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: Does a Community Development Pastor at the XXXXXXXXXX qualify for a clergy residence deduction pursuant to paragraph 8(1)(c) of the Act?
Position: Appears to.
Reasons: Appears to satisfy both the status and function tests for the purpose of the paragraph 8(1)(c) deduction.
February 14, 2012
XXXXXXXXXX Tax Services Office HEADQUARTERS
XXXXXXXXXX Income Tax Rulings
Directorate
Attention: XXXXXXXXXX V. Srikanth
2011-042277
Clergy Residence Deduction
This is in response to the correspondence dated September 19, 2011, from XXXXXXXXXX (the "Taxpayer"), who requested our views on the clergy residence deduction provided for in paragraph 8(1)(c) of the Income Tax Act (the "Act"). Specifically, the Taxpayer wanted our opinion on whether, as a Community Development Pastor at the XXXXXXXXXX , the Taxpayer satisfied the function test of 'being in charge of or ministering to a diocese, parish, or congregation' for the purpose of the clergy residence deduction pursuant to paragraph 8(1)(c) of the Act.
The Taxpayer had requested an advance income tax ruling from this Directorate. However, written confirmation of the tax implications inherent in transactions is given by this Directorate to taxpayers, or their authorized representatives, only where the transactions are proposed. In this particular situation, the Taxpayer had, in fact, been corresponding with the XXXXXXXXXX Tax Services Office ("the TSO") concerning their situation. As a general comment, once a taxpayer has been dealing with a TSO on an actual issue, this Directorate's involvement would consist of providing a TSO with our views to assist a TSO in resolving the issues; and, in such a situation, we would not deal directly with the taxpayer to the exclusion of a TSO. Accordingly, and as indicated during our telephone conversation on December 6, 2011 (Srikanth/XXXXXXXXXX), we are providing you with the following comments which may be of assistance to you in resolving this Taxpayer's issue. We understand that, subsequent to receiving this memorandum, you will be contacting the Taxpayer.
Generally, to be eligible for the clergy residence 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). 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.
It appears that based on the letters from the TSO dated July 5, 2011 and March 14, 2011, the Taxpayer is of the opinion that she satisfies the status test (of being a member of the clergy). Therefore, the Taxpayer has asked for our views specifically on whether she satisfies the function test. Accordingly, we will only comment on whether the Taxpayer satisfies the function test for the purpose of claiming the clergy residence deduction.
The Taxpayer is of the view that she satisfies the function test by 'ministering to, a diocese, parish or congregation'.
Based on the job description, it is our understanding that the Taxpayer, as a 'Community Development Pastor', is in charge of a number of programs mainly with the view to help women, provide spiritual support to new immigrants and other community development programs. Specifically, the incoming describes the Community Pastor to be "primarily responsible for outreach to the community in both practical and spiritual terms, serving as pastor to the surrounding community... to strategically represent XXXXXXXXXX to the greater community, identifying their needs, coordinating services to the community." Given that "Ministering" is a very broad concept of serving or attending to the needs of a congregation, diocese or parish, or its individual members, and, accordingly, as stated in paragraph 13 of the Interpretation Bulletin IT-141R(Consolidated) entitled, 'Clergy Residence Deduction', 'if a person who meets the status test is employed within a congregation, he or she is considered to be ministering to a congregation if he or she is fulfilling a pastoral or ministerial role in the manner requested by that congregation.'
The XXXXXXXXXX web page states that "XXXXXXXXXX"
Based on the above, the duties of a Community Development Pastor appear to be in line with the ideology of the XXXXXXXXXX .
We are further given to understand that at the XXXXXXXXXX , the administrative activities are taken care of by the Executive Pastor as this position was 'created to handle leadership of the overall administrative responsibilities of the church.' Hence, it may be reasonable to conclude that the duties of the Taxpayer as a Community Development Pastor are not administrative in nature. Accordingly, in the given instance, if the Taxpayer satisfies the status test, then based on the job description of the Taxpayer, in our view, the Taxpayer would satisfy the function test by 'ministering to, a diocese, parish or congregation'.
Please note that as indicated in paragraph 13 of IT-141R, it is essential that the individual first satisfies the status test of being a member of the clergy because in order to claim a clergy residence deduction pursuant to paragraph 8(1)(c) of the Act, one has to satisfy both the status and function tests. As commented by Little, J. in Kirkbride v The Queen 2003 TCC 229 , "...although the legislation appears to be divided (as discussed) along the lines of "status" and "function", the two cannot be so easily separated. Essentially, the determination of Mr. Kirkbride's "status" will necessarily entail an examination of his "function"."
For your information, unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the CRA's electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should the taxpayer request a copy of this memorandum, they may request a severed copy using the Privacy Act criteria, which does not remove taxpayer identity. Requests for this latter version should be made by you to Mrs. Celine Charbonneau at (613) 957-2137. In such cases, a copy will be sent to you for delivery to the taxpayer.
Yours truly,
R.A. Albert, CA
For Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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