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.
Principal Issues: Is an individual who is the vice-principal and school chaplain in a Roman Catholic school eligible for a clergy residence deduction?
Position: No
Reasons: Does not satisfy the status test.
XXXXXXXXXX
2010-037020
V. Srikanth
July 9, 2010
Dear XXXXXXXXXX :
Re: Clergy Residence Deduction
This is in response to your letter dated June 3, 2010, wherein you requested our views on claiming a clergy residence deduction pursuant to paragraph 8(1)(c) of the Income Tax Act (the "Act"). Specifically, you wanted to know whether an individual, who is a vice- principal and school chaplain (the "Individual") of a Roman Catholic high school would be able to claim the clergy residence deduction provided in paragraph 8(1)(c) of the Act.
Our Comments
Written confirmation of the tax implications inherent in actual proposed transactions is given by this Directorate only where the transactions are the subject of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, entitled Advance Income Tax Rulings. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on our website at http://www.cra-arc.gc.ca. If, however, the particular transactions are completed or partially completed, the enquiry should be addressed to the relevant Tax Services Office. Your request was not submitted as an advance income tax ruling request, however, as stated in paragraph 22 of IC 70-6R5, we do provide written opinions on general enquiries which are not advance income tax rulings and we are prepared to provide you with the following comments.
Generally, to be eligible for the clergy residence deduction pursuant to paragraph 8(1)(c) of the Act, 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).
Further, in order to qualify for the clergy residence deduction, pursuant to paragraph 8(1)(c) of the Act, the person must satisfy both the status and the function tests discussed below.
Status test
In order to qualify for the clergy residence deduction under paragraph 8(1)(c), the person must be one of the following:
- a member of the clergy;
- a member of a religious order; or
- a regular minister of a religious denomination.
As stated in paragraphs 3 and 4 of Interpretation Bulletin IT-141R (Consolidated), entitled Clergy Residence Deduction, whether or not a person is a "member of the clergy" or a "regular minister" depends upon the structure and practices of the particular church or religious denomination. A "member of the clergy" is a person set apart from the other members of the church or religious denomination as a spiritual leader. It is not necessary that the process of appointment be referred to as ordination or that the appointment is by someone higher up in the ecclesiastical hierarchy; it may be done by the congregation itself. In most established Christian churches, a member of the clergy would also be an ordained minister. However, whether ordained or not, a member of the clergy should be authorized to perform all of the duties of a regular minister. Paragraph 7 of IT-141R does indicate that deaconesses and deacons, elders, commissioned officers of the Salvation Army, chaplains (including female chaplains in the Roman Catholic Church) and cantors may be recognized as regular ministers, however, any situation would be a question of fact to be resolved based upon the structure and practices of the particular church or religious denomination.
We suggest that you refer to the case of Gasparini v The Queen, 97 DTC 3265 ("Gasparini"), as this case appears to be very similar to the situation you described and the judge refers to several other decisions in his analysis. In Gasparini, the appellant was hired as a chaplain of St. Charles' College High School in Sudbury by the Sudbury District Roman Catholic's Separate School Board ("The Board") and was paid by the Board. The appellant's responsibilities included "organizing religious services within the school, counselling students and staff, visiting hospitals and funeral homes, assisting religion teachers with their classes, offering retreats and days of reflection, and being present in the community activities as a symbol of the Church's presence in the lives of our youth." In determining whether the appellant was entitled to the clergy residence deduction, Teskey J. made the following concluding remarks:
"The Appellant cannot be ordained as a Roman Catholic priest and he cannot perform the functions of one. When mass is to be held, the Appellant must arrange for a priest to perform that duty. Even on the basis of Kolot [Kolot v. The Queen, 92 DTC 2391], if it could be said that the Appellant fits the definition of Minister (which I expressly do not find) the pupils of St. Charles' High School are not a religious congregation as those words are used in paragraph 8(1)(c) of the Act.
The Appellant's employer is the Sudbury District Roman Catholic Separate School Board. Its primary purpose is to educate those students who attend its schools including St. Charles' High School. Its secondary purpose is to establish a Christian environment for the educational process. The Appellant was employed to assist in this secondary purpose.
He is not a member of the clergy or of a religious order or a regular minister of a religious denomination, and is not in charge of or ministering to a diocese, parish or congregation."
In our view, it appears that the above comments made by Teskey J., apply in the situation of the Individual as well. Therefore, in our view, based on the information provided, the Individual does not satisfy the status test for the purpose of the clergy residence deduction pursuant to paragraph 8(1)(c) of the Act.
As explained earlier, in order to claim a clergy residence deduction pursuant to paragraph 8(1)(c) of the Act, it is necessary for an individual to satisfy both the status and function tests. As noted above, in our view, the Individual does not satisfy the status test and therefore, the Individual is not eligible to claim the clergy residence deduction provided for in paragraph 8(1)(c) of the Act. No further analysis has been done to determine if the Individual satisfies the function test.
We trust that our comments will be of assistance.
Yours truly,
R.A. Albert, CA
For Director
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
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