Principal Issues: 1. Whether the phrase "income from qualifying employment" and term "remuneration" have the same meaning for purposes of the clergy residence deduction. 2. Whether "income from qualifying employment" and "remuneration" include amounts received as a housing allowance.
Position: 1. Yes. 2. Yes
Reasons: 1. & 2. Broad interpretation of "remuneration"
XXXXXXXXXX 2011-041354 T. Baltkois February 22, 2012
Dear XXXXXXXXXX :
Re: Clergy Residence Deduction
We are writing in response to your letter of June 12, 2011, in which you have requested clarification as to whether the phrase "income from qualifying employment" in form T1223, Clergy Residence Deduction, and the term "remuneration" in Interpretation Bulletin IT-141R (Consolidated), Clergy Residence Deduction, have the same meaning and whether both include taxable benefits such as a housing allowance.
Paragraph 8(1)(c) of the Income Tax Act ("the Act") provides a deduction in certain circumstances, to clergy, ministers and members of religious orders in respect of employer-provided housing as well as rented or owned housing where the individual is engaged in qualifying employment.
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. 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.
Where an individual satisfies the conditions of paragraph 8(1)(c) of the Act and rents accommodations, the amount of the clergy residence deduction is calculated pursuant to subparagraph 8(1)(c)(iv) of the Act, regardless of whether a housing allowance has been received.
For purposes of computing the clergy residence deduction, the phrase "income from qualifying employment" on form T1223 and the term "remuneration" in IT-141R are both in reference to the phrase "remuneration for the year from the office or employment" as found in paragraph 8(1)(c) of the Act.
The term "remuneration" is not defined in the Act; therefore its ordinary meaning (e.g. dictionary definition) should be used. The dictionary definition of "remuneration" is broad and would likely include taxable benefits provided by an employer. Where an employer provides an employee with an allowance in respect of accommodation, the value of this benefit is generally included in the employee's income under paragraph 6(1)(a) of the Act and would also be included in determining the taxpayer's "remuneration for the year from the office or employment" under paragraph 8(1)(c) of the Act.
We trust these comments will be of assistance to you.
Yours truly,
Nerill Thomas-Wilkinson
Manager
for Director
Reorganizations Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch