25 February 1998 Internal T.I. 9719316 - 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:

Whether XXXXXXXXXX is a religious order.

Position TAKEN:

No.

Reasons FOR POSITION TAKEN:

XXXXXXXXXX members are not required to commit to the vows of chastity, poverty and obedience. In addition, XXXXXXXXXX Doctrinal Statement is a broad affirmation of faith which does not mark XXXXXXXXXX and its members as distinct from any church or denomination which it may serve.

		February 25, 1998

L. Tremblay	HEADQUARTERS
	Director	M. Azzi
	Appeals and Referrals Division	(613) 957-8953

	Attention:  P. Picard
		8-971931

XXXXXXXXXX
Clergyman’s Residence Deduction

This is in reply to your memo of July 11, 1997, wherein you requested our views on whether the above-noted individual qualifies for the clergyman’s residence deduction provided in paragraph 8(1)(c) of the Income Tax Act.

XXXXXXXXXX

Our Comments

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"). Based on XXXXXXXXXX claim for the paragraph 8(1)(c) deduction, the issue in this case is whether XXXXXXXXXX is a religious order and, if so, whether XXXXXXXXXX is engaged exclusively in full-time administrative service by appointment of this religious order.

Whether an organization is a "religious order" is a question of fact which must be determined on a case-by-case basis. This term is not defined in the Act; however, we agree with the expert testimony provided on page 6693 in Zylstra Estate et al. v. The Queen, 94 DTC 6687, that the phenomenon of "religious orders" is:

1. "...marked by common characteristics, when a group of persons, distinct from within a larger religious community, live under a set of rules, bound by vows to observe not only the general precepts of their church, but also vows of chastity, poverty and obedience, including agreement to a communal life unless permitted to live otherwise."

The Federal Court-Trial Division accepted this evidence, in Zylstra, in reaching its conclusion that the organizations at issue were not religious orders (i.e., the Judge’s reasons and conclusion were based on this definition of a "religious order"). In addition, in McRae v. The Queen, 97 DTC 5124, the Federal Court of Appeal agreed with the conclusion in Zylstra and stated that it was "in substantial agreement with" the Trial Judge’s reasons.

In our view, the above interpretation of the term "religious order" is also consistent with the approach adopted by the Tax Court in Oligny v. The Queen, 96 DTC 1744, when on pages 1751 and 1752 it states: "It is my view that the teleological approach recommended by the Supreme Court of Canada leads in the instant case (upon examination of the parliamentary debates, of the historical context in which paragraph 8(1)(c) was initially passed then amended and, lastly, of its exceptional nature relative to the general rule) to the conclusion that it must be interpreted narrowly rather than liberally. This was the approach recommended by counsel for the respondent and that moreover adopted by the Federal Court, Trial Division, in Zylstra Estate, supra...Furthermore, in my view, paragraph 8(1)(c) of the Act, as drafted, neither favours nor disfavours any religion or denomination in particular through the use of the expression 'member of a religious order'...while it may be observed that it is in the Roman Catholic tradition that religious orders are most numerous, it is nevertheless common knowledge that such orders, though less numerous, exist in the tradition of certain Protestant denominations, in particular the Anglican Church as well as in the Christian Orthodox tradition. I will add that certain oriental religions could probably lay claim to their existence as well."

Based on the Letters Patent, By-Laws, Doctrinal Statement and pamphlets, which were submitted, in our view, XXXXXXXXXX is not a religious order. For instance, XXXXXXXXXX members are not required to commit to the above-noted vows. In addition, XXXXXXXXXX Doctrinal Statement is a broad affirmation of faith which does not mark XXXXXXXXXX and its members as distinct from any church or denomination which it may serve. This view is consistent with the comments made by the Court on page 1753 in Oligny that: "the conditions that appear essential for an organization to be considered as a religious order are, in my view, first that the members adhere to the particular rules uniting them in a formal way and that those particular rules governing them be more compelling than those that consist simply in ratifying the beliefs established by the religion or the denomination to which they already belong. A simple inter-denominational organization such as CSB offering a statement of faith to which the members of a number of religious denominations adhere and rules of conduct stated in very general terms does not meet this condition."

As XXXXXXXXXX does not qualify as a religious order, in our view, XXXXXXXXXX is not entitled to a deduction under paragraph 8(1)(c).

In closing, we would also note that we were not provided with sufficient information in order to establish whether XXXXXXXXXX was "engaged exclusively in full-time administrative service." That is, the job description submitted does not provide sufficient details as to his duties and level of authority. The Concise Oxford Dictionary defines "administrative" as "concerning or relating to the management of affairs" and "administrator" as "a person capable of organizing...a person who performs official duties in some sphere, e.g. in religion or justice." In our view, an administrator is therefore 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.

We trust that these comments will be of assistance.

Bryan W. Dath
Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

-3 -