Tax Court of Canada Judgments

Docket: 2002-4707(IT)I

BETWEEN:

N.A. (NOEL) KIRKBRIDE,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

____________________________________________________________________

Appeal heard on April 8, 2003 at Vancouver, British Columbia

Before: The Honourable Mr. Justice L.M. Little
Appearances:
For the Appellant:	The Appellant himself
Counsel for the Respondent:	Amy Francis

____________________________________________________________________

JUDGMENT

          The appeal from the assessment made under the Income Tax Act for the 2001 taxation year is dismissed, without costs, in accordance with the attached Reasons for Judgment.

Signed at Vancouver, British Columbia, this 18th day of July 2003.

"L.M. Little"

Little, J.

Citation: 2003TCC229

Date: 20030718

Docket: 2002-4707(IT)I

BETWEEN:

N.A. (NOEL) KIRKBRIDE,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

REASONS FOR JUDGMENT

Little, J.

A.       FACTS

[1]      The Appellant is the Facilities Manager for the Christian Life Assembly (the "Assembly").

[2]      The Assembly is a Pentecostal church located in Langley, British Columbia.

[3]      The Appellant is not an ordained Minister.

[4]      In his capacity as a Facilities Manager the Appellant is responsible for the day-to-day administration of the Assembly. The Appellant supervises 21 paid employees and 17 volunteer workers at the Assembly.

[5]      When the Appellant filed his income tax return for the 2001 taxation year he claimed a deduction in the amount of $10,800.00 as a clergy residence deduction (the "Clergy Deduction").

[6]      After the Minister of National Revenue (the "Minister") issued the original Notice of Assessment for the Appellant's 2001 taxation year, to allow the Clergy Deduction, the Appellant requested that the Minister allow an additional deduction in the amount of $1,441.00 for the utilities costs paid by the Appellant in the year.

[7]      On the 2nd day of December 2002 the Minister reassessed the Appellant's 2001 taxation year and denied the Clergy Deduction claimed by the Appellant. The Minister also denied the utilities costs that were claimed by the Appellant.

B.       ISSUE

[8]      The issue is whether the Appellant is entitled to claim a Clergy Deduction in the amount of $10,800.00 plus the utilities costs of $1,441.00 paid by him in determining his income for the 2001 taxation year.

C.       ANALYSIS

[9]      Paragraph 8(1)(c) of the Income Tax Act (the "Act") reads as follows:

8. (1)     In computing a taxpayer's income for a taxation year from an office or employment, there may be deducted such of the following amounts as are wholly applicable to that source or such part of the following amounts as may reasonably be regarded as applicable thereto:

. . .

(c)         Clergy residence - where, in the year, the taxpayer

(i)          is a member of the clergy or of a religious order or a regular minister of a religious denomination, and

(ii) is

            (A)        in charge of a diocese, parish or congregation,

            (B)        ministering to a diocese, parish or congregation, or

(C)        engaged exclusively in full-time administrative service by appointment of a religious order or religious denomination,

the amount, not exceeding the taxpayer's remuneration for the year from the office or employment, equal to

(iii)        the total of all amounts including amounts in respect of utilities, included in computing the taxpayer's income for the year under section 6 in respect of the residence or other living accommodation occupied by the taxpayer in the course of, or because of, the taxpayer's office or employment as such a member or minister so in charge of or ministering to a diocese, parish or congregation, or so engaged in such administrative service, or

(iv)        rent and utilities paid by the taxpayer for the taxpayer's principal place of residence (or other principal living accommodation), ordinarily occupied during the year by the taxpayer, or the fair rental value of such a residence (or other living accommodation), including utilities, owned by the taxpayer or the taxpayer's spouse or common-law partner, not exceeding the lesser of

(A)        the greater of

            (I)         $1,000 multiplied by the number of months (to a maximum of ten) in the year, during which the taxpayer is a person described in subparagraphs (i) and (ii), and

            (II)        one-third of the taxpayer's remuneration for the year from the office or employment, and

            (B)        the amount, if any, by which

(I)         the rent paid or the fair rental value of the residence or living accommodation, including utilities

exceeds

(II)        the total of all amounts each of which is an amount deducted, in connection with the same accommodation or residence, in computing an individual's income for the year from an office or employment or from a business (other than an amount deducted under this paragraph by the taxpayer), to the extent that the amount can reasonably be considered to relate to the period, or a portion of the period, in respect of which an amount is claimed by the taxpayer under this paragraph;

[10]     In considering the Clergy Deduction we must determine whether the Appellant can be considered:

(1)      A member of the clergy, a member of a religious order, or a regular minister, and

(2)      In charge of a diocese, parish or congregation, ministering to a diocese, parish or congregation, or engaged exclusively in full-time administrative service by appointment of a religious order or religious denomination.

