Clergy Residence Deduction Information - Revised

	Paul Klassen

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 here).

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

1. 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), the Conference Pension Plan calculation, for determination of Disability Insurance coverage as well as Insurable Earnings for EI deductions.

2. The amount of the Clergy Residence Deduction claim since 2001 can now include the cost of utilities. This amount is assumed to be limited to water, electricity, and heating. In other words, telephone and cable TV costs would not be allowed.

3. 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 26 would 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 and record 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.

4. 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.