Guest authored by Gilbert Langerak, CCCC Manager, Member Support.
Employers who provide housing (e.g. a manse or parsonage) to their employees who are eligible for the clergy residence deduction (CRD) should note that CRA recently changed its wording for form T1223 Clergy Residence Deduction. This revision, made earlier this month, also potentially affects T4 slip reporting.
The new edition of Sub-part (A) of Part C of CRA form T1223 now instructs the taxpayer:
“If you received free accommodation and … utilities for a residence that you did not own or rent, the value of both is shown as a taxable benefit in box 30 of your T4 slip. Claim this amount as a deduction at line 231 of your return.”
The prior edition instructed the taxpayer that their CRD claim was the T4’s box 30 amount (i.e. the fair rental value of the employer-provided housing) plus “the part of box 40 that represents eligible utilities” – which CRA defines in its Interpretation Bulletin IT-141R (Consolidated) Clergy Residence Deduction as “amounts expended for services for electricity, heating (e.g., gas), and water and sewer.” (para. 23).
The result of the change is that only the T4 slip’s box 30 is now referenced, and not box 40.
However, it is the combined fair rental value and eligible utilities that make up the allowable CRD claim amount in these cases. Due to the change in the T1223 form’s wording and how information may have been set out in the T4, the employee should exercise extra care to claim the correct amount.
For employers who have not yet filed T4 slips for 2014, there is an opportunity to ensure the combined fair rental value and eligible utilities are shown in box 30. Going-forward, the payroll register should be amended to combine these amounts for future T4 slip box 30 entries.
Noteworthy is provided for general information purposes and does not constitute legal or professional advice. Every organization’s circumstances are unique. Before acting on the basis of information contained in this blog, readers should consult with a qualified lawyer for advice specific to their situation.