http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/126846/index.do
Moerman v. The Queen (November 26, 2015 – 2015 TCC 295, Lafleur J.).
Précis: The appellant acted as a chaplain for a number of hospitals in the Lethbridge area in Alberta. He and his wife owned a corporation, John Moerman Enterprises Ltd. (“JME”) which paid him $24,000 in 2012. That payment was entirely derived from donations from the community in respect of his chaplaincy. He also received an honorarium from from Alberta Health Services (“AHS”) in the amount of $13,836.14. He claimed the clergy residence deduction pursuant to paragraph 8(1)(c) of the Income Tax Act (the “Act”) in respect of both amounts but CRA denied the deduction in respect of the payment from JME.
The Tax Court held that the payment from JME was in respect of his chaplaincy services and allowed the appeal (without costs as this was an informal procedure appeal).
Decision: The facts of this case were crystal clear:
In 2012, the Appellant had two sources of income. One source was the remuneration paid by AHS; he received $13,836.14 as an honorarium for his work as chaplain at the Hospitals for the 12‑month period beginning on January 1, 2012 and ending on December 31, 2012. The second source was the remuneration paid by the Corporation as employment income; he received $24,000 (see Exhibit A‑2, “Copy of T4 slip issued by the Corporation to the Appellant for the 2012 taxation year”).
The Corporation is owned by the Appellant and his spouse. However, no documents were filed with the Court with respect to their ownership, but that is not relevant for the purposes of this appeal.
During the 2012 taxation year, the Appellant was the sole employee of the Corporation. The evidence shows that the Corporation employed the Appellant to render chaplaincy services at the Hospitals. The Appellant did not render any other services to the Corporation or to anyone else. It is clear from the Appellant’s testimony that he served, on a full‑time basis, as the sole chaplain of the Hospitals, serving the community at such Hospitals. The Appellant did not render services to anyone else other than the community at the Hospitals or in any other location than at the Hospitals.
The Appellant filed as Exhibit A‑4 copies of record of hours of employment, indicating he had worked 31,157.37 hours over a period of 15 years (including 2012); on average, that would amount to 2,077 hours per year.
The funding of the Chaplaincy program at the Hospitals was shared by AHS and by Lethbridge churches and individual donors through College Drive Community Church (“College Drive”).
The Appellant explained to the Court how the funding of the Corporation was organized: College Drive would receive donations from various churches and individual donors earmarked for the Chaplaincy program at the Hospitals; College Drive, which had contracted the Corporation to render the required chaplaincy services at the Hospitals, would then transfer said amounts to the Corporation. With said funds, the Corporation would then pay remuneration to the Appellant in respect of the services rendered as a chaplain at the Hospitals. The sole objective of the donations made to College Drive by the individual donors and churches was to fund the Chaplaincy program at the Hospitals.
The Court’s decision was equally clear and succinct:
In this case, I do not have to address the question whether the Corporation was providing benefits to the Appellant in respect of his employment at the Hospitals such that it might not be remuneration according to the doctrine propounded by the Court of Appeal in The Queen v. Blanchard, 95 DTC 5479, [1995] 2 CTC 262, at paragraph 2. I am satisfied that the amounts in question were remuneration in respect of the Appellant’s employment with the Corporation. Furthermore, the Appellant was employed by the Corporation to render the aforementioned chaplaincy services to the Hospitals.
The evidence shows clearly that the Appellant received remuneration from the Corporation for his services as chaplain at the Hospitals. The Appellant did not render any other services to the Corporation itself. There are no other reasons for the payment of the remuneration by the Corporation to the Appellant. The evidence shows that College Drive contracted with the Corporation for the delivery of chaplaincy services to the Hospitals. The Corporation then employed the Appellant in order to render such services to the Hospitals. It is clear that the Appellant was paid by the Corporation in consideration of the chaplaincy services rendered at the Hospitals. It is also clear from the evidence that the Appellant did not render any ministering services to the individual donors or churches who gave money to College Drive.
As a result the appeal was allowed (but without costs as this was an informal procedure appeal).