Principal Issues: [TaxInterpretations translation] Does a taxpayer who is a pastoral worker qualify for the clergy residence deduction under paragraph 8(1)(c)?
Position: Generally not
Reasons: A pastoral worker generally does not satisfy the status test in subparagraph 8(1)(c)(i) because the pastoral worker is not a regular minister of a religious denomination. The pastoral worker is therefore not eligible for the clergy residence deduction.
June 12, 2006
Jonquière Tax Centre Headquarters Client Services Income Tax Rulings Directorate Attention: Ms. Ghislaine Larouche Michel Lambert, CA, M.Fisc. (613) 957-8953
2006-018604
Deduction for the residence of a member of the clergy
This is in response to your memorandum of May 11, 2006, asking whether XXXXXXXXXX (the "Taxpayer") can claim the clergy residence deduction.
Unless otherwise indicated, all statutory references herein are to provisions of the Income Tax Act (the "Act").
1. The Taxpayer has provided you with the following description of the tasks assigned to him by the Catholic Bishop of the Diocese of XXXXXXXXXX as follows:
A. Respondent for the Diocese of XXXXXXXXXX in all matters relating to the liturgies celebrated in the diocese and all related aspects of religious celebrations:
1. In this capacity, I am authorized by my bishop, XXXXXXXXXX, to exercise spiritual functions and to celebrate religious services:
a) Leadership and presiding over worship services;
b) Training and spiritual renewal of priests and pastoral workers of the diocese in liturgy, especially in matters of Eucharistic celebrations or funerals;
c) Leadership of religious songs during worship services;
d) Training and resourcing of religious singing in the diocese.
B) Leader of the pastoral zone XXXXXXXXXX authorized by the Bishop of the diocese of XXXXXXXXXX
1. To bring together religious workers, priests and pastoral agents, in order to develop their spiritual concentration in the implementation of the Bishop's pastoral orientation;
2. To be the link between the leaders of the Catholic parishes and the Bishop with regard to the pastoral zone concerned;
3. To facilitate the circulation of information between those responsible for the parishes and the diocesan authorities;
4. Leadership and/or organization of worship services and retreats in the pastoral area concerned;
5. Encouraging, accompanying and supporting pastoral activities in the community.
2. For the purposes of this application, we have taken note of all the documentation provided by the taxpayer.
Our Comments
3. To qualify for the clergy residence deduction under paragraph 8(1)(c), the taxpayer must be, inter alia, a member of the clergy, a member of a religious order or a regular minister of a religious denomination.
4. Whether a taxpayer is employed as a regular minister is a question of fact that can only be resolved after examining all the relevant facts, including, inter alia, the structure and practices of the religious organization, in this case the Roman Catholic Church, and a detailed description of the duties the taxpayer is authorized or empowered to perform.
5. Canadian courts have repeatedly considered the meaning of the term "regular minister" in the context of tax disputes. For example, in Noseworthy v. The Queen, 99 DTC 541 (T.C.C.), the court had to determine whether the appellant was entitled to the clergy residence deduction. The appellant held the position of Interfaith Chaplain at the Nova Institution for Women and was appointed to that position by the Roman Catholic Archdiocese of Halifax. Her duties included conducting regular Sunday and holiday worship services as well as memorial and special prayer services. The appellant was also required to administer the sacraments to the inmates and to provide pastoral services to them. In his analysis, Hamlyn J. stated
[27] The meaning of "regular minister of a religious denomination" and "member of the clergy" has been judicially considered a number of times by this Court. Hardy v. R., [1998] 2 C.T.C. 2013 (T.C.C.), was decided based on facts that have some similarities with those in the instant case. Ms. Hardy, the Appellant, was a Lay Pastoral Minister appointed by the Bishop of London of the Roman Catholic Church. She was responsible for assisting with the distribution of Holy Communion at mass and taking Communion to the sick and shut-ins of the parish. She was also authorized to conduct funerals and could perform marriages with the permission of the Bishop. The Court found that the Pastor of her parish held greater responsibilities, as he was responsible for the administration of the parish and could lead Mass and hear confessions. Based on this and the finding that her religion does not ordain women, Rip J. concluded that the Appellant was not a "member of the clergy".
[28] Rip J. then continued to examine if she was a regular minister of the Roman Catholic Church. He considered and quoted the decision of Greenless v. Canada (Attorney General), [1945] O.R. 411 (Ont. H.C.), aff'd [1946] O.R. 90 (Ont. C.A.), leave to appeal refused [1946] S.C.R. 462, wherein Hogg J. referred to a decision of the High Court of Session of Scotland in Saltmarsh v. Adair, [1942] S.C. 58. Rip J. observed at paragraph 21:
Thus, Lord Justice-General Normand and Lord Moncrieff appear to infer that a “regular minister” is one who
i) performs spiritual duties, the conduct of religious services, the administration of sacraments and the like;
ii) is appointed by a body or person with the legitimate authority to appoint or ordain ministers on behalf of the denomination; and
iii) is in a position or appointment of some permanence.
In the absence of a legitimate appointment, the mere performance of the duties of a minister will not suffice, in their view, to constitute a “regular minister”.
[29] After reviewing these elements, Rip J. found that the Appellant was not a regular minister of the Roman Catholic Church because her appointment was made at the pleasure of the Bishop and was therefore not permanent as required by the above criteria. Moreover, her performance of certain sacraments of the Roman Catholic Church was limited to that of Church laity. Thus, he concluded she was not a regular minister of a religious denomination.
6. In Noseworthy v. The Queen, the Court found that the appellant was, for the purposes of section 8(1)(c), a "regular minister" of the Catholic Church. In that regard, the judge stated
[34] While somewhat similar, the distinctions between Hardy (supra) and the Appellant's case are significant. The Appellant in this case was appointed a Roman Catholic chaplain, she was not an assistant to another church official. She herself held the designated office. In terms of spiritual Roman Catholic duties, she was authorized to offer all the prayers and rites and gave a reflection and instruction on the Word of God during the Sunday services and performed other duties and celebrations as required. Her appointment was broad, extensive and permanent with accompanying health, pension and other benefits. Even if funding was withdrawn, the evidence is the Roman Catholic chaplain's work would continue.
[35] She was the spiritual leader and had the primary responsibility for the ministry at the Nova Institution for Women and she performed the duties of this spiritual leadership herself with the appropriate ecclesiastical authority to do so.
7. Consequently, in order for a pastoral worker to be a regular minister of a religious denomination, we are of the view that the pastoral worker must be authorized or empowered to perform spiritual functions, celebrate religious services, administer sacraments and perform similar religious functions. In general, a pastoral worker is not a regular minister since the pastoral worker is not authorized to administer most of the sacraments of the Roman Catholic Church.
8. In our view, based on the facts provided by the taxpayer herein, we cannot conclude that he is entitled to perform most or all of the duties of a minister, including, inter alia, administering most of the sacraments of the Roman Catholic Church. Consequently, he does not qualify for the clergy residence deduction.
Access to Information
For your information, unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency'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 your client request a copy of this memorandum, the electronic library version can be provided. Alternatively, the client may request a severed copy using the Privacy Act criteria, which does not remove client identity. Requests for this latter version should be made by you to Ms. Jackie Page at (819) 994-2898. A copy will be sent to you for delivery to the client.
We hope that these comments are of assistance.
Manager
Financial Sector and Exempt Entities Section
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch