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:
A priest may conduct a mass. After conducting a mass, those who requested his services may make voluntary payments to the priest. Are the payments taxable?
Position TAKEN:
The payments are taxable either as employment income or as business income.
Reasons FOR POSITION TAKEN:
The person is receiving consideration for providing services.
June 14, 1994
Sydney District Office Head Office
Mr. Don Drohan Rulings Directorate
Client Assistance Division M. Eisner
(613) 957-8953
941394
Payments to Priests - Masses
This is in reply to your memorandum of May 26, 1994 concerning the above noted subject.
Your situation involves a retired catholic priest. At various times, he is requested by former parishioners to conduct masses in respect of certain types of occasions (e.g., weddings, in memory of deceased relatives). After conducting a mass, a number of those requesting his services may make voluntary payments to him. However, in some cases, he may not receive anything. It is estimated that the retired priest has received approximately $XXXXXXXXXX in each of the last three years for conducting masses.
With respect to this situation, you have attached a letter from the XXXXXXXXXX. This letter indicates that the fact that an offering may or may not be made for the priest has no effect on the obligation of a priest to carry out the mass in a careful and diligent manner. Accordingly, an offering made to a priest for conducting a mass should be considered to be a gift.
With respect to the above type of payments, you have asked us for our comments on the tax consequences of amounts received by a priest who is an employee and on amounts received by a priest who is self-employed.
In relation to the above issue, we have referred to paragraphs 4 and 11 of Interpretation Bulletin IT-334R2 "Miscellaneous Receipts". These paragraphs respectively includes the following comments:
"Amounts received as gifts, that is, voluntary transfers of real or personal property without consideration, are not subject to tax in the hands of the recipient. However, when by virtue of an office or employment a voluntary payment or other valuable transfer or benefit is received by an employee from an employer, or from some other person the amount of the payment or other valuable consideration is generally included in income pursuant to subsection 5(1) or paragraph 6(1)(a). ... Similarly, voluntary payments (or other transfers or benefits) received by virtue of carrying on a business are taxable receipts."
"In order for any activity or pursuit to be regarded as a source of income, there must be a reasonable expectation of profit."
By virtue of the above comments, it is our view that payments made in respect of masses to a priest who is an employee or to a priest who is self-employed would respectively constitute income from employment or business income. It would follow that the payments made in the situation referred to us would be taxable. We are also mentioning that these comments are consistent with the point that while the payments are voluntary, it is the services provided by the individual that gives rise to the payments.
As a consequence of the above comments, it follows that payments of the type described above cannot be regarded as being non-taxable on the basis that they are in the nature of gifts.
If you require further assistance, we would be pleased to provide our views.
P.D. Fuoco
Section Chief
Personal and General Section
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
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