The Cook Islands Christian Church says the more than half a million dollars it has been awarded in the latest Budget is to clear an outstanding debt owed by the government.
The government had characterised the money as a grant to help construct and refurbish the church's training facility at the Takamoa Theological centre.
But the church's legal representative, Iaveta Short, said the money was owed for overdue rental on its property at Te Puka.
The church had taken exception to media reports that the money was a grant and claims by opposition MP, James Beer, that churches should not get grants when police are poorly paid and the outer islands lack doctors and dentists.
But Mr Short said the debt had accumulated as a result of the government failing to pay rent for three houses at the Te Puka site since 1999.
Meanwhile, the government continued to characterise the payment as a grant with the Finance Minister, Mark Brown, saying it was the government's job to do what it thinks is right by its people.
Mr Brown said the government had also granted the Catholic Church $US363,000 dollars - part of which will go to rebuilding Nukutere College.