18 October 2017 Ruling 173963r

The Association is a non-profit organization that was founded to advance and promote Profession A. Members pay dues and have voting and other rights. The by-laws of the Society reference the concept of a District, meaning a provincial or territorial association of Profession A recognized by the Society as a class of membership. A portion of the Association’s total revenues was remitted to the Society by the Association.

In finding that the supply of memberships by the Association was not exempt under Sched. V, Pt VI, s. 18, CRA noted that it had not been provided, and was unable to find, any evidence that membership in the Association is required to maintain a professional status recognized by statute, noting that a “person may offer or provide services similar to those offered or provided by [Profession A in Province X] even though they are not a member of the Association.”

The Association, in turn, paid fees to the Society. Although these fees appeared to be stated in the Society by-laws to be paid “on behalf of” Society members, CRA found that the fees did not represent Society membership fees that the Association was collecting as agent for the Society given that “the bylaws of the [Society] provide no liability to the individual members to pay membership dues to [Society].”

A provincial professional association (the “Association”) was itself a member of a national professional association (the “Society”). CRA found that member fees paid to the Association were not exempted under ETA Sched. V, Pt VI, s. 18 since membership in the Association is required to maintain a professional status recognized by statute. It noted that persons could offer similar services in the province in question without being a member of the Association.

In rejecting the Association’s submission that it collected its fees as Society membership dues as agent for the Society notwithstanding a statement in the Society’s by-laws that: “On behalf of the Society membership, […] [Districts, such as the Association,] shall pay to the Society an annual fee based on a per capita rate for each of its […] Members,” CRA confirmed its statements in a previous ruling letter to the Association that:

[T]he bylaws of the [Society] provide no liability to the individual members to pay membership dues to [Society]. In particular, pursuant to section […] of the [Society]’s bylaws, the [District] organizations have the obligation to pay an annual fee to the [Society]. Although the amount of this fee is calculated based on the number of individual members, the individual members are not liable to pay this fee to the [Society]. … Therefore, the value of the consideration for [the Association]’s supplies of memberships is the entire amount charged by [the Association] to the individual members.