The clergy residence deduction in Canada, explained
How much Canadian clergy can deduct for housing under CRA Form T1223, which utilities count, how to set fair rental value, and two habits that prevent mistakes.
Read the guide →← All guidesCanada — reducing withholding at source
T1213: reduce a pastor’s tax withholding for housing
If your church provides the home: the church can reduce income tax and CPP withholding once the pastor signs Form T1223 Parts A and C and gives written notice, including the amount, that they intend to claim the deduction. If the pastor rents or owns: withholding can only be reduced after CRA issues a letter of authority in response to Form T1213 — file it every October or November so the letter arrives before the first January pay run.
Checked 2026-09-28Two paths, depending on who provides the home
Employer-provided home: the pastor completes Parts A and C of Form T1223 and asks the church to complete Part B, and separately tells the church in writing that they intend to claim the deduction and how much. Once both conditions are met, the church can reduce the income used to calculate income tax deductions and CPP contributions by that amount.
Rented or owned home: the pastor completes Form T1213, Request to Reduce Tax Deductions at Source, and sends both T1213 and T1223 to CRA. The church can only reduce income tax and CPP withholding once the pastor hands them the CRA letter of authority — and only by the amount stated on that letter, not by the pastor’s own estimate.
Neither path changes EI withholding. A cash housing allowance is EI-insurable regardless.
Why October or November
CRA takes roughly four to eight weeks to process a T1213. Filing in October or November means the letter of authority is usually in hand before the first pay run in January, so the pastor sees the benefit of the deduction in every paycheque instead of waiting for a refund in April.
FAQ
Questions
Can the church stop withholding tax on a pastor’s housing during the year?
If the church provides the house: yes, once the pastor gives the church a signed T1223 Parts A and C and written notice, including the amount, that they intend to claim the deduction. If the pastor rents or owns: only after CRA issues a letter of authority in response to Form T1213. Source: CRA payroll page, steps 3-4; Form T1213.
What if our treasurer won’t sign Part B of the T1223?
Without the employer’s certification, there is no deduction at all — the Income Tax Act makes this a precondition, not a formality. The employer signs to the best of their knowledge and is not required to investigate; a treasurer should not refuse unless they know the person fails the status or function test. Source: Income Tax Act, subsection 8(10).
Does filing a T1213 reduce EI withholding too?
No. Neither the employer-provided path nor the T1213 path changes EI withholding. A cash housing allowance is EI-insurable, and EI is withheld on a non-cash housing benefit whenever cash earnings are also paid in the same pay period. Source: CRA payroll page.
Try it with this example in the calculator.
Open the Clergy Housing Calculator →General information, not legal or tax advice. Laws differ by province and state and change over time. Have a qualified lawyer or accountant review before your church adopts or relies on this.