Date: 19980526
Docket: 94-2341-IT-G
BETWEEN:
HARRY VIBE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
(delivered orally from the Bench on October 17, 1997 at
Toronto, Ontario)
Garon, J.T.C.C.
[1] These are appeals from income tax reassessments concerning
the l989, l990 and 1991 taxation years.
[2] By these reassessments the Minister of National Revenue
disallowed the deductions in the respective amounts of
$14,433.24, $15,083.28 and $16,345.33 claimed by the Appellant in
the years 1989, 1990 and 1991 under paragraph 8(1)(c) of
the Income Tax Act with respect to the fair rental value
of a residence that he owned and occupied during each of the
three years.
[3] The Appellant was ordained in May l962 and has been on the
clergy roster of the Evangelical Lutheran Church in Canada and
its predecessor Church since that time. He has been a member in
good standing of the Manitoba Northwestern Ontario Synod of the
Evangelical Lutheran Church in Canada.
[4] From his ordination until l986, the Appellant has served
various congregations as a full-time pastor of his Church in
localities in the provinces of Manitoba, British Columbia,
Alberta, Ontario and briefly in Minnesota, United States of
America.
[5] Effective September lst, l986, the Appellant became
employed as Secretary of the Manitoba District of the Canadian
Bible Society. Following such appointment, an installation
service was arranged by his Church and was presided over by the
Appellant’s Bishop, that is, the Bishop for the Manitoba
Northwestern Ontario Synod. The General Secretary of the Canadian
Bible Society assisted the latter Bishop in the Appellant’s
installation service. The Appellant was employed in that capacity
during the three years in issue and resigned his position in l993
for health reasons.
[6] The Canadian Bible Society was created under the authority
of, "An Act to incorporate the Canadian Bible Society
auxiliary to the British and Foreign Bible Society",
assented to on June 26th, l906 as a non-profit corporation. The
Canadian Bible Society is a registered charity under the
Income Tax Act.
[7] The object of the Canadian Bible Society is described in
section 4 of the latter statute as follows:
The sole object of the Society shall be to promote and
encourage the wider circulation throughout Canada of the
Scriptures, without note or comment, and to co-operate with the
British and Foreign Bible Society in its world-wide work.
[8] From the l990 version of the Constitution of the Canadian
Bible Society, the following excerpts are of interest for present
purposes:
1. The sole object of the District shall be to encourage the
wider promotion of the Bible, without note or comment, throughout
Manitoba, and to assist the Canadian Bible Society in its world
wide ministry.
...
6. A District Secretary shall be appointed by the General
Board of the Canadian Bible Society. Such appointment shall be
preceded by consultation between the General Secretary and the
Executive Board of the Manitoba District.
a. The District Secretary will be responsible to the General
Board of the Canadian Bible Society, but will work in harmony
with the District Board of the Canadian Bible Society.
b. The District Secretary will be the chief executive officer
of the District and will be responsible for the administration
and management of the District. He will also be responsible for
the promotion and implementation of the national policies of the
Society in the District.
c. The District Secretary will be an ex-officio member of the
District Board.
Paragraphs numbered 1 and 2 of the By-laws of the Canadian
Bible Society are worth noting:
The business of the Canadian Bible Society, La Societe
Canadienne,[sic] is managed by the Executive Board. Its
membership is composed of one third clergy and two thirds lay
persons representing the various denominations in the District.
The Board is elected at the Annual Meeting of the Society each
spring.
It is required that members of the Executive Board shall be
members in good standing of their respective congregation, and as
far as possible, shall be elected or appointed by their
denomination to the Board.
[9] There are no significant differences between the above
provisions of the l990 version of the Constitution of the
Canadian Bible Society and the corresponding provisions in the
pre-1990 Constitution that were applicable during a portion of
the period in issue.
[10] The position of District Secretary of the Canadian Bible
Society was advertised in an issue of the periodical of the
Lutheran Church of Canada some time in l985 or early l996. The
advertisement reads thus:
CANADIAN BIBLE SOCIETY
will require two district secretaries for July 1, 1986.
Successful candidates will be Biblically motivated, genuinely
ecumenical, and personally outgoing ordained clergy ready to
serve in either Manitoba or Nova Scotia. Applicants may write
to:
The General Secretary
10 Carnforth Road
Toronto, Ontario M4A 2S4
[11] The job description of Secretary of the Manitoba District
of the Canadian Bible Society describes its primary purpose in
these terms:
...
