I'm continually blessed by the number and the amazing quality of gifted adminstrative people we have within our Foursquare family across Canada. In most cases these people work quietly behind the scenes but their service to the Lord and the strength they bring to the ministry of the churches cannot be overlooked. Thank YOU so much for all you do!
At the beginning of this week I sent out an update for applying for the Clergy Residence Deduction (CRD). From that email I had dialogue with 2 amazingly administrative-minded people that provided some additional information on this topic. The following questions/answers were:
Question 1: Is it mandatory that the CRD be applied for and used in the payroll calculation through the church or can the entire CRD be claimed at the end of the year on my personal tax return?
Answer: No, it is not mandatory and Yes, the entire amount of the CRD can be claimed at the end of the year on the personal tax return. The T1223 is still required to be completed and verified/signed by the church. This form does not have to accompany the tax return but kept on file with the personal tax return in the event CRA requests it.
It is recommended that the CRD be applied for and used in the calculation of payroll as it saves the church's portion of CPP. This leads to the next question:
Question 2: What if the gross yearly payroll is over a certain amount and, even after applying the CRD, the maximum CPP would still be deducted? Should the CRD still be used in the payroll calculation?
Answer: No but maybe...an example may be helpful.
The gross yearly salary is $60,000 and the allowable CRD is $18,000. The amount that would be used to calculate income tax + CPP would then be $42,000. **EI is not affected by the CRD.
The maximum level of income that CPP is calculated on for 2012 is $46,600. Using the example above, the CRD would only provide a savings to the church on the CPP paid over $42,000. In this case and for those instances that the CPP maximum would be paid, it may not be necessary to claim the CRD on payroll.
However, the person claiming the CRD may still want to have this applied to their payroll as it will provide the personal income tax savings throughout the year rather than receiving a tax return at the end of the year. It's completely up to the individual whether they want to go through the process of making application to CRA... or not :)
I hope you find this useful...thanks to a little help from my administrative friends,
Rhonda Berkhiem
Useful Quote of the Day: But in your hearts set apart Christ as Lord. Always be prepared to give an answer to everyone who asks you to give the reason for the hope that you have. But do this with gentleness and respect. 1Peter 3:15
