27 May 1998 Internal T.I. 9805787 - 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: An individual is ordained as a minister in a XXXXXXXXXX church and is an appointed minister for XXXXXXXXXX The individual’s primary duty is XXXXXXXXXX Does the individual qualify for the clergyman’s residence deduction under paragraph 8(1)(c)?

Position: No

Reasons: As an ordained minister of the XXXXXXXXXX , the individual meets the status test of paragraph 8(1)(c). However, he does not meet the function test as he is not “in charge of or ministering to a diocese, parish, or congregation.”

		May 27, 1998

	Debbie Miller	HEADQUARTERS
	T1 Client Services	G. Moore
	Enquiries and Adjustments Division	952-1506
	Winnipeg Taxation Centre
		7-980578

Clergyman’s Residence - Paragraph 8(1)(c)

We are writing in reply to your memo of March 4, 1998, in which you asked for our opinion concerning whether XXXXXXXXXX is entitled to a clergyman’s residence deduction under paragraph 8(1)(c) of the Income Tax Act (the “Act”) for the 1996 taxation year.

XXXXXXXXXX

Our Comments

As you know, generally, to be eligible for the paragraph 8(1)(c) deduction, 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 a full-time administrative service by appointment of a religious order or religious denomination (the “function” test). On the basis that XXXXXXXXXX is an ordained minister, he would meet the status test. The issue, then, is whether he meets the function test.

Since XXXXXXXXXX cannot be considered to be “engaged exclusively in full-time administrative service,” the remaining issue to be reviewed is whether or not he is “in charge of or ministering to a diocese, parish or congregation.” In our view, the activity of “ministering” to a diocese, parish or congregation includes the activities normally performed by a minister of the better known religious denominations. In Zylstra Estate et al. v. The Queen, (94 DTC 6687), the court held that the phrase “diocese, parish or congregation” is generally intended to describe different organizational or institutional structures determined by religious denominations for the ongoing organized activities of their members on a regular basis. Although a gathering of persons may be a congregation for some purposes, it will not qualify as a congregation for the purposes of paragraph 8(1)(c), unless it is a gathering for shared religious purposes recognized by a religious denomination for its regular organizational religious activities. Finally, as indicated in paragraph 5 of IT-141, Clergymen’s Residences, a congregation is not defined by territorial boundaries nor by the number of people gathered together in one place. Based on the above, in our view, a congregation may comprise members who participate as members in other congregations. It is also our general view that a particular congregation must be recognized by (i.e., be a subunit of) a denomination. We would also note that, in our view, Christianity is not itself a religious denomination.

Based on a review of XXXXXXXXXX job description and information submitted with his request, XXXXXXXXXX appears to be involved primarily in missionary work, XXXXXXXXXX As part of this missionary work, XXXXXXXXXX preaches the gospel, teaches scripture, leads Bible study groups and visits families in a pastoral care position. In our view, XXXXXXXXXX is not in charge of or ministering to a diocese, parish or congregation because his primary activities are not those normally performed by a minister. In addition, XXXXXXXXXX is not in charge of organizational or institutional structures determined by a religious denomination for the ongoing organized activities of their members on a regular basis XXXXXXXXXX . The Bible group studies that XXXXXXXXXX leads would not qualify as a congregation for the purposes of paragraph 8(1)(c), because they are not gathering for shared religious purposes recognized by a religious denomination for its regular organizational religious activities.

Finally, with respect to whether XXXXXXXXXX teaching the scriptures would qualify as “ministering to a diocese, parish or congregation,” in our view, teaching would not qualify. Both the court cases of Zylstra Estate et al. v. the Queen and McRae v. the Queen, (97 DTC 5124), support this view.

For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Legislation Access Database (LAD) on the Department’s mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version or they may request a copy severed using the Privacy Act criteria which does not remove client identity. Requests for this latter version should be made by you to Jackie Page at 613 957-0682. The severed copy will be sent to you for delivery to the client.

We trust our reply will be of assistance in this matter.

J. Wilson
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch