R. Langevin (613) 957-2138
Jul 11, 1986
Dear Sirs:
Re: Clergyman's Housing Allowance
This is in reply to your letter dated April 4, 1986, requesting an elaboration of Interpretation Bulletin IT-141 (the "Bulletin") concerning the reporting of income from a housing allowance paid to a member of the clergy by a congregation and the determination of fair rental value. Your letter has been forwarded to this Division for reply.
As individual who is in receipt of an allowance from his employer for personal or living expenses must include the amount in his income for tax purposes. This position is set out in paragraph 7 of the Bulletin. If the individual is a person described in paragraph 1 of the bulletin subject to the comments set out in paragraphs 2 through 6 of the Bulletin he will be permitted a deduction in respect of his residence.
In the case of a taxpayer who qualifies for a deduction for his residence and who also owns and occupies his own home, his deduction is limited to the fair rental value of the unfurnished premises excluding utilities; however, as indicated above, any allowance received must be included in income.
In the case where a housing allowance exceeds the fair rental value of a residence, this excess will form part of the income of the clergyman for the year.
The Income Tax Act (the "Act") does not indicate how a member of the clergy is to determine the annual fair rental value of his residence. The study report you have submitted for our consideration presents an approximation of such value. It would be acceptable for a member of the clergy to have reference to such a report: however, each case should be viewed on its own merits. Features and detractions which are unique to any particular residence would have to be taken into account in computing a deduction in accordance with paragraph 8(1)(c) of the Act.
We hope that our comments will be helpful.
ORIGINAL SIGNED BY P. D. FUOCO
for Director Small business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch