CRA recently released a letter which discusses whether a school chaplain employed by a Catholic school board can claim the clergy residence deduction as per section 8(1)(c) of the Income Tax Act (Canada). CRA had the following comments:
Generally, to be eligible for the clergy residence deduction provided under paragraph 8(1)(c) of the Act, an individual must be a member of the clergy, a member of a religious order, or a regular minister of a religious denomination (the status test). When one of these conditions is met, the individual must also 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). In order to qualify for the clergy residence deduction, a person must satisfy both the status and the function tests.
The information you provided indicates that the individual holding the position of school chaplain is neither a member of the clergy, nor a member of a religious order. Thus, the individual would only satisfy the status test if he or she is a regular minister of the Roman Catholic Church.
According to paragraph 5 of Interpretation Bulletin IT-141R (Consolidated), Clergy Residence Deduction, a “regular minister” is a person who:
*is authorized or empowered to perform spiritual duties, conduct religious services, administer sacraments and carry out similar religious functions. Religious functions may include participation in the conduct of religious services, the administration of some of the rituals, ordinances or sacraments, and pastoral responsibilities to specific segments of the religious organization;
*is appointed or recognized by a body or person with the legitimate authority to appoint or ordain ministers on behalf of or within the religious denomination; and
*is in a position or appointment of some permanence.
However, as noted in paragraph 3 of IT-141R, the determination as to whether a particular individual is a “regular minister” of a particular religious denomination generally depends on the structure and practices of the particular church or religious denomination.
Based on an examination of several court cases which have considered whether non-ordained members of the Roman Catholic Church are 'regular ministers' of that religion, CRA determined that a non-ordained individual appointed to the position of school chaplain by the Roman Catholic Church would not satisfy the status test as a 'regular minister' of that religious denomination. Accordingly, the function test was not considered.
Here is a copy of the full CRA letter.
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Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.