30 August 1995 Internal T.I. 9514327 - CLERGYMAN'S RESIDENCE 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.

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:

Whether the taxpayer is entitled to a deduction under para 8(1)(c). Can she be considered to be a "regular minister ministering to a congregation

Position TAKEN:

Question of fact. Ruling cannot be provided. File referred back to TSO for consideration and reply. We have provided comments to assist them in their determination.

Reasons FOR POSITION TAKEN:

Departmental position.

		August 30, 1995

	Ottawa Tax Services	HEADQUARTERS
	Client Assistance Division	D. Zion
	Chantal Jalbert		(613) 957-8953
	Assistant Director

	Attention: Lynne Charron
		951432

Clergyman's Residence
XXXXXXXXXX

We are returning the attached letter from XXXXXXXXXX which your office forwarded to this Division for a ruling, for your consideration and reply. XXXXXXXXXX has requested confirmation that the housing allowance received by

XXXXXXXXXX

qualifies for the "housing allowance tax benefit". We apologize for the delay in our response.

As noted in Information Circular IC 70-6R, "Advance Income Tax Rulings" dated September 28, 1990 and Special Release thereto dated September 30, 1992, confirmation of the tax consequences of specific transactions is only given by this Directorate by way of an advance tax ruling and is restricted to proposed transactions. The Department does not issue advance income tax rulings in respect of transactions that are already in progress or a question of fact. The determination of the tax consequences of a particular fact situation is normally the responsibility of the Tax Services office serving the area in which the client resides. The following comments are intended to assist you with that determination. Should you require further technical assistance, do not hesitate to contact us.

We have made the assumption, from a review of the information provided, that the issue at hand is actually whether or not XXXXXXXXXX qualifies for the clergyman's residence deduction pursuant to paragraph 8(1)(c) of the Income Tax Act (the "Act") in respect of a housing allowance paid to her by XXXXXXXXXX qualify for the deduction under paragraph 8(1)(c) of the Act and she informs her employer of her intention to claim the deduction, it is our understanding that Canada Pension Plan and income tax deductions at source would not be required.

Generally, to be eligible for the deduction under paragraph 8(1)(c) of the Act, the individual must first be either a member of the clergy, a member of a religious order or a regular minister of a religious denomination (the "status test"). Where one of these conditions is met, then 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").

It is our view that a regular minister of a religious denomination refers to an individual who is exercising a clergyman's function and whose appointment to a position to exercise that function has been made in conformity with orderly or prescribed rules established by the particular religious denomination for the making of such appointments. The individual must perform, or can be authorized to perform, the same functions as the regular minister, such as, baptising, giving communion and conducting marriage and burial ceremonies.

As noted in our memorandum of January 13, 1994 to Source Deductions Division, which you included with your referral, the issue of whether an individual who had been appointed to the staff associate position at a United Church was a regular minister of a religious denomination was at issue in Kolot v. The Queen (92 DTC 2391). In this case the Court found that the Appellant was a regular minister of a religious denomination ministering to a congregation. The decision can be distinguished on its facts and the case should not be used as a precedent in any situation except where the facts are substantially the same as that found in Kolot. The Appellant was in receipt of a housing allowance which had been included in her income. There was evidence, accepted by the Court, that she was considered a spiritual leader with the United Church and that church-specified status similar to the status of an ordained minister was required to occupy the position of the staff associate. The criteria outlined in our above-noted memorandum, and included in Mr. Ivey's January 27, 1994 letter to XXXXXXXXXX serve as a general guideline as to the requirements that should be met by an individual in this determination.

XXXXXXXXXX

According to testimony provided in Kolot, upon appointment to the position of staff associate, an individual can, in contrast to ordinary lay people, be authorized to give all of the sacraments of The United Church of Canada. You may wish to confirm this is the case for XXXXXXXXXX You may also wish to obtain more details regarding what a resource person's duties entail as well as what is considered to be "on-going pastoral care and support", in order to determine if these duties can be considered "ministering to a congregation" and that the nature of these duties involves those that are otherwise carried out by the ordained minister of XXXXXXXXXX In accordance with criteria 4 and 5 listed in Mr. Ivey's letter, you also may wish to obtain further clarification from XXXXXXXXXX in order to ensure that these criteria are met. We would expect that a review of her appointment documents and responsibilities would be sufficient to satisfy you in this regard.

We trust that these comments will be of assistance in resolving XXXXXXXXXX request.

P.D. Fuoco
Section Chief
Personal and General Section
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

c.c. Source Deductions Division
TSO/TC Support Services