23 June 1995 External T.I. 9500855 - PROFESSIONAL DUES

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 professional dues may be deducted under paragraph 8(1)(i) when the dues have been paid by the employer but an amount has been included in the employees income as a taxable benefit

Position TAKEN:

yes.

Reasons FOR POSITION TAKEN:

dept. considers that where the payment by the employer requires an income inclusion into the employees income that the amount has effectively been paid by the employee

		950085
XXXXXXXXXX	Sandra Short

Attention: XXXXXXXXXX

June 23, 1995

Dear Sirs:

Re: Annual professional fees paid to the Barreau du Quebec

This is in reply to your letter of January 11, 1995 which asks whether you may deduct annual bar fees paid to the Barreau du Quebec in the following situation:

XXXXXXXXXX

2.Bar fees are required to be paid annually to the Barreau du Quebec.

3.You employer pays your Bar fees and includes the amount of the fees in your income as a taxable benefit.

You enclosed with your query a copy of the December 15, 1994 article from the Ottawa Citizen concerning recent Tax Court cases wherein a number of lawyers appealed penalties imposed under subsection 163(2) of the Income Tax Act. The penalties were levied in respect of claims made by the appellants under paragraph 8(1)(i) of the Act for deductions in respect of annual dues paid to maintain the appellants' membership in either the Quebec Bar or the Law Society of Upper Canada in Ontario when these fees had been paid by their employers. The employer did not include an amount in the appellants' employment income as a result of the employer paying or reimbursing these fees.

Paragraph 8(1)(i) of the Income Tax Act permits a deduction from income from an office or employment for annual professional membership dues the payment of which are necessary to maintain a professional status recognized by statute. A deduction however is only available to the extent that one has not been reimbursed, and is not entitled to be reimbursed in respect thereof. Hence, where membership dues are paid by an employer there is no deduction available to the employee. However, the Department considers that an amount in respect of such dues paid by his or her employer in circumstances where the employer is required to include the payment in the employee's income as a taxable benefit is effectively an amount paid by the employee. Consequently, the employee would be permitted the related deduction if he or she otherwise qualifies under paragraph 8(1)(i) of the Act.

We would add that the determination of whether the payment of professional and other membership fees by an employer in respect of an employee is a taxable benefit to the employee depends upon who is the primary beneficiary of the payment.

We trust our comments will be of assistance to you.

Yours truly,

J.A. Szeszycki
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch