Clergy Residence Deduction – When can Youth Pastors Qualify?

30 janvier 2012 | Amanda J. Stacey

( Disponible en anglais seulement )

In a technical interpretation released by the CRA on June 27, 2011, the CRA was asked to consider whether a pastor in charge of a children’s ministry qualified for the clergy residence deduction. Youth pastors often fail to qualify for the deduction because they fail the status test – one of the two tests required to be met to qualify for the deduction.  A brief review of the status and function tests is warranted here.

The status test requires that the individual claiming the deduction be a member of the clergy, a member of a religious order, or a regular minister of a religious denomination.  The taxpayer in this technical interpretation sought to be recognized as regular minister.  In Interpretation Bulletin IT-141R, the CRA confirms that a regular minister is an individual 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.

In this technical interpretation, the individual did not qualify as a regular minister because his job description provided that an individual filling the Children’s Pastor position may not be able to perform most of the duties of a regular minister of the church in question.  This is where many youth pastors fail to qualify for the deduction.  Youth pastors are typically young people who are in training to become full pastors themselves.  As such, their ability to perform spiritual duties, conduct full services and administer sacraments is often limited.  To the extent that an individual is permitted to carry out these functions, and these functions are not reflected in his or her job description, the problem can be easily rectified by updating the job description.  This is an important reminder to ensure that job descriptions are accurate, up to date, and drafted with the individual filling the role in mind.

However, the CRA concluded that the individual in question did meet the status test by virtue of being a “member of the clergy”.  A member of the clergy is an individual who has been set apart from the other members of the church or religious denomination as a spiritual leader.  The CRA confirms in IT-141R that it is not necessary that the process of appointment be referred to as ordination or that the appointment be by someone higher up in the ecclesiastical hierarchy – it can be done by the congregation itself. It is sufficient that there be a formal or legitimate act of recognition, and it requires a serious and long-term commitment to the ministry.

Assuming that a youth pastor meets the status test, the function test is not usually an issue.  To meet the function test, an 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.

Individuals in a youth pastor role will typically qualify as “ministering to a congregation”.  The CRA and the courts consider “ministering” to be a very broad concept of serving or attending to the needs of a congregation, diocese or parish, or its individual members.

In this particular technical interpretation, the CRA found that the taxpayer was ministering to a congregation because as part of his role as children’s minister, the individual was required to:

  • Provide oversight to, and be responsible for all aspects of ministry to children and their families;
  • Provide overall direction and leadership to all staff and volunteers involved in the children’s ministries;
  • Recruit, equip and train teams for the ministry; and
  • Coach and mentor team leaders.

The term “congregation” is a broad concept and can include the youth members of a church. In IT-141R the CRA recognizes specialized ministries such as the youth pastor function and states the following:

Persons who meet the status test performing specialized ministering may satisfy the function test depending on the significance of the ministry in the particular religious denomination. Recognized forms of specialized ministry may include chaplaincies, religious education within a congregation, congregational pastoral responsibilities for music or youth, ethnic focus ministries, ministries with overseas or domestic missions, and ministries to the disadvantaged or disabled…

Based on this, the CRA found that the individual was ministering to a congregation and thus met the function test as well.

Individuals who think they may be eligible for the clergy residence deduction, or charities employing individuals whom they think may qualify, should feel free to contact us to assist them with making this determination.

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