19 May 2000 External T.I. 2000-0022335 - EMPLOYEE CONTRIB. TO A LEGAL FUND

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: Whether annual dues to the "Mounted Police Member's Legal Fund" are deductible by employees under subparagraph 8(1)(i)(iv).

Position: No.

Reasons: In our view, the primary object of the Legal Fund is not to promote the improvement of the members' conditions of employment or work.

XXXXXXXXXX 	2000-002233
		James Gibbons, CGA
Attention:  XXXXXXXXXX 

May 19, 2000

Dear XXXXXXXXXX:

We are replying to your letter of April 19, 2000, which was further to your letter of December 2, 1999, concerning the deductibility of annual dues to the "Mounted Police Member's Legal Fund" (the "Legal Fund"). In our response to your first letter, we stated that it was our view that dues payable to the Legal Fund would not be deductible under subparagraph 8(1)(i)(iv) of the Income Tax Act (the "Act"). As well, we outlined the reasons why we felt that the primary object of the Legal Fund is not to promote the improvement of the members' conditions of employment or work. In your latest letter, you expressed disagreement with this conclusion and argued that the activities of the Legal Fund do in fact deal with the "improvement of the members' conditions of employment or work."

Your views

In brief terms, it is your position that being subject to verbal, physical or legal harassment at the workplace or as a result of what happens at the workplace is a condition of work or employment. You state that, while the Letters Patent creating the Legal Fund talk about "matters which affect the dignity or welfare of a member or members of the Legal Fund," the words really mean conditions of employment. In this regard, you provide the following examples of issues the Legal Fund has dealt with:

1. A legal opinion has been requested with respect to actions available to a member who has been banned by a Band Council Resolution from coming on to an Indian Reserve;

2. A civil action against a complainant and his parents for falsely accusing a member who arrested the complainant after a motor vehicle accident of assaulting the complainant. The complainant was convicted with respect to the motor vehicle accident and witnesses present at the arrest have come forward to testify that the officer conducted himself with great restraint in a very difficult situation.

3. A civil action against a newspaper which slandered a member of the Fund with respect to a complaint filed by the member in connection with duty-related matters. The newspaper and reporter were found in contempt of court for the story which was published.

Our views

After carefully considering the arguments in your latest letter, we have reached the same conclusion as set out in our letter of January 20, 2000. Thus, it remains our view that the annual dues paid to the Legal Fund are not deductible. As noted in our earlier correspondence, we suggest that you approach officials at the Department of Finance to discuss the possibility of amending the Act to provide the desired tax assistance to members of the RCMP for contributions to a legal fund.

We trust our comments will be of assistance.

Yours truly,

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

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