Canada Revenue Agency
www.cra.gc.ca
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Clergy residence deduction
If your employee is a member of the clergy, he or she may be able to claim a deduction from income for his or her residence.
An employee is a member of the clergy, a regular minister, or a member of a religious order if he or she is in charge of, or ministers to, a diocese, parish, or congregation. This also applies to an employee who is engaged only in full-time administrative service by appointment of a religious order or denomination.
To claim the deduction, the employee has to complete Parts A and C of Form T1223, Clergy Residence Deduction. You have to complete Part B and sign the form to certify that this employee has met the required conditions. The employee does not have to file the form with his or her income tax and benefit return, but has to keep it in case we ask to see it.
Reducing remuneration subject to income tax
Employer provided or paid
If you provide your employee with free or low-rent accommodation, and the employee tells you in writing that he or she will claim the clergy residence deduction, do not include the accommodation and utilities share of the benefit in income when you calculate the income tax deductions required.
Employee owned or rented
Your employee may own or rent the accommodation and pay for utilities either out of his or her own money or using the allowance you paid to him or her. If your employee will be claiming the clergy residence deduction on his or her personal income tax and benefits return, he or she may get a letter of authority from a tax services office to reduce the income on which you have to deduct tax. When your employee provides you with a letter of authority from a tax services office, reduce the income by the amount stated in the letter.
Note
Although the clergy residence deduction and the utilities share of the benefit can be excluded from income for the purpose of calculating tax deductions, you still have to report it on the T4 slip.
