CRA rules that contributions made by construction contractors to a workplace development fund as agreed to by their collective bargaining agent were not subject to GST/HST

An employers’ organization for collective bargaining on behalf of employers (i.e., construction contractors) in the construction industry agreed during the negotiation of the collective agreements between the organization and the unions, that for each hour worked by employees pursuant to the collective agreements, the employers would contribute amounts to support workforce development initiatives. As a result, and as authorized by the provincial legislation, the contributions were paid by the employers over to the organization, which contributed them to a trust fund to be applied as bargained for.

CRA ruled that:

There is no direct link between the contributions made by the contractors to the Trust Fund and a supply made by the Trust Fund to the contractors. The payment of amounts as an industry development fee set by [the Organization] are therefore not consideration for a supply and therefore not subject to GST/HST.

Neal Armstrong. Summary of 19 January 2017 Ruling 172004 under ETA s. 123(1) – supply.