TO: CHURCH TREASURERS
FROM: PAUL KLASSEN, DIRECTOR OF FINANCE
This memo is intended to revise and clarify the memo I sent out in November
for payroll and year-end issues (find it
Specifically, I wish to revise the coding instructions for T4 slips regarding
the Clergy Residence Deduction and clarify the change regarding utilities.
Clergy Residence Deduction – REVISED
The Clergy Residence Deduction is to be excluded from Taxable Income
and Pensionable Earnings for CPP deductions. However it should be
included in income for purposes of Gross Employment Income (Box 14),
Pension Plan calculation, for determination of Disability Insurance
coverage as well as Insurable Earnings for EI deductions.
The amount of the Clergy Residence Deduction claim since 2001 can
now include the cost of utilities. This amount is assumed to be limited
electricity, and heating. In other words, telephone and cable TV
costs would not be allowed.
Box 26 (CPP Pensionable Earnings) should be reduced by the amount
of the Clergy Residence Deduction. In other words, the Box 26 amount
should be equivalent
to gross income (box 14) less the amount of the Clergy Residence Deduction.
For churches that do not provide the housing, this adjustment to Box
be the only requirement. For those churches which actually do provide
the pastor with a manse, you would adjust the amount in Box 26 as above
the amount of the housing benefit as a code “30” taxable benefit
in the “Other Information” area of the T4 slip since they would
be providing an actual housing benefit.
CCRA routinely assesses a CPP discrepancy
in their PIER review of payroll deductions for those employees where
CPP has been reduced due to
the Clergy Deduction and no code 30 is used. You simply need to advise
CCRA that the
benefit was not provided but a deduction claimed.
Additional information on the Clergy Residence Deduction (such as
a prescribed letter for responding to PIER Review assessments) is
available at the Canadian
Council of Christian Charities website (www.cccc.org). This
site is an
excellent resource for finding the prescribed form and how to
complete it, and for
links to CCRA’s Interpretation Bulletin that describes the eligibility
and the amounts claimable in detail.