To alert, to listen, and to challenge the Christian community
of Manitoba with the three-fold purpose of the Canadian Bible
Society, both as it applies at home and beyond our borders, in a
manner that is both relevant and respectful.
In other words, to discover the best ways to alert and
challenge Christians within the various denominations that make
up the Christian mosaic of Manitoba to the three-fold purpose of
the Society, namely:
The 'Translation' of the Bible, in part or in
whole, into as many languages of the world as there are people
who desire.
The 'Publication' of the Bible in a format that
is easily readable, and at a price that people can afford.
The 'Distribution' of the Bible, whether
directly or through the missionary endeavours of the supporting
Churches to all who desire a copy of the Bible.
[12] The Canadian Bible Society was requiring at the relevant
time that the District Secretary had a minimum of five years
parish experience and preferably ten years. It was also
considered desirable that the incumbent of that position had a
broad ecumenical experience since he had to deal with a great
number of Christian denominations.
[13] Before accepting the appointment, the Appellant consulted
with the Synod Bishop of Manitoba and Northwestern Ontario who
was quite supportive of his application. The latter Synod Bishop
had previously endorsed the Appellant's application for this
position.
[14] The Appellant also had discussions at that time about the
duties of the position of Manitoba District Secretary of the
Canadian Bible Society with Reverend William R. Russell, the
General Secretary of the Canadian Bible Society.
[15] The Appellant was offered the position of Manitoba
District Secretary in a letter dated June 3, l986 from the
General Secretary, Reverend Russell.
[16] Following his acceptance of the above position, the
Appellant received a Letter of Call from the Manitoba and
Northwestern Ontario Synod. A Letter of Call dated November 3,
l986 was also issued to the Appellant by the Church Council of
the Evangelical Lutheran Church in Canada. This Letter of Call
was forwarded to the Appellant by the Secretary of the latter
Church with his letter of November l9, l986. The last paragraph
of the letter of November 19, 1986, is of some significance:
May God bless you in this new ministry you are
undertaking.
(Emphasis added)
[17] The Appellant gave a detailed account of his work as
Manitoba District Secretary of the Canadian Bible Society. The
Appellant testified that he spent about 60% of his time on the
road for the purpose of visiting the parishes and congregations
of the various denominations in Manitoba. In his work, he
contacted the pastors of such denominations. As a minimum, with
the consent of the pastor of the local Church, the Appellant
participated in the worship service by making a five minute
presentation in the course of which he promoted the reading and
study of the Bible. On an average, he made 150 to 200 five-minute
presentations a year during the relevant period. In addition, he
preached sixty to seventy times a year during the years in issue.
He visited 150 to 200 local churches in a particular year.
[18] With respect to the worship services, the Appellant read
lessons and shared in the sermons, if the local pastors agreed.
On many occasions, the local pastors consented to the Appellant
playing an important role in the conduct of worship services; at
times, he conducted the whole service. He also assisted with the
communion service, that is, in the distribution of bread and wine
in churches of his denomination and, to a lesser extent, in
churches of other denominations. The Appellant also presented
what he called a children’s or youth feature that is, a
religious message that was made palatable for young people of a
congregation.
[19] Occasionally he also filled in as a minister for the
worship service. He was also available for ministry work on
Sunday eight to ten times a year, at the request of the Synod
Bishop. He occasionally visited prisons and more often, senior
citizens retirement homes. He also called at the offices of the
Citizenship Court where he presented Bibles to individuals who
became Canadian citizens.
[20] On many occasions, in his attendance at and participation
in the worship service, he wore the clerical collar and was
dressed as a clergyman. On other occasions, taking into account
the wishes of the local pastor, he would wear the clerical gown
or simply dress in civilian clothes.
[21] In addition to his participation in the worship services,
the Appellant was required by the duties of his office to attend
to correspondence and handle special requests, for example, from
institutions which would like free bibles or free new testaments.
He took part in board meetings of the Canadian Bible Society and
in a number of meetings of various committees of the Manitoba
District of the latter Society.
[22] On his visits to the churches of the various
denominations, the Appellant arranged for the placing of
envelopes in the Church for donations to the Canadian Bible
Society, provided that the local pastor consented to this type of
arrangement. In many cases, the local pastor did not agree to
this collection method. The Appellant stated that the collection
work for the Canadian Bible Society was not a significant part of
his work. The raising of funds for the Canadian Bible Society was
mainly done through its national direct mail programme, which was
operated through the national office in Toronto, by a number of
employees of the Canadian Bible Society. The Appellant himself
also acknowledged receipt of larger gifts to the Canadian Bible
Society.
