Clergy housing deduction expanded

Published May 1, 1999

Evangelical Protestants are claiming a major victory in tax court on the clergy housing deduction. But observers say the latest decision has little impact on the Anglican community.

In a Feb. 26 decision, Judge D.G.H. Bowman ruled in favor of 38 individuals and against eight who had been denied the clergy housing deduction by Revenue Canada. The individuals had appealed those denials, assisted by the Canadian Council of Christian Charities, which spent $2 million in legal fees. The cases were heard between May and December 1998.

To qualify for the deduction, a person must be a member of a religious order, a member of the clergy or a regular minister of a religious denomination. In addition, that person must minister to a diocese, parish or congregation, or must work in full-time administrative service by appointment of a religious order or denomination. On average, the deduction is worth about $5,000 a year in additional take-home pay to the individual, who can claim an amount equivalent to the fair rental value of a house or apartment as a deduction from income.

Of the 38 cases approved:

  • 30 met the definition of working for a religious order;
  • one minister of music at a Pentecostal church met the definition of ministering to a congregation;
  • two college presidents met the definition of appointment to administrative service by a denomination;
  • five people working at para-church organizations, whose task included speaking to churches, met the definition of ministering to a congregation.

Among the eight cases dismissed was that of a Bible-college professor (deemed not to be ministering to a congregation) and five members of Navigators (deemed not to be a religious order).

Archdeacon Jim Boyles, general secretary for the Anglican Church, said the decision represents a “broadening” of eligibility for the deduction. He declined to comment on whether that broadening was good, saying merely that it “will have very little effect on the Anglican Church.” Still, the ruling in

favour of the Pentecostal music minister might open the door for non-ordained Anglican employees of parishes to claim the deduction, he said. “But that’s very unclear.”

Archdeacon Boyles could not say how many Anglicans currently claim the deduction, although there are about 2,300 clergy in parishes or administrative positions in Canada who would likely be eligible.

The Anglican Church’s national office, like several other organizations, devises different pay scales for staff who are eligible for the deduction and those who are not in order to equalize their take-home pay.

Meanwhile, Frank Luellau, executive director of the charities council, called the rulings a victory for evangelicals.

“The primary significance of the successful appeals is that the unfair practices in reassessing evangelical Christian ministry personnel will have to be corrected,” said Mr. Luellau. The organization will not appeal the eight denials.

The council went to court to seek clarity and consistency in Revenue Canada rulings on the deduction, said Mr. Luellau. It isn’t uncommon for an individual to be approved the deduction one year, be denied the next, then be approved again, he said.

Furthermore, Revenue Canada was increasingly using a Roman Catholic model in defining the terms “member of the clergy” and “religious order.” As such, an order was defined as an organization that required members to take vows of perpetual poverty, chastity, obedience. “Minister” was interpreted as ordained clergy.

That left staff of many evangelical groups out because they may not formally ordain clergy, or may require a different set of theological and moral commitments from staff than Catholic orders.

Judge Bowman rejected those narrow definitions in his ruling, saying they need to be faith specific. He also rapped Revenue Canda’s knuckles for failing to abide by its own interpretive guidelines regarding the deduction.

Neither Revenue Canada, nor its lawyer in the Department of Justice, would comment on the case until the judge has released a decision awarding court costs. That decision is pending. Marianne Meed Ward is a freelance writer and editor in Toronto.


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