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:
clergymen's residence deduction -whether charity is a religious order, who appointed clergyman to his position, meaning of the terms minister and administration
Position:
charity not a religious order, question of fact as to who appointed minister to administrative post, the term minister refers to spiritual leader of a religious denomination who performs all the activities including pastoral care and priestly functions, normally associated with the term, administrative service can be distinguised from groundkeeping and accounting in that the latter are specific tasks done at the direction of the administrator
Reasons:
8(1)(c) status test involves issue of what is a regular minister function test required determination of whether charity is a religious order, who appointed the minister to his position as well as whether accounting & groundkeeping constituted administrative service
April 7, 1997
Kitchener Tax Services Office Headquarters
Business Audit A. Humenuk
957-8953
Attention: Henry Brunsveld
963385
XXXXXXXXXX
Clergyman's Residence Deduction
We are replying to your memoranda of October 7, 1996 and January 27, 1997 in which you ask for our assistance in determining whether the above-noted individuals are eligible for a deduction under paragraph 8(1)(c) of the Act.
Generally, to be eligible for the paragraph 8(1)(c) deduction, an individual must first 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"). The issue of concern in each of the above-noted cases is different. In the case of XXXXXXXXXX, the sole issue is whether he meets the function test whereas the issue for XXXXXXXXXX primarily involves the status test.
XXXXXXXXXX it can be accepted that he is exclusively engaged in full- time administrative service to the charity. The issue, then, is whether he meets the function test by being engaged exclusively in full-time administrative service by appointment of a religious denomination, since he clearly meets the status test as an ordained minister of the XXXXXXXXXX also argues that he meets the function test by ministering to a congregation. You also ask for our comments concerning an unnamed individual who was hired as the chaplain for XXXXXXXXXX.
XXXXXXXXXX
As a separately constituted body, the charity has its own board of governors and one would normally expect that its CEO would be appointed by that board. However, this issue may require further examination. If documentation is presented to confirm XXXXXXXXXX does have the authority to appoint the CEO of XXXXXXXXXX (and did in fact appoint him to that role), then he would be entitled to the deduction.
Concerning the other argument presented by XXXXXXXXXX, however, it is our view that, if he is engaged exclusively in full-time administrative service, he is not ministering to a congregation. The activity of ministering to a congregation includes all the activities normally performed by a minister of the better known religious denominations, and an individual who is so engaged is not engaged exclusively in full-time administrative service. In our view, occasional preaching or other church-related duties is not sufficient to find that an individual is ministering to a congregation.
While we have no reason to dispute your findings relating to the availability of the deduction to XXXXXXXXXX chaplain, we cannot offer any definitive comments without a review of the relevant facts. However, paragraph 5 of Interpretation Bulletin IT-141 continues to reflect our general views with respect to chaplains.
In the case of XXXXXXXXXX, it must be determined whether she is "a regular minister of a religious denomination," and if she is, whether her duties as an accountant and financial manager for the XXXXXXXXXX, constitute full-time administrative duties. You also asked for our comments concerning an unnamed individual who is engaged in full-time administrative work as the XXXXXXXXXX, but who is not authorized to perform ministerial functions normally performed by an ordained minister. In a similar vein, you asked whether a "commended worker" of the XXXXXXXXXX would automatically be considered "a regular minister of a religious denomination" in the same manner as XXXXXXXXXX. In particular, you are looking at the eligibility of a commended worker of the XXXXXXXXXX.
With respect to these questions, we will consider the issues relating to "status" first. XXXXXXXXXX In our view, the term "minister" connotes a position of acknowledged leadership in the spiritual affairs of a religious denomination and connotes a formal or official status distinct from that of the members of the congregation. In addition, a minister is one who regularly provides the full range of normal pastoral services as an employee of a religious denomination. Accordingly, it is our view that XXXXXXXXXX is neither a member of the clergy nor a regular minister of a religious denomination.
While it is our view that XXXXXXXXXX does not meet the status test, it is also our view that the deduction under paragraph 8(1)(c) of the Act is not available to XXXXXXXXXX (or to the "commended worker" who tends the property of the XXXXXXXXXX), on the basis of the function test. The Concise Oxford dictionary defines "administrative" as "pertaining to the management of affairs" and "administrator" as "one capable of organizing; one who performs official duties (of religion, justice, etc.)..." In our view, individuals who are performing specific functions for the organization, such as shipping, typing, cleaning, grounds keeping or accounting, are performing staff duties, and thus are not in administrative service. An administrator is a senior person in an organization who is responsible for carrying out the objectives of that organization and who has the capability and authority to organize so as to achieve those objectives. Such an individual performs official duties and often has signing authority for that organization. Individuals who undertake the specific tasks at the direction of the administrator, such as those listed above, cannot be said to be engaged in full-time administrative service on behalf of an organization.
Since we have not had the opportunity to look at the qualifications or duties of a commended worker of the XXXXXXXXXX or at the structural organization of the XXXXXXXXXX, we cannot provide any definitive comments concerning the status test of either "a commended worker of the XXXXXXXXXX" or a member of the XXXXXXXXXX. However, based on the information provided, it is unlikely that the XXXXXXXXXX meets the status test for the same reasons as given for XXXXXXXXXX.
As a final comment, you asked whether we could confirm or deny the assertion made by XXXXXXXXXX, the representative for each of the above-noted taxpayers, when he said that your office is the only tax services office which does not acknowledge that all individuals working in full-time administrative service for a religious denomination qualify for the deduction under paragraph 8(1)(c) of the Act. As indicated above, an individual must meet both the status and the function test in order to qualify for the deduction under paragraph 8(1)(c) of the Act.
We have enclosed a copy of the recent decision of the Federal Court of Appeal.
John F. Oulton
Section Chief
Business, Property & Employment Section II
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
c.c.: Deanna Dubé, Individual Returns & Payment Processing Directorate
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1997
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1997
Email this Content