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.
MINISTER/DM'S OFFICE 93-1918T ADM'S OFFICE CENTRAL RECORDS RETURN TO RULINGS, ROOM 303, MET. BLDG.
XXXXXXXXXX
Dear XXXXXXXXXX
I am writing in reply to your letter of March 4, 1993, concerning the XXXXXXXXXX I apologize for the delay in replying.
I understand that you believe the opinion given to the union's solicitors by the Department, to the effect that the employees' contributions to the fund are not deductible as union dues because the contributions are "not directly related to the ordinary operating expenses of the trade union", is mistaken and should be reconsidered in view of the representations made by the union's solicitors. In this regard, you believe that, since the issue is new, officials of the Department experienced difficulty in interpreting the relevant provisions in the Income Tax Act (the Act) as they apply to the circumstances.
Market Recovery Programs, sometimes referred to as job stabilization funds, have been in existence in various forms for several years. The Department has, upon request, given its views on the income tax implications for both employers and employees with respect to the establishment, operation and winding-up of these arrangements. Such opinions were based on the facts presented by the individuals or institutions initiating the particular request.
Recent enquiries regarding this issue resulted in a thorough review of the Department's position on such arrangements, including consultation with our advisors in the Department of Justice.
Job stabilization funds have been established and funded by either employer or employee contributions, depending on the specifics of the particular situation. Where such funds are established and maintained through employee contributions, the employee is not entitled to a deduction in computing income because, in our view and that of our legal advisors, there is no provision in section 8 of the Act that would permit such a deduction.
The issues raised in your letter relate to a matter of tax policy that would require an amendment to the Act. As you are aware, a number of measures designed to improve conditions and employment opportunities for union members have already been included in the Income Tax Act; therefore, the union may wish to make representations to the Minister of Finance concerning this employment initiative.
I sincerely hope that the above comments provide you with an adequate explanation of the Department's position on this issue.
Yours sincerely,
Otto Jelinek
June 3, 1993
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