Magazine article Anglican Journal

Clergy Face Tighter Tax Scrutiny, Churches May Be Asked to Compensate

Magazine article Anglican Journal

Clergy Face Tighter Tax Scrutiny, Churches May Be Asked to Compensate

Article excerpt

The tax man cometh!

Moves by Revenue Canada to tighten up clergy taxable benefit regulations have some people wondering what's next on the horizon for financially strapped religious organizations.

For many church officials, the first indication of the tax department's more stringent look at clergy benefits came early last year with the news that Revenue Canada had reassessed several married United Church clergy couples who had each claimed a full housing tax break.

While the Income Tax Act allows a minister to claim a tax deduction on his or her residence, Revenue Canada balked at allowing both clergy spouses to each claim the 100 per cent tax deduction.

Close on the heels of the married clergy matter, Revenue Canada began, in some areas, to treat church-provided utilities such as power and heating as taxable benefits.

But "it's not a new law," said a spokesperson for the Canadian Council of Christian Charities. "The provision for the clergy residence deduction has been always to exclude utilities," said Frank Luellau, executive director of the charities council.

He said his organization has always understood utilities are not eligible for tax deduction. "It's just that Revenue Canada has not paid enough attention to it in the past and, now that they are more aware of what they perceive to be misuses, they are looking at it more."

The council - an umbrella organization for 1,200 members, including many church groups - also concluded there was no case to be made for challenging the married clergy couples issue.

Mr. Luellau said more taxpayers are being audited than ever before and he detects "a lot more activity in auditing and monitoring of churches and clergy."

Church officials say these new developments will put an additional financial burden on the church and could result in closures or the withdrawal of paid ministry, particularly in small, remote areas. Added to that is the fear that these are just initial moves by Revenue Canada to tax most of the benefits clergy have enjoyed over the years.

While legally it might be a matter between the individual and the tax department, Archdeacon Jim Boyles, the church's General Secretary, says denominations also have a vital interest in the matter.

"We have requested a meeting (with Revenue Canada) about the interpretation of the Income Tax Act and also to find out what the government's intention is for the years ahead. …

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