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:
Clarification of the extent to which members of the clergy under paragraph 8(1)(c) of the Act may claim the residence deduction when two members are spouses.
Position TAKEN:
Subject to income limits:
When both spouses otherwise qualify for a deduction under paragraph 8(1)(c) of the Act and they pay rent for their accommodation, the actual rent paid must be allocated between them on some reasonable basis.
When the residence is owned and occupied by the couple, a reasonable allocation of the fair rental value between the spouses would be appropriate. Provided that both spouses agree upon the allocation, the Department is prepared to accept any reasonable allocation chosen by them.
Reasons FOR POSITION TAKEN:
Previous position per 920493, based on wording of preamble to 8(1)(c) and our view that intention of the subparagraph was to provide for the deduction of a reasonably equivalent amount under either of the two circumstances; ownership or rental of the premises.
961386
XXXXXXXXXX D. Zion
Attention: XXXXXXXXXX
May 27, 1996
Dear XXXXXXXXXX:
Re: Paragraph 8(1)(c) of the Income Tax Act (the "Act")
This is in response to your letter of April 18, 1996, in which you request clarification concerning the residence deduction for members of the clergy under paragraph 8(1)(c) of the Act when two members are spouses.
In the situation you describe, two members of the clergy are spouses and each is in charge of ministering to a congregation. Further, each receives a housing allowance from a congregation. You requested clarification on the extent to which the clergy could claim a deduction under 8(1)(c) of the Act when they occupy the same house. You asked whether each could claim 100% of the fair market rental value of the home if the home were owned by them, or 100% of the rent paid for the home in the case where they rent the home.
In considering the extent to which each spouse may claim the residence deduction, we begin by looking at the preamble to the various subsection 8(1) deductions. For the purposes of calculating income from an office or employment for a taxation year, subsection 8(1) of the Act states, in part, that "...there may be deducted such of the following amounts as are wholly applicable ... or such part of the following amounts as may reasonably be regarded as applicable ..." Subparagraph 8(1)(c)(ii) of the Act provides for a deduction of either the amount paid as rent for the accommodation or the fair rental value of a residence or other living accommodation which is personally owned and occupied. The deduction is limited to the taxpayer's remuneration from that particular office or employment source.
When both spouses otherwise qualify for a deduction under paragraph 8(1)(c) of the Act and they pay rent for their accommodation, it is our view that the actual rent paid must be allocated between them on some reasonable basis. For example, an allocation could be made on the basis of income earned from the applicable source. Similarly, when the residence is owned and occupied by the couple, subparagraph 8(1)(c)(ii) of the Act permits the deduction of the fair rental value of the premises subject to the income limits. Considering the wording of the preamble, we hold the view that a reasonable allocation of the fair rental value between the spouses would be appropriate. Provided that both spouses agree upon the allocation, the Department is prepared to accept any reasonable allocation chosen by them.
We trust that our comments will be of assistance.
Yours truly,
John F. Oulton
Section Chief
Business, Property & Personal Section
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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