29 November 1996 External T.I. 9624975 - UNION DUES

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

									962497
XXXXXXXXXX							M. Eisner

Attention: XXXXXXXXXX

November 29, 1996

Dear Sirs:

Re: Deductibility of Membership Dues

This is in reply to your letters of July 23, 1996 and November 12, 1996 concerning the deductibility of annual dues being paid to a non-profit corporation. We also acknowledge our telephone conversations.

In the circumstances of your situation, a number of employees formed an association in XXXXXXXXXX as a result of concerns relating to their government employment. In XXXXXXXXXX, the association became an incorporated entity (the Organization) which was initially registered as XXXXXXXXXX and subsequently changed its name to XXXXXXXXXX. The objects of the Organization are to represent certain XXXXXXXXXX employees (i) with respect to their inclusion in, or the creation of, a unit certified for the purpose of collective bargaining on their behalf with the XXXXXXXXXX, and (ii) in other matters relating to the terms and conditions of their employment as may be approved by special resolution.

With respect to membership in the Organization, you enclosed a resolution of the Association dated XXXXXXXXXX which describes employees who may become members of the Organization. Pursuant to the resolution, the board of directors of the Organization, subject to the comments below, will only approve for membership in the Association (i) employees (in the service of Her Majesty) who are subject to the provisions of the Public Service Act of XXXXXXXXXX (the Public Service Act), as amended from time to time; and, (ii) employees (in the service of Her Majesty) who are appointed by order-in-council and who may or may not be subject to some or all of the provisions of the Public Service Act. (It is also our understanding that one of the effects of the resolution is that the activities of the Organization described in its objects will be carried out in respect of its members.)

You have asked whether annual membership dues paid by members of the Association qualify for deduction under subparagraph 8(1)(i)(iv) of the Income Tax Act (the Act) on the basis that the dues are "annual dues ... to maintain membership in an association of public servants the primary object of which is to promote the improvement of the members' conditions of employment or work."

Our Comments

On the basis of the above information, it is our view that the Organization is "an association of public servants the primary object of which is to promote the improvement of the members' conditions of employment or work" and, accordingly, amounts paid by the members are deductible under subparagraph 8(1)(i)(iv) of the Act.

As a further comment, we wish to mention that paragraph 8(5)(c) of the Act denies a deduction under subparagraph 8(1)(i)(iv) of the Act where dues are levied for any purpose not directly related to the ordinary operating expenses of the trade union or association to which they were paid. It is our view that payments made in respect of professional development would not qualify for deduction under subparagraph 8(1)(i)(iv) by virtue of paragraph 8(5)(c) of the Act.

The above comments are based on the information submitted by you. This is an opinion only and, as such, is not binding on the Department.

We trust our comments will be of assistance to you.

Yours truly,

John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

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