Clergy residence deduction
If your employee is a member of the clergy, they may be able to claim a deduction from income for their residence when filing a personal income tax and benefits return.
An employee who is a member of the clergy, a regular minister, or a member of a religious order can claim the clergy residence deduction if the employee is in one of the following situations:
- in charge of, or ministers to, a diocese, parish, or congregation
- engaged only in full‑time administrative service by appointment of a religious order or denomination
To claim the deduction, the employee has to fill out Parts A and C of Form T1223, Clergy Residence Deduction. You have to fill out Part B and sign the form to certify that this employee has met the required conditions. The employee does not have to file the form with their income tax and benefit return, but has to keep it in case we ask to see it.
For instructions on how to report the housing or utilities benefit, see Housing or utilities.
Reducing remuneration from which you have to deduct income tax and CPP
Employer provided or paid - benefit
If you provide your employee with free or low-rent accommodation, do not include the accommodation and utilities share of the benefit that is equal to the clergy residence deduction, in your employee’s income when you calculate the income tax and CPP contributions to deduct as long as your employee does both of the following:
- gives you a completed Form T1223, Clergy Residence Deduction
- tells you in writing they intend to claim the clergy residence deduction and tells you the amount of the deduction that will be claimed
Employee owned or rented - allowance
Your employee may own or rent the accommodation and pay for utilities either out of their own money or by using the allowance you paid to them. If your employee will be claiming the clergy residence deduction on their personal income tax and benefits return, they may get a letter of authority from a tax services office to reduce the income on which you have to deduct tax and CPP. When your employee provides you with a letter of authority from a tax services office, reduce the income by the amount stated in the letter.
Although the clergy residence deduction and the utilities share of the benefit can be excluded from income for the purpose of calculating tax deductions and CPP, you still have to report it on your employee’s T4 slip. Special rules apply if you pay for utilities (or provide them) for a member of the clergy. You must add eligible utilities (electricity, heat, water, and sewer) for clergy members to the taxable benefit for housing under code 30. Report all other utilities under code 40.
For more information, see “Code 30 – Board and Lodging” in Chapter 2 of Guide RC4120, Employers’ Guide – Filing the T4 Slip and Summary.
For more information, see Interpretation Bulletin IT-141R, Clergy Residence Deduction.
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