Clergymen are often housed by their congregations. This housing may take several forms, including the payment of a housing allowance. If the congregation you serve as a clergyman pays for your housing, you must include the allowance in your income. A matching deduction might also apply to your case.
Including a Clergyman’s Housing Allowance in Your Income
If you are employed as a member of the clergy, a religious order or as a regular minister of a religious denomination, you must report your employment income like any other taxpayer. If you receive a housing allowance, it is considered to be a taxable benefit and will be shown on your T4 slip in box 30. The amount in this box must be entered on line 10100 of your income tax return.
Allowances received for expenditures related to housing, such as utilities, are taxable in the same manner but are often found separately in box 14 of your T4 slip. When reporting your housing allowance, subtract any amount in box 14 from the amount in box 30 to avoid declaring the utilities allowance twice.
If you do not receive an allowance but are provided with free housing instead, this is considered to be a taxable benefit. The basic amount of the benefit is the fair rental value of the residence or other living accommodation.
Clergy Residence Deduction
The inclusion of the allowance in your income may be offset by a special deduction available only to clergymen, found on line 23100 of your return. If you are eligible for the deduction, you can deduct the full amount of your housing allowance or taxable benefit.
The term “clergyman,” in this context, is defined very broadly and includes persons in different organizations who hold and fulfil functions similar to those of persons in religious organizations that use this particular terminology.
To qualify for the deduction you must meet two criteria.
The first qualification is that you must be one of the following:
- A member of the clergy;
- A member of a religious order;
- A regular minister of a religious denomination.
Whether you can be considered a member of the clergy or a regular minister depends upon the structure and practices of the particular church or religious denomination. In general, a member of the clergy is a person who is set apart from the other members of the church or religious denomination as a spiritual leader.
The second qualification is that you must be employed in a qualifying function; you must be:
- In charge of, or ministering to a diocese, parish or congregation, or;
- Engaged exclusively in full-time administrative service by the appointment of a religious order or religious denomination.
If you meet these criteria, the inclusion of your housing allowance in your income may be completely offset by the deduction.