3 February 1999 External T.I. 9826835 - XXXXXXXXXX

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:

Eligibility for the paragraph 8(1)(c) deduction.

Position TAKEN:

General comments provided, and taxpayer referred back to the TSO.

Reasons FOR POSITION TAKEN:

The taxpayer’s situation has been the subject of a review by the TSO.

XXXXXXXXXX 		5-982683
M. Azzi
February 3, 1999

Dear Reverend:

Re: Clergyman’s Residence Deduction

This is in reply to your letter of October 8, 1998, wherein you requested our views on whether you qualify for the clergyman’s residence deduction provided in paragraph 8(1)(c) of the Income Tax Act (the “Act”).

We understand that you are an ordained minister XXXXXXXXXX . You indicate that the Client Services section of the XXXXXXXXXX Tax Services Office has reviewed, and did not approve, your claim for the clergyman’s residence deduction.

Our Comments

As the situation outlined in your letter has been the subject of a review by a tax services office, your concerns, or any appeal of the decision of the tax services office, should have been addressed to that tax services office. We are therefore not in a position to reply to your request, and apologize for any misunderstanding which may have led you to send your enquiry to this directorate. We can, however, offer the following general comments which may be of assistance.

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 full-time administrative service by appointment of a religious order or religious denomination (the “function test”). On the basis that you are an ordained minister, you would meet the status test. Since you are not engaged exclusively in full-time administrative service by appointment of a religious order or religious denomination, the remaining issue is whether you are 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 addition, in the case of Zylstra Estate et al. v. The Queen (94 DTC 6687), the Federal Court-Trial Division 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 purpose, it will not qualify as a congregation for the purposes of paragraph 8(1)(c) of the Act, unless it is a gathering for shared religious purposes recognized by a religious denomination for its regular organizational religious activities. Furthermore, 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. Accordingly, in our view, a congregation may comprise members who participate as members in other congregations. However, it is also our general view, that a particular congregation must be recognized by (i.e., be a subunit of) a denomination.

Should you have any further questions regarding the above matters, we suggest that you contact officials from the tax services office which reviewed your claim. They are in a better position to review all the facts of your case, and can explain any appeals options available to you, should you still not agree with their decision.

While we were unable to answer to your request, we hope that these comments will be of assistance.

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