[23] It is to be noted that in the years in question, the
Appellant ought not to present himself to congregations and
gatherings as a Lutheran pastor but as a representative of the
Bible Society.
[24] The Appellant was also required to make an annual written
report to the Synod Bishop about his ministry and in particular
about his work for the Bible Society. The Appellant also had
informal communications with the Synod Bishop at least twice a
year.
[25] The Appellant did not perform funerals during the years
in issue; he conducted two marriages during that period. Family
and marriage counselling was not part of the duties of his
office.
[26] It should also be noted that the Evangelical Lutheran
Church of Canada paid no part of his salary. The
Appellant’s Church did not provide him with an office or
other facilities. However, the Appellant elected to continue to
participate in the pension plan of his Church rather than in the
pension plan of the Canadian Bible Society.
[27] The testimony of the Synod Bishop for Manitoba and
Northwestern Ontario during the years in issue corroborated the
Appellant's testimony, namely with regard to the installation
service that took place shortly after the Appellant's
appointment to the office of Manitoba District Secretary of the
Canadian Bible Society. As well, the Synod Bishop asserted that
there was a requirement for the Appellant to possess the Call of
his Church for serving as Secretary of the Manitoba District of
the Canadian Bible Society. He also confirmed that the Appellant
was required to make an annual report to him, in his capacity as
the Synod Bishop, like any other pastor of his denomination
albeit the form of the report was of a different nature.
[28] It was also mentioned that, in particular, the Appellant
remained subject to the discipline provisions of his Church which
are found in Part III of the By-laws of the Evangelical Lutheran
Church in Canada.
[29] Reverend Russell Tudor Hall, who was Resource Director
for the Canadian Bible Society during the relevant years,
testified briefly at the hearing of these appeals. He provided
information as to how the Canadian Bible Society raised its funds
to finance its operations. He gave explanations in particular
about the direct mail fund raising programme directed by the
national office of the Canadian Bible Society in Toronto. This
programme was the primary source of funds for the Canadian Bible
Society.
The Appellant's submissions
[30] On behalf of the Appellant it was submitted that
paragraph 8(1)(c) of the Income Tax Act requires a
taxpayer to meet status and function requirements to be entitled
to that deduction.
[31] Regarding the status test, the taxpayer must be a member
of the clergy, a member of a religious order or a regular
minister of a religious denomination. According to the function
requirement test, the taxpayer must be in charge of or
ministering to a diocese, parish or congregation or must be
engaged in full-time administrative service by appointment of a
religious order or a religious denomination.
[32] Applying these two tests, it was submitted on behalf of
the Appellant that the first test is met by reason of the fact
that the Appellant was an ordained minister of the Evangelical
Lutheran Church in Canada.
[33] As for the second test, it was advanced that the
Appellant was ministering to the congregation on whom he attended
in his capacity as the Manitoba District Secretary of the
Canadian Bible Society. In support of this proposition, Counsel
for the Appellant referred to paragraphs 4 and 5 of the
Interpretation Bulletin, IT-141 dated December 31, 1973 and
to Revenue Canada Directives TIP 92-02 and l974.l4 dated March
20, 1997.
[34] For the Appellant, it was also urged that the word
"congregation" in the phrase "ministering to a
congregation" in paragraph 8(l)(c) of the Act
should be read as including the plural "congregations".
It was suggested that a contrary intention is not indicated in
paragraph 8(l)(c).
[35] The proposition was also put forward that the function
requirement of ministering to a congregation does not restrict
the deduction set out in paragraph 8(l)(c) of the
Act to just the local Church minister of a particular
congregation.
[36] The Appellant also submitted, as an alternative argument,
that if the Appellant's work as Manitoba District Secretary
of the Canadian Bible Society is not found ministering, such work
was full-time administrative service to which the Appellant had
been appointed by a religious denomination, namely the
Evangelical Lutheran Church of Canada.
The Respondent's submissions
[37] The respondent relied on the decision of Deputy Judge
Rowe in the case of McNeil v The Queen,[1] who described the general
purpose of paragraph 8(l)(c) at page 705.
