28 July 1995 Internal T.I. 9513397 - CLERGYMAN'S DEDUCTION - RELIGIOUS ORDER

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 the taxpayer was entitled to a deduction under para 8(1)(c), & more particularly whether the organization which appointed him was a religious order

Position TAKEN:

no

Reasons FOR POSITION TAKEN:

question of fact: the organization in question is more a non-profit organization with humanitarian objectives then a religious denomination

		July 28, 1995

	Toronto Centre Tax Services	HEADQUARTERS
	Appeals 	D. Zion
G. E.S. Fleming	(613) 957-8953
	Chief

	Attention: L. Wilcox,
		951339

Clergyman's Deduction - Religious Order

We are writing in reply to your memorandum of April 28, 1995 in which you requested that we review the information submitted by XXXXXXXXXX and determine whether or not his employer, XXXXXXXXXX qualifies as a "religious order" for the purposes of paragraph 8(1)(c) of the Income Tax Act (the Act). We apologize for the delay in responding.

According to the documents provided with your memorandum, the corporation is a non-profit charitable organization.

XXXXXXXXXX

Our Comments

Generally, to be eligible for the paragraph 8(1)(c) deduction, the 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"). Where one of these conditions is met, then 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 Tax Court of Canada case Small et al. v. MNR (89 DTC 663) contained a detailed discussion and interpretation of these terms. The appeal of this case, along with two related files, was recently heard in the Federal Court-Trial Division in the case of Zylstra Estate et al. v. The Queen (94 DTC 6687). As none of the terms under consideration are defined by the Act, Justice MacKay in his judgement outlined the results of his research into the history and intent of 8(1)(c) of the Act. He then went on to determine if either of the institutions in question could be considered a "religious order" for the purposes of this provision. Expert testimony was introduced in this regard. The Court's comments in this more recent case are of assistance here to determine if XXXXXXXXXX is a religious order.

According to the expert testimony, the term "religious order" was originally understood, within the Christian religion, to refer to those orders established under canon law within the Roman Catholic Church. However, it no longer has a specific meaning under canon law as it was replaced in 1983. It was testified that other organized Churches contain traditions comparable to the phenomenon of "religious orders". They are 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. These comments were in keeping with the term as defined in the dictionary references reviewed by the Court.

The Court advanced two major reasons for concluding that the institutions in question were not religious orders. In the Court's opinion there was no expression of faith or of religious purpose of either institution, apart from the educational purpose of each, that would mark the institution and its members as distinct from the churches or denominations that each serves (which based on expert testimony and definitions of the terms would be a necessary quality of a "religious order") and their primary purposes were not religious purposes in the sense pursued by a religious order i.e., service to their God through worship, prayer and devotion.

Based on our review of XXXXXXXXXX activities and objectives as detailed in the documentation you provided to us with your memorandum, we are of the view that there is no expression of faith or of religious purpose that would mark XXXXXXXXXX and its members as distinct from the churches, communities, XXXXXXXXXX or denominations that it endeavours to assist and their primary purpose is not a religious purpose in the sense pursued by a religious order i.e., service to their God through worship, prayer and devotion. There is no provision that members abandon their secular lifestyle, withdraw from society or live communally. There is no vow of poverty.

XXXXXXXXXX

However, it does not appear to be mandatory and there are no rules of disciple in evidence.

Accordingly, it is our view that XXXXXXXXXX is not a religious order as that term was interpreted in the most recent jurisprudence. Since XXXXXXXXXX is not a religious order, the taxpayer cannot be a member of a religious order by reason of his membership in, or association with XXXXXXXXXX and therefore he cannot be said to be "engaged exclusively in full-time administrative service by appointment of a religious order".

P.D. Fuoco
Section Chief
Personal and General Section
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch