Clergy Residence Deduction

This article is for those who send to Canada Revenue (CRA) the Request to Reduce Deductions at Source for their Clergy Residence Deduction amount for each year.

For those who are in active ministry and own or rent your own residence, you should send to CRA an application to request approval for your employer (the church or ministry) to reduce your income tax withholdings at the time of each pay during the next tax year. Once you get approved, the church is allowed to factor your Clergy Residence Deduction into each pay cheque during the next year. If you live in a church owned parsonage, you do not have to send in a request. Also, please note that the Clergy Residence Deduction is not applicable on any income that does not qualify as clergy.

T1213 REQUEST TO REDUCE TAX DEDUCTION AT SOURCE

The main application form is the T1213 Request to Reduce Tax Deductions at Source. Below is a link to the T1213 form on CRA’s website to open the form and print. The form is available in either fillable pdf, or manual pdf to be completed by hand. You will need to complete the Identification and Employer sections, check off the box for Salary, and enter under Deductions on the Clergy Residence line on the top of page 2 the same amount you have calculated on the T1223, as described below.

T1223 CLERGY RESIDENCE DEDUCTION

As requested on the T1213, you must also send with the Request a completed T1223 Clergy Residence Deduction form. Below is a link to the T1223 form on CRA’s website to open the form in either fillable pdf or manual pdf. On the first page of the form, you would complete Part A, and the church would complete Part B and the Employer Certification at the top of page 2. You should also complete the Part C calculation using estimates for the next year. Once you have completed the calculations down to the amount on Line 11, you should enter that amount on the Clergy Residence line on the T1213 as noted above. If you wish, you can enter a lesser amount, but never a larger amount.

Please note the following for the T1223:

1. Part B 1. a) – CRA requires not only the name of your credential, but also the name of the denomination i.e. Pentecostal Assemblies of Canada, plus a copy of your credential certificate.
2. Part B 4. – CRA requires not only the inclusion of your job description but also the percentage of time per week that each of your job duties take.
3. Part C (B) 6. – Utilities are gas, electricity and water. Fair rental value should be in writing from a real estate agent or home appraiser who understands your market area.

The recommended time to send your Request to CRA is by the end of October each year for the following tax year. This will ensure that you get your permission before your first pay in the new year.

If you have any questions about this process, please contact Vern Kratz at the District Office.