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.
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T4 for pastors: what box 30 and box 26 mean
If your church provides a pastor’s home or pays a housing allowance, report it under code 30 in the T4’s Other Information area — "Housing, board and lodging" — whether it is an employer-provided residence or a cash allowance, when the pastor claims the clergy residence deduction (code 40 when they do not). The clergy residence deduction also reduces box 26, the pastor’s CPP/QPP pensionable earnings, so both the church and the pastor pay less CPP. Box 24, EI insurable earnings, is not reduced by the deduction.
Checked 2026-09-28What goes where on the T4
A cash housing allowance is employment income: it goes in box 14 (employment income) the same as salary, and is also reported under code 30 (Housing or utilities) in the Other Information area, per CRA’s payroll guide. An employer-provided residence is reported the same way, as a taxable benefit under code 30. Code 30 on its own does not tell you which situation you are in — a renting pastor with a cash allowance shows code 30 too, so do not treat a code-30 amount as proof the church provided the home.
Box 26, CPP/QPP pensionable earnings, is reduced by the amount of the clergy residence deduction. If your payroll software or process does not reduce box 26 during the year, the pastor’s own CPP overpayment comes back on their personal return, but the church’s half needs a separate refund application — most treasurers avoid this by setting payroll correctly at the start of the year.
Box 24, EI insurable earnings, is not reduced by the clergy residence deduction. A cash housing allowance is EI-insurable. EI is only withheld on a non-cash housing benefit if cash earnings are also paid in the same pay period.
If the rent is more than the calculator allows
A pastor’s own claim is capped at the greater of one-third of remuneration and $1,000 per month, to a maximum of $10,000. If the actual rent is higher than that cap, one option treasurers use is for the church itself to rent the home and provide it to the pastor: the full rent then goes into box 30 as a taxable benefit and is deductible in full, rather than being capped by the personal calculation. For example, a pastor earning $30,000 and paying $14,400 in rent personally can deduct only $10,000 under the cap, but if the church rents the home and provides it, the whole $14,400 can go in box 30.
FAQ
Questions
Our pastor’s T4 shows code 30 but they rent their own home. Do they just claim box 30?
No. Code 30 reports a cash housing allowance the same way it reports an employer-provided home, so it does not by itself prove which situation applies. If the pastor rents or owns, they still complete the Part B rent/fair-rental-value calculation and claim line 10 of that calculation, even though a code-30 amount appears on the T4. Source: CRA Form T1223 E (25), Part C(A).
Which utilities belong in the box 30 figure?
Eligible utilities are electricity, heating, water and sewer. Internet, phone, cable, property tax, insurance, and mortgage principal and interest are not utilities for this purpose. Do not claim utilities twice — if they are already inside the box 30 figure, they should not be added again elsewhere. Source: CRA T1223 wording, "eligible utilities"; treasurer guides from CCCC and PAOC.
Does the deduction change what we withhold for CPP during the year?
Yes, but only once the pastor has given written notice they intend to claim the deduction, with the T1223 Parts A and C completed and the employer’s Part B agreed. Then the church can reduce the income used to calculate CPP contributions by the deduction amount. Source: CRA payroll page, Step 4.
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.