The items listed in number (1) above formulate what is known as the "status" test. The items listed in number (2) above formulate what is known as the "function" test. If the Appellant is successful in demonstrating that at least one of the options listed in number (1) above, and at least one of the options listed in number (2) above applies to him, both tests will be satisfied and the appeal will be successful. The Respondent argues that the Appellant does not meet either of these tests.

Status Test

[11]     The requirements to meet the status test are commented upon in Interpretation Bulletin IT-141R,[1] to which the Appellant referred in presenting his evidence. I will refer to the IT Bulletin to determine whether the Appellant qualifies as a "member of the clergy" or as a "regular minister", as these terms are discussed simultaneously in the Bulletin. On the requirements for these designations, IT-141R reads:

Member of the Clergy or Regular Minister

3.          Whether a person is a "member of the clergy" or a "regular minister" depends upon the structure and practices of the particular church or denomination.

4.          A "member of the clergy" is a person set apart from the other members of the church or denomination as a spiritual leader. It is not necessary that the process of appointment be referred to as ordination or that the appointment be by someone higher up in the ecclesiastical hierarchy; it may be done by the congregation itself. It is sufficient that there be a formal or legitimate act of recognition, and it requires a serious and long-term commitment to the ministry. Priests, pastors, ministers, rabbis, imams, commended workers and other persons who have been commended, licensed, commissioned or otherwise formally or legitimately recognized for religious leadership within their religious organization may be members of the clergy.

5.          A "regular minister" is a person who

·                     is authorized or empowered to perform spiritual duties, conduct religious services, administer sacraments and carry out similar religious functions. Religious functions may include participation in the conduct of religious services, the administration of some of the rituals, ordinances or sacraments, and pastoral responsibilities to specific segments of the religious organization;

·                     is appointed or recognized by a body or person with the legitimate authority to appoint or ordain ministers on behalf of or within the denomination; and

·                     is in a position or appointment of some permanence.

6.          In the absence of a legitimate appointment or recognition, the mere performance of the duties of a minister will not suffice to constitute a "regular minister" ...

[12]     In order to determine whether the Appellant can be considered a "member of the clergy" or a "regular minister", it will be necessary to review the evidence put before the Court, which will require an examination of the Appellant's role in the church. In other words, although the legislation appears to be divided (as discussed) along the lines of "status" and "function", the two cannot be so easily separated. Essentially, the determination of Mr. Kirkbride's "status" will necessarily entail an examination of his "function".

[13]     It is not contested that the position occupied by the Appellant is facilities manager. The requirements set out in the job description[2] include overseeing the coordination of facilities, energy management (i.e. light and heat), security, housekeeping, transportation, facilities maintenance, rental buildings, rental of outside facilities, and purchasing.

[14]     In addition to these duties, the Appellant also serves as a volunteer coordinator and supervises a staff of 19 people. Although the purpose statement as stated in the Job Description (exhibit R-3) is "To serve the Body of Christ", there is no mention in the document that relates to tasks specific to religious ceremonies.

[15]     The Appellant testified that, since he was part of the management team of the church, he was able to perform "special" functions, such as performing baptisms, serving communion or "pray[ing] and counsel[ing] when called upon". Although the Appellant was allowed to perform some duties normally performed by a minister, he testified that he never received any "official" religious training. He further testified that four or five other lay members of the church also had the privilege of performing "special" functions within the Assembly.

