20 June 2000 External T.I. 2000-0021735 - HEALTH AND WELFARE TRUST

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.

Principal Issues: Is a particular Health and Welfare Trust a "Health and Welfare Trust for Employees" as contemplated in Interpretation Bulletin IT-85R2?

Position: No

Reasons: As indicated in paragraph 5 of the bulletin a trust referred to in the bulletin is a trust arrangement under which the trustees receive the contributions from the employer or employers, and in some cases from employees, to provide such health and welfare benefits as have been agreed to between the employer and the employees. The trust referred to in the letter is one created by a union for its members.

XXXXXXXXXX 2000-002173
J. E. Grisé
Attention: XXXXXXXXXX

June 26, 2000

Dear Sirs:

Re: Health and Welfare Trust

This is in reply to your letter of April 11, 2000, requesting our opinion concerning the application of the Income Tax Act to a Health and Welfare Plan and Trust created by a union for its members.

In the situation you have outlined, your client currently has an existing Health and Welfare Trust. Some members of the union elect to pay after tax contributions into the Health and Welfare Trust and receive benefits. Not all union members participate in the plan. The union would like to make contributions to the Health and Welfare Trust on behalf of all of its members to provide short-term disability benefits.

The particular circumstances in your letter on which you have asked for our opinion appear to be a factual situation involving specific taxpayers. As explained in paragraph 22 of Information Circular 70-6R3, it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advance income tax ruling. However, we are prepared to provide the following comments which are of a general nature and are not binding on the Agency.

A health and welfare trust for employees contemplated in interpretation bulletin IT-85R2 is a trust arrangement under which the trustees receive contributions from an employer or employers, and in some cases from employees, to provide such health and welfare benefits as have been agreed to between the employer and the employees. A health and welfare trust created by a union in which contributions are only made by the union members and the union would not be a trust contemplated by IT-85R2.

The Income Tax Act provides that a member of a trade union, in computing income from an office or employment, may deduct annual dues to the extent that the member has not been reimbursed and is not entitled to be reimbursed in respect thereof. Annual union dues of a member of a trade union are not deductible, however, to the extent that they are, in effect, levied for or under a fund or plan for annuities, insurance or similar benefits.

We hope our comments are helpful.

Yours truly,

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

??

- 2 -