The BC Humanist Association is condemning a proposal in Budget 2026 to give a further $778 tax break to Canadian religious officials.
The Clergy Residence Deduction, first introduced in 1949, allows members of religious clergy to deduct housing expenses from their taxable income. In its 2021 report, An Extra Burden, the BCHA showed that this deduction costs the federal government over $100 million in foregone revenue annually, while reducing the taxes of eligible clergy by thousands of dollars.
The current deduction relies on a detailed formula based on the clergy member's income or rent (or fair rental value) and utility costs. Under the Budget 2026 proposal, clergy would be able to instead claim a flat $1000 monthly housing deduction from their taxable income.
The Government of Canada estimates this new proposal will benefit around 9,000 individuals and cost the treasury $27 million over four years and then $7 million annually thereafter. This works out to an average tax break of $778 for eligible clergy.
"Why are Canadians being asked to further subsidize a small number of priests when the government is looking at $60 billion dollar deficits?" asked BCHA Executive Director Ian Bushfield. "Instead of putting more money in the pockets of priests, rabbis and imams, the government ought to finally eliminate this relic."
The Budget proposal comes just days after the BCHA published The God Tax, a new report estimating that federal tax credits for donations to religious charities costs the federal government over $1 billion annually. Together, these tax privileges raise broader questions about the public cost of subsidizing religion in an increasingly secular Canada.
The BCHA continues to advocate for governments to uphold their duty of religious neutrality and end the special privileging of religious organizations.
Background Information
In An Extra Burden, BCHA used T1 Final Statistics to show that 27,140 individuals received the Clergy Residence Deduction. This worked out to an average annual deduction of around $14,500, for an $1800 federal tax break. Factoring in the associated provincial tax breaks, the median clergy saved between $2000 and $5000 in income taxes. This new proposal will boost the deduction for clergy whose housing costs are below $1,000 per month, resulting in the average $778 tax cut.
The Clergy Residence Deduction proposal can be found under "Making it easier for Canadians to manage their taxes" of "Chapter 6: A more efficient government" in Budget 2026:
Members of the clergy would be able to claim an optional flat $1,000 per month that they are eligible for the Clergy Residence Deduction, up to their annual remuneration. It is expected that this change would benefit around 9,000 individuals. This measure would provide $27 million over four years, starting in 2027-28, and $7 million per year ongoing in additional tax relief.
Further details on the proposal are provided in the Budget's Supplementary information.
The Budget's Impacts report analyzes the gender and diversity impacts of new measures. For the Clergy Residence Deduction, it concludes:
This measure would simplify tax filing for clergy members who rent or own their own accommodation with expenses below or around $1,000 per month by allowing them to deduct a flat $1,000 per month instead of tracking and calculating their housing expenditures. About three quarters of those expected to benefit from this measure are men. Those affected are generally middle-income, highly educated and of working age, with an average total income of $59,000, according to 2023 tax data.