23 February 2001 External T.I. 2001-0066655 - PROFESSIONAL MEMBERSHIP FEES

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: An individual pays examination fees to Transport Canada which issues licenses with respect to flying aeroplanes. Are the examination fees deductible under subparagraph 8(1)(i)(i) of the Act.

Position: no

Reasons: Subparagraph 8(1)(i)(i) of the Act refers to "annual" membership fees paid by an individual to "maintain" a professional status (a deduction in computing employment income).

XXXXXXXXXX 2001-006665
M. Eisner, CA
February 23, 2001

Dear XXXXXXXXXX:

Re: Examination Fees versus Professional Membership Fees

This is in reply to your letter of January 12, 2001, concerning the above-noted subject.

You have indicated that your daughter, XXXXXXXXXX, is a commercial pilot, who paid an amount of $XXXXXXXXXX (the "Amount") in XXXXXXXXXX to Transport Canada with respect to examination fees so that your daughter could obtain her commercial instrument, multiengine, float, and instructor ratings. You have asked us to consider whether the Amount can be deducted on line 212 of her return on the basis that the Amount can be considered to be professional fees as the payment of the Amount is necessary in order for your daughter to be licensed and practice as a professional, commercial pilot in Canada.

Our Comments

As a result of the confidentiality provisions of the Income Tax Act (the "Act"), we are unable to discuss the details of your daughter's income tax affairs without her authorization. However, we are providing you with the following general comments.

Line 212 of the General Income Tax benefit Guide (1999), amongst other things, refers to professional membership dues paid by an individual to maintain a professional status recognized by law. These comments reflect the provisions of subparagraph 8(1)(i)(i) of the Act. To be deductible under this provision, the dues or fees must, amongst other things, be "annual" fees, as opposed to entrance or initiation fees, they must be paid to "maintain" professional status, as opposed to "obtain" such status, and there must be a related employment income source. As explained in paragraph 1 of IT-158R2, "Employees' professional membership dues" (copy enclosed), "An employee may deduct annual professional membership dues in computing the income or loss from an office or employment to the extent that they may reasonably be regarded as applicable to that source of income and provided that

(a) they are annual dues (in contrast with entrance fees) necessary to maintain professional status,

(b) the amount claimed is paid in the taxation year and the employee is not reimbursed or entitled to be reimbursed, and

(c) the professional status is recognized by a Canadian, provincial, or foreign statute."

In addition, paragraph 8 of the bulletin states that "Dues paid by students before becoming members of a professional organization are not allowable under subparagraph 8(1)(i)(i)". Accordingly, based on the information you provided, it appears that the above exam fees paid to Transport Canada are not deductible as professional dues.

The Canada Customs and Revenue Agency, whose role is to administer and enforce the Act as passed by Parliament, does not have the authority to change income tax laws. Tax policy and amendments to the Act are the responsibility of the Department of Finance. Should you wish to pursue your concerns further, you may contact the

Tax Policy Branch of the Department of Finance by writing to L'Esplanade Laurier, 140 O'Connor Street, Ottawa, Ontario K1A 0G5.

While we regret that we could not give you a favourable reply, we trust that our comments are of assistance to you.

Yours truly,

Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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