31 January 1996 External T.I. 9529185 - Annual Dues - General Inquiry

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:

General information concerning investments that qualify for RRSP's and the deductibility of annual dues.

Position TAKEN:

No position required. Provided general comments only.

Reasons FOR POSITION TAKEN:

Not applicable.

L. Barrows
XXXXXXXXXX							952918

January 31, 1996

Dear XXXXXXXXXX:

Re: Not-For-Profit Corporations

Your letter of September, 1995 addressed to the East Ontario Office of Revenue Canada, Ottawa, Ontario was referred to this Directorate for response. Unfortunately, we were not able to contact you by telephone and you did not provide adequate details or explanation concerning the type of investment being contemplated in order for us to provide specific comments to the questions posed in your letter.

Generally, there are no provisions in the Income Tax Act (the "Act") that provide a deduction of the purchase price of shares of a not-for-profit corporation either in the year acquired or over a number of years. Only certain kinds of property constitute qualified investments for a registered retirement savings plan ("RRSP") and contributions are limited to a maximum amount for deduction purposes. For your information, we have enclosed copies of IT-320R2 which discusses qualified investments and IT-124R6 which discusses contributions to RRSP's.

An individual may also contribute funds to a qualifying trust governed by a RRSP which uses the contributed funds to acquire shares of a prescribed labour-sponsored venture capital corporation ("LSVCC"). In addition to any RRSP deduction, tax credits deductible from taxes payable are available. Since investment in LSVCC's involve the application of the Income Tax Act, the Ontario Income Tax Act and the LSVCC Act, the Department has not prepared specific publications on the subject. Accordingly, you may wish to seek the advice of an investment dealer who is knowledgeable in making these types of investments.

The context of your query regarding annual dues was unclear from your letter, however, with respect to annual administration fees relating to an RRSP, as discussed in paragraph 4 of IT-124R6, reasonable administration fees paid by a taxpayer to the trustee of the taxpayer's own RRSP are deductible.

In addition, annual membership dues may be deductible. For example, annual professional membership dues may be deducted in computing 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

-they are annual dues necessary to maintain professional status,

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

-the professional status is recognized by a Canadian, provincial or foreign statute.

Additional information in respect of membership dues may be obtained from IT-158R2 a copy of which is also enclosed.

We trust that the general comments provided above along with the enclosed interpretation bulletins will be of assistance.

Yours truly,

R. Albert
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

Enclosures