours truly,
For Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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