Principal Issues: [TaxInterpretations translation] What is the tax treatment associated with housing that is provided free of charge to a pastor of a congregation? Will the value of such housing be included in the amount of insurable earnings and pensionable earnings of the pastor?
Position: We referred the taxpayer to interpretation 2009-0350821E5, which seems to answer all his questions.
Reasons: The Income Tax Act.
XXXXXXXXXX 2010-038279 Anne Dagenais, Advocate, M. Fisc, B.A.A.
April 13, 2011
Dear Sir,
Subject: Free housing for a pastor
This is in response to your letter of September 27, 2010 in which you requested our opinion regarding the tax treatment of the value of housing that was offered to you free of charge as a pastor from May 2001 until XXXXXXXXXX July 2009, the date at which the services of another pastor were retained. You continued to live in the accommodation free of charge from XXXXXXXXXX July 2009 until XXXXXXXXXX November 2009.
Unless otherwise indicated, all statutory references herein are to the provisions of the Income Tax Act (the "Act").
In particular, you described a situation where you occupied, free of charge, housing owned by your church having a monthly market value of $750, including electricity. We understand that you are a pastor and that you do not receive fixed and weekly remuneration but that you are rather remunerated with the voluntary contributions of members of your church or the surrounding churches. In computing your income you have included the contributions of your church members as business income. You have also confirmed that you have not made a vow of poverty.
First, you wish to know the tax treatment associated with the value of housing that was provided to you from May 2001 to November 2009. Second, you wish to know the tax treatment of voluntary contributions from members of the surrounding churches. You also wish to know, if applicable, which tax slip should have been completed. Finally, you wish to know if you can take advantage of the clergy residence deduction if the value of housing is taxable.
Our Comments
It appears to us that the situation described in your letter and hereinafter summarized could constitute an actual situation involving taxpayers. As explained in Information Circular 70-6R5, it is not the practice of this Directorate to provide comments on proposed transactions involving specific taxpayers otherwise than in the form of an advance income tax ruling. If your situation involved specific taxpayers and one or more transactions, you should submit all relevant facts and documents to the appropriate Tax Services Office for their opinion.
Attached you will find document 2009-0350821E5 which deals with a situation similar to yours and which seems to answer your questions, including that concerning the clergy residence deduction.
With regard to the tax consequences of the free occupation of the housing after you ceased to be a pastor for the congregation, it would be necessary to determine whether, for that period, housing is provided to you in return for services rendered or rendered in the course of an office or employment. If that were not the case, the value of the housing would not have to be included in computing your income.
Furthermore, we invite you to consult the Tax Services Office ("TSO") in your area, which will provide you with more information regarding the computation of your income for the years 2003 to 2009. We invite you to visit the Canada Revenue Agency website at the following address to determine which TSO is closest to you: http://www.cra-arc.gc.ca/cntct/tso-bsf-eng.html.
We hope that these comments are of assistance.
Best regards,
François Bordeleau, Advocate
Manager
Business and Partnerships Section
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch.
Attach.