5 February 2009 External T.I. 2008-0304301E5 - Whether association is a "trade union"

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.

Principal Issues: Whether dues paid by XXXXXXXXXX workers to an "independent workers association" qualify as annual dues to a trade union for purposes of the deduction under subparagraph 8(1)(i)(iv).

Position: No.

Reasons: This provision generally contemplates organizations that negotiate collectively with employers for improvements in their members' working conditions.

XXXXXXXXXX 2008-030430
J. Gibbons, CGA
February 5, 2009

Dear XXXXXXXXXX :

Re: Membership Dues to an Independent Workers Association (the "Association")

This is in reply to your email dated December 17, 2008, concerning whether the Association would be considered a "trade union" for purposes of the employment deduction under subparagraph 8(1)(i)(iv) of the Income Tax Act (the "Act").

Under subparagraph 8(1)(i)(iv) of the Act, an employee may deduct annual dues to maintain membership in an association in a trade union (as defined by section 3 of the Canada Labour Code or in any provincial statute providing for the investigation, conciliation or settlement of industrial disputes), or to maintain membership in an association of public servants the primary object of which is to promote the improvement of the members' conditions of employment or work.

In our view, although an association need not be certified as a trade union for purposes of deducting an amount under subparagraph 8(1)(i)(iv) of the Act, it is our view that this provision generally contemplates organizations that negotiate collectively with employers for improvements in their members' working conditions. In this regard, reference is made to the Federal Court of Appeal's decision in Douglas L. Crowe and Kenneth A. Cush v. The Queen, 2003 DTC 5288, wherein the court stated that such a requirement could generally be inferred from a purposive interpretation of subparagraph 8(1)(i)(iv).

Since you indicated that the Association does not negotiate collectively, nor does it negotiate terms and conditions of employment, it is our view that it would not qualify as a trade union. Accordingly, dues paid to it by XXXXXXXXXX workers would not be deductible under subparagraph 8(1)(i)(iv) of the Act, nor are there any other provisions in the Act that would permit such dues to be deducted or claimed as a credit.

We trust these comments will be of assistance.

Yours truly,

G. Moore
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch