Clergy Residence Deduction Form T1223—New Changes by Canada Revenue Agency

The T1223 has been revised since this post was published. Please see Recent Revisions to CRA’s Clergy Residence Deduction Form: A Positive Development. 

The Canada Revenue Agency (CRA) has made further changes to its T1223 – Clergy Residence Deduction (CRD) form. Certain sections have been expanded in “Part B – Conditions of qualifying employment (to be completed by the employer).”[1] Also, a note has been added to “Part C – Calculation of deduction (to be completed by employee).”

Individuals eligible for the CRD and their employers must be familiar with the changes since this form is their joint submission to CRA. 

CCCC is currently in consultation with CRA and will provide updates as needed.

MAIN CHANGE

The main change has occurred in Part B, section 1. a):
Prior Wording
Revised Wording
 Was this employee … a member of the clergy? If so, specify his or her title as designated by the denomination or church that formally recognized him or her as well as the name of that denomination or church.
 “Was this employee … a member of the clergy? If so, specify his or her title as designated by the denomination or church that formally recognized him or her as well as the name of that denomination or church. Provide a copy of his or her ordination certificate.

CCCC Commentary

CRA describes “member of the clergy” in its “Interpretation Bulletin-141R Consolidated-Clergy Residence Deduction (the IT), which summarizes the Tax Court of Canada’s decisions regarding CRD. Paragraph 4 states:

A “member of the clergy” is a person set apart from the other members of the church or religious denomination as a spiritual leader. 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 may 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. Priests, pastors, ministers, rabbis, imams, commended workers and other persons who have been commended, licensed, commissioned or otherwise formally or legitimately recognized for religious leadership within their religious organization may be members of the clergy.

CCCC is concerned that the new requirement to provide a copy of an ordination certificate appears to be inconsistent with CRA’s IT, which states:

  1. appointing clergy does not need to be referred to as “ordination”;
  2. appointing clergy does not necessarily require written documentation—only “a formal or legitimate act of recognition.”
CCCC is waiting for CRA’s clarification on these matters.

CCCC Suggestions

  • As directed by CRA,[2] do not send any supporting documents if you are filing electronically or filing a paper return. If you are a member of the clergy and have any documentary evidence of your formal act of recognition to clergy status, keep a copy on file with the completed T1223 and your attached job description. These documents should be ready, should CRA ask to see them in a review.
  • If you are a member of the clergy who does not have these types of documents, a reasonable attempt should be made to obtain some demonstrable evidence (e.g., a letter from the church’s leadership affirming the act of recognition; a copy of the bulletin of the service in which the recognition act took place). As noted above, be sure to keep a copy on file with the completed T1223 and your attached job description.

OTHER CHANGES

The other changes in Part B of the T1223 appear to be more of a “housekeeping” nature.

1) An additional requirement has been added to Part B, 1. b):

Prior Wording
Revised Wording
 “Was this employee … a regular minister of a religious denomination? If so, specify the spiritual duties the employee is authorized to perform.”
 “Was this employee … a regular minister of a religious denomination? If so, specify the spiritual duties the employee is authorized to perform.  Provide the name of the religious denomination and describe how he or she was appointed.”

CCCC suggests that the denomination’s name and a simple statement of its appointment process should suffice (e.g., Ordination ceremony; Commendation service; Issuance of ministerial license; or whatever traditional practice is followed by the denomination). 

2) An additional requirement has also been added to Part B, 3. c):

Prior Wording
Revised Wording
“Was this employee … engaged exclusively in full-time administrative service by appointment of a religious order or religious denomination?  If so, provide the name of the organization, if different from the employer, that appointed this employee to his or her position.”
“Was this employee … engaged exclusively in full-time administrative service by appointment of a religious order or religious denomination?  If so, provide the name of the organization, if different from the employer, that appointed this employee to his or her position and describe how he or she was appointed.”

CRA is now requiring more details if the appointing body is not also the employer.  Again, a simple statement should suffice (e.g., “Appointed by the Head Office of ______ Denomination to serve at ” or “Appointed by the ______ Religious Order to serve at ”).

(3)    The wording in Part C, sub-part B), line 1 remains the same: “Income from qualifying employment (from all eligible employers).”  However, CRA has added an explanatory note, which states: “’Income from qualifying employment’ has the same meaning as ‘remuneration for the year from the office or employment’ as stated in paragraph 8(1)(c) of the Income Tax Act.”

CRA’s standard administrative expectation is that “Income from qualifying employment” is shown on a T4 slip to verify that it is “remuneration for the year from the office or employment.”

CCCC has developed a fillable T1223 Clergy Residence Deduction form.  The form has helpful pop-up commentary throughout to assist in filling out the form.”

Please contact CCCC if further information on this matter is needed.


[1] Previous changes to the CRD are noted in a CCCC News Release from January 17, 2012 [:link href=”https://www.cccc.org/news_release/124″:]

[2] 5000-G “General Income Tax and Benefit Guide 2012, Line 231 – Clergy residence deduction