23 September 1992 External T.I. 9219205 F - Prepaid Union Dues For Period Of Leave

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.

19(1)

September 23, 1992

Dear 19(1)

Re:   Prepaid Union Dues

Your letter of May 20, 1992 has been referred to us for reply.  We apologize for the delay in responding. You have asked whether you can claim a deduction for union dues which have been prepaid in respect of a period beyond the present taxation year in the year in which the prepayment occurs.  In a subsequent discussion with Teresa Ohene-Asante of the Vancouver District Office (June 24, 1992), you clarified the type of situation where such a prepayment might be required.

It is our understanding that the union dues in question are ordinarily paid monthly directly to the union and are not withheld by the employer.  If the payment of dues lapses for more than one month, membership in the union is terminated.  If an employee takes a leave of absence from employment but wishes to retain the privileges of membership in the union, the union dues must be prepaid for the period of the leave. 

The deduction of annual dues to maintain membership in a trade union is a deduction made in respect of employment income.  Such deductions are only permitted to the extent that the amount so paid is in respect of and wholly applicable to employment income.  Where an individual pays dues to maintain membership in a trade union during a period of leave from employment, it is questionable as to whether the dues are applicable to an employment source, regardless of whether the dues are prepaid for the entire period of leave or paid on a monthly basis.  While it is the Department's practice to allow a deduction for dues relating to periods of non-employment where the individual is actively seeking further employment for which membership in the union is required, consideration of whether the deduction should be allowed for a period of leave can only be made after an examination of the purpose of the leave and the reason for maintaining the membership during the period of that leave. 

Nevertheless, provided that the deduction is otherwise allowable, an employee is entitled to deduct the amount paid in the year in which such dues are paid, regardless of whether the dues are paid in respect of either a future or prior period of time.

We trust our comments will be of assistance to you.

Yours truly,

J.A. Szeszyckifor DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch

c.c.  Teresa Ohene-Asante, Vancouver District Officec.c.  Assessment of Returnsc.c.  Client Assistance