[16]     In Kraft et al. v. The Queen, 99 DTC 693 Mr. Justice Bowman (as he then was) was concerned with determining whether Mr. Kraft was a member of the clergy. Mr. Justice Bowman said at page 695:

[13]       It comes to this. Whether one is member of the clergy in a particular church depends upon the procedures and rituals of that church. It requires a formal act of recognition whereby that person is set apart from the other members of the church as a spiritual leader. It does not require necessarily that it be done by someone higher up the ecclesiastical hierarchy. Some churches recognize no such hierarchy. It may be done by the congregation. It requires a formal, serious and long-term commitment to the ministry. If these elements exist, whether or not the particular denomination calls the formal ritual 'ordination', the person accorded that status by the church is in my view a member of the clergy.

[17]     While the Appellant is clearly more involved in the inner workings of the church than is the average lay member, and the position of facilities manager entails a considerable amount of added church-related responsibility, there is no evidence which shows that any formal recognition (akin to ordination) had to take place before the Appellant was able to assume that position. Nowhere does it state in the Job Description that the position of facilities manager requires the successful party to engage in performing duties of any spiritual significance.

[18]     On the facts before me, I do not believe that the Appellant could be considered a "member of the clergy".

[19]     In addition to the "special" functions mentioned previously, the Appellant adduced further evidence that he was appointed to his position by "the Board of Deacons and the Senior Pastor" and that the position was one of some permanence, as he is able to continue in that function until he chooses to retire.

[20]     The Appellant argues that these aspects show that he has met the requirements of paragraph 5 of IT-141R.

[21]     I agree that the Appellant has met the third criterion of that paragraph, namely that the position is of some permanence.

[22]     Turning to the first criterion, the Appellant argues that he is "authorized or empowered to perform spiritual duties, conduct religious services, administer sacraments and carry out similar religious functions". From the evidence presented I am not convinced that the Appellant satisfies this criterion.

[23]     As regards the second criterion of paragraph 5 of the Bulletin, the Appellant argues that he was "appointed or recognized by a body or person with the legitimate authority to appoint or ordain ministers on behalf of or within the denomination". There was, however, no evidence presented as to how the Appellant was selected for his current position within the church.

[24]     Consequently, there was no evidence presented to negate an assumption that this position was open to multiple applicants, and that Mr. Kirkbride was selected by the church authority due to his occupational background and competence rather than any spiritual criteria other than supporting the general principles and beliefs of the Assembly.

[25]     Once again, the position of facilities manager, while understandably an important function with multiple responsibilities, does not require the Appellant to engage in "spiritual duties", nor is the church bound to authorize every holder of the position to do so.

[26]     The evidence tends to show that the Appellant was allowed to take on the additional responsibilities of conducting baptisms or assisting with communion as a result of his position as an administrative manager within the Assembly, rather than assuming the position of an administrative manager because of his experience as a spiritual leader. Once again, the designation of "lay pastor" supports the inference that the Appellant never attained a status equal to the status of a regular minister.

[27]     As a result, it appears that the "legitimate appointment or recognition" stated in paragraph 6 of IT-141R is lacking. This precludes the Appellant from being considered a "regular minister".

[28]     The Appellant claims in an alternative argument that he has a higher level of responsibility, which sets him apart from the other lay members of the church. In addition to performing the aforementioned "special" functions at the church and acting as a lay pastor, he is a voting member of the church. He argues that he is therefore a "member of a religious order". The Respondent disagrees.

The following explanation is provided in IT-141R:

8. The term "religious order" means a group of people bound by the same religious, moral and social regulations and discipline. A religious order may comprise all the members of an organization or only an identifiable group within that organization. ... Not every religious organization is a religious order. Whether or not an organization or a group of individuals within an organization is a religious order is a question of fact to be determined on a case-by-case basis. No factor predominates and each must be assigned its proper weight in the context of all the facts.

[29]     The Bulletin suggests the following factors be considered:

9. Generally, the following characteristics will be indicative of a religious order:

(a)         The purpose of the organization should be primarily religious. It may have other objects within the overall context of that religious purpose such as education, the relief of poverty, or the alleviation of social ills and suffering. A religious order may have objects that go beyond preaching the gospel and prayer and meditation, and extend to works beneficial to humanity such as running hospitals or helping the poor and homeless...