[38] Counsel for the Respondent also found support for his
position in the House of Commons Debates on July 3l, l956
reported in Hansard at pages 6775 and 6777 and the observations
made by the then Minister of Finance. In this connection, counsel
for the Respondent commented as follows in his memorandum
submitted during oral argument entitled “Respondent’s
Points of Argument”:
At the time of amendment of the provision into its present
form l956, the Minister responsible indicated that the deduction
was not intended to be applicable in the case of all clergymen or
ministers, and that it was to apply to a clergyman,
‘whether he be in fact a pastor in charge of a congregation
or a member of the church body in the higher level [...] who
engages in church work exclusively including acting as a pastor
from time to time’.
[39] Counsel for the Respondent also propounded the
proposition that the general scheme of the Act is to preclude
deductions for personal and living expenses and contended, on the
basis of the decision of this Court in the case Oligny v. The
Queen,[2] and
in a decision of the Federal Court of Canada, Trial Division in
the case of Zylstra Estate et al. v. The Queen,[3] that paragraph
8(l)(c) is to be construed narrowly rather than
liberally.
[40] On behalf of the Respondent, the attention of the Court
was drawn to a difference in substance between the English and
the French versions of the enactment of paragraph 8(l)(c),
the French version being narrower. In support of this submission,
Counsel contrasted the portion of the enactment in the English
version of paragraph 8(1)(c) “is in charge of, or
ministering to a diocese, parish or congregation” with the
enactment in the French version “et qu’il dessert un
diocèse, une paroisse ou a la charge d’une
congrégation”.
[41] It was also submitted in the Respondent’s Points of
Argument that, "‘ministering to a congregation’
consists of having the charge of the spiritual needs and welfare
of the congregation as the principal focus of one's
activities, and not simply having such duties as an incidental or
secondary concern. It is further submitted that the phrase
'ministering to a congregation' does not include the
performance of only a portion of the duties that are ordinarily
performed by a clergyman who is ministering to a congregation. A
clergyman who is 'ministering to a congregation' or to
'congregations' is one who is performing the bundle of
duties that are ordinarily associated with and performed by the
minister of a congregation”.
[42] Finally, it was urged on the Court that the appointment
of the Appellant to the position of Manitoba District Secretary
of the Canadian Bible Society was not an appointment by a
religious denomination as required by paragraph 8(l)(c) of
the Act, but rather an appointment made by the Canadian
Bible Society which is an entity other than a religious
denomination or a religious order.
Analysis
[43] It is common ground that the entitlement by a member of
clergy to a deduction against the income from his office or
employment in respect of his residence is governed by paragraph
8(l)(c) of the Income Tax Act which provides as
follows:
8(1) In computing a taxpayer’s income for a taxation
year from an office or employment, there may be deducted such of
the following amounts as are wholly applicable to that source or
such part of the following amounts as may reasonably be regarded
as applicable thereto:
...
(c) where the taxpayer is a member of the clergy or of
a religious order or a regular minister of a religious
denomination, and is 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, an amount equal to
(i) the value of the residence or other living accommodation
occupied by him in the course of or by virtue of his office or
employment as such member or minister so in charge of or
ministering to a diocese, parish or congregation, or so engaged
in such administrative service, to the extent that such value is
included in computing his income for the year by virtue of
section 6, or
(ii) rent paid by him for a residence or other living
accommodation rented and occupied by him, or the fair rental
value of a residence or other living accommodation owned and
occupied by him, during the year but not, in either case,
exceeding his remuneration from his office or employment as
described in subparagraph (i);
[44] First, there is no dispute about the quantum of the
deduction claimed by the Appellant in each of the years in
issue.
[45] As mentioned by Judge Beaubier of this Court, in the case
of Kolot v. The Queen,[4] the case law has established that there is a
twofold test to determine whether or not a taxpayer can fall
within the ambit of paragraph 8(l)(c) of the Income Tax
Act. These tests have been described as the status test and
the function test.
[46] It is common ground here that the Appellant was an
ordained minister of the Evangelical Lutheran Church in Canada.
The Appellant was therefore a member of the clergy within the
purview of the opening words of paragraph 8(l)(c) of the
Income Tax Act. Thus, the Appellant met the status
test.
[47] The second test is whether the Appellant, in the years in
issue, satisfied the function test. In other words, having regard
to the facts of the present case, was the Appellant ministering
to a congregation in his capacity as Manitoba District Secretary
of the Canadian Bible Society.
[48] In that position, his main duties, apart from the office
work related to any clerical office, or for that matter generally
to any type of office, could be summarized as follows:
On many occasions, the Appellant assisted the pastor of the
local Church in the conduct of the congregation's regular
worship services. The Appellant spoke from the pulpit. In fact,
the Appellant participated in the sermon to the congregation in
his presentation concerning the promotion of the use and reading
of the bible. In some instances, he preached the entire sermons
to the congregations. He also participated in the regular worship
of these congregations in other ways, such as reading lessons,
leading prayers, etc. The Appellant also assisted in
administering the sacrament of communion. He led the bible study
lessons.
[49] Also, the work performed by the Appellant, as Manitoba
District Secretary of the Canadian Bible Society, was regarded as
ministry by his Church. Among other things, the Evangelical
Lutheran Church in Canada issued a specific Letter of Call to the
Appellant, following his appointment to that position. The Synod
Bishop also put out a Letter of Call to the Appellant for the
same purpose.
[50] Also the installation service was conducted under the
direction of the Synod Bishop after the Appellant's
appointment to the above position. This factual element is a
clear recognition by the Church that the Appellant's work
constituted ministry. I agree with counsel for the Appellant that
considerable weight should be given to what constitutes ministry
in the eyes of a particular Church, although I recognize that the
matter may not be entirely conclusive. The Appellant’s work
for the Canadian Bible Society was also considered by that
Society as ministry. The evidence of the Resource Director of the
Canadian Bible Society was that the work of the District
Secretaries of the Canadian Bible Society was described “as
a cognate ministry”.
[51] In performing the above duties the Appellant was, in my
view, ministering to the congregations on whom he attended. These
congregations were regular congregations of established religious
denominations. Regarding the use of the singular in the phrase
“ministering to a diocese, parish or congregation” in
paragraph 8(1)(c) of the Income Tax Act, I am in
full agreement with the point made by Counsel for the Appellant
that it was a long standing principle of statutory interpretation
that words in the singular do include the plural, as set out in
subsection 33(2) of the Interpretation Act.
[52] It is of interest to note the import of the words,
"diocese, parish and congregation" in the context of
paragraph 8(l)(c) of the Income Tax Act. The
observations of Justice MacKay of the Federal Court, Trial
Division in the case of Zylstra Estate et al. v. The
Queen, 94 DTC 6687 at page 6696 are worth noting:
...
It is my opinion that in this broader context of the words
used to describe the qualifications for a deduction, the words
‘diocese, parish or congregation’ are intended to
describe different organizational or institutional structures
determined by religious denominations for the ongoing organized
activities of their members on a regular basis. Thus, a gathering
of persons may well be a congregation for some purposes, but
unless it is a gathering for shared religious purposes recognized
by a religious denomination for its regular organizational
religious activities, it does not qualify as a
‘congregation’ within the meaning of that word in
paragraph 8(1)(c) of the Act.
[53] Even if paragraph 8(l)(c) of the Income Tax
Act is to be construed narrowly, I cannot accept that
paragraph 8(l)(c) should be restricted to the usual case
of the local Church pastor. If that had been the intention of
Parliament, it would have been easy to say so. In this regard, it
is interesting to observe that in the Interpretation Bulletin
IT-141 dated December 3l, 1973, a reasonably broad interpretation
is given to the concepts of, "Ministering to a
congregation", and, "congregation". Paragraphs 4
and 5 of this Bulletin read as follows:
4. “Ministering to a congregation” means
performing a function in relation to the members of the
congregation similar to that performed by ministers of the better
known religious denominations. For example, a cantor whose main
function is to sing in religious services is not ministering to a
congregation as is a cantor who has been trained to fulfil and is
carrying out religious duties similar to those of a rabbi.
5. A congregation is not defined by territorial boundaries nor
by the number of people gathered together in one place.
Accordingly, chaplains in the armed forces or with an institution
are generally considered to minister to congregations.
[54] Thus, I find as a fact that the Appellant, during the
years in issue, was ministering to congregations within the
purview of paragraph 8(l)(c) of the Income Tax Act.
The Appellant met during the years in issue the function
test.
[55] Therefore, I come to the conclusion that the Appellant is
entitled, in each of the years in issue, to the deduction
provided by paragraph 8(l)(c) of the Income Tax
Act in respect of his residence.
[56] For these reasons, the appeals are allowed with costs and
the assessments are referred back to the Minister of National
Revenue for reconsideration and reassessment on the basis that
the Appellant is entitled, in respect of the years l989, l990 and
1991, to the deduction spelled out in paragraph 8(l)(c) of
the Income Tax Act.
Signed at Ottawa, Canada, this 26th day of May 1998.
"Alban Garon"
J.T.C.C.
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