(b)         The members must agree to, and in fact adhere to, a strict moral and spiritual regime of self-sacrifice and dedication to the goals of the organization to the detriment of their own material well-being.

(c)         The commitment of the members should be full-time and of a long-term nature. It is not essential that the commitment be for life but it is important that it not be short term, temporary or part-time.

(d)         The spiritual and moral discipline and regime under which the members live must be markedly stricter than that to which the lay members of the church are expected to adhere.

(e)         The admission of members must be in accordance with strict standards of spiritual and personal suitability.

(f)          There should generally be a sense of communality.

10. Religious orders can include interfaith orders, orders that are family oriented and orders that do not require vows of celibacy, poverty and obedience. Nonetheless, such orders do require significant self-sacrifice, a dedication that transcends that of an ordinary churchgoer and an ardent commitment to the cause of the particular order.

[30]     The factors stated in paragraph 9 of the Bulletin were derived from the Reasons of Bowman, J. in McGorman v. Canada,[3] and applied inter alia in his decisions in Koop v. Canada[4]and Alemu et al. v. The Queen.[5]

[31]     Any analysis of the term "religious order" must first make note of the fact that the term is different from the term "religious denomination" or "religion". It would be counterintuitive to suggest that the Minister allow a tax deduction to individuals who are simply a member of a religion or religious denomination. The Christian Life Assembly is, as discussed, such a denomination. However, as Mr. Justice Bowman stated in Koop, "[t]his does not ... mean that every religious institution or organization is a religious order."[6]

[32]     Looking at the factors listed in paragraph 9 of IT-141R, as well as the case law on which it is based, it appears that the Appellant meets only the criteria indicated by the letters (a), (b) and (c). That is, the organization in question is primarily religious, the members must adhere to a strict moral and religious regime and the Appellant's commitment is long-term.

[33]     The Appellant does not meet the criteria set out in letters (d) or (f). Specifically, there is no evidence which suggests that:

·         the Appellant may have agreed to and adhered to a strict moral and spiritual regime but there is no evidence of of self-sacrifice and dedication to the goals of the organization to the detriment of his own material well-being,

·         the Appellant's spiritual and moral discipline and regime must be markedly stricter than that to which the lay members of the church are expected to adhere. There was no clear evidence to establish this point,

·         there is generally a sense of communality.

[34]     Aside from the admission that the Appellant in the case at bar was a lay pastor, there is no evidence to suggest that the Appellant had to exhibit some form of self-sacrifice or denial of material comfort or financial advancement beyond that which was expected of other lay members of his church. For example, there was no evidence that the Appellant earned less or was required to work under more rigourous conditions than what could possibly be expected of a facilities manager for a secular organization - in contrast to the meager earnings of the Appellants in McGorman, who received "only enough to satisfy their basic needs",[7] In the year 2000, Mr. Kirkbride had income of $53,000.[8]

[35]     Moreover, there was no evidence presented to indicate that his position as facilities manager required him to live in a "general sense of communality" with other members of the church or share in any kind of common property.

[36]     For the reasons above, I do not believe that the Appellant would qualify as a "member of a religious order".

[37]     From an analysis of the facts before me I have concluded that the Appellant was not a "member of the clergy", nor a "regular minister", nor a "member of a religious order". He is therefore unable to meet the "status" test. It therefore follows that the provisions of paragraph 8(1)(c) are not satisfied and the appeal must fail.

[38]     The appeal is dismissed, without costs.

Signed at Vancouver, British Columbia, this 18th day of July 2003.

"L.M. Little"

Little, J.

CITATION:

2003TCC229

COURT FILE NO.:

2002-4707(IT)I

STYLE OF CAUSE:

N.A. (Noel) Kirkbride and Her Majesty the Queen

PLACE OF HEARING:

Vancouver, British Columbia

DATE OF HEARING:

April 8, 2003

REASONS FOR JUDGMENT BY:

The Honourable Mr. Justice L.M. Little

DATE OF JUDGMENT:

July 18, 2003

APPEARANCES:

For the Appellant:

The Appellant himself

Counsel for the Respondent:

Amy Francis

COUNSEL OF RECORD:

For the Appellant:

Name:

Firm:

For the Respondent:

Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada

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