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:
1. Trainees may belong to a professional association but are not permitted to practice professionally. Are the dues that they pay to the association deductible under subparagraph 8(1)(i)(i)?
2. A professional member may pay a penalty in addition to the annual dues in respect of the late payment of the dues. Does the penalty form part of the membership dues that are deductible under subparagraph 8(1)(i)(i)?
3. If an individual resigns from a professional association and subsequently decides to become a registered member again, is the initial fee that must be paid to association deductible under subparagraph 8(1)(i)(i)?
Position:
1. The dues are not deductible.
2. The penalty is not deductible.
3. The initiation fee is not deductible.
Reasons:
1. The dues are not paid for the purpose of maintaining a professional status.
2. As the nature of the penalty is that it relates to the late payment of annual membership dues, it is not considered to be deductible under subparagraph 8(1(i)(i).
3. The initiation fees are not paid on an annual basis.
962253
XXXXXXXXXX M. Eisner
Attention: XXXXXXXXXX
September 11, 1996
Dear Sirs:
Re: Employees' Professional Membership dues
This is in reply to your letters of June 24 and August 16, 1996, in which you raised three issues concerning the above-noted subject.
Issue 1
Your first concern relates to individuals (the Trainees) who are enrolled as members of the Association of British Columbia Professional Foresters (the Association) and are designated as "forestry pupils" or "foresters in training" under the Foresters Act of British Columbia (the Foresters Act). Such individuals, who may be required by their employers to belong to the Association, aspire to become registered as professional foresters so that they may practice professional forestry. You have asked us whether the Trainees are entitled to deduct their membership dues.
One of the requirements under subparagraph 8(1)(i)(i) of the Act is that the payment of annual professional membership dues by an individual must be necessary to maintain a professional status recognized by statute. As Trainees are not permitted to practice professional forestry (i.e. they do have not a professional status) under the Foresters Act, it is our view that the annual membership dues paid to the Association are not deductible by them under subparagraph 8(1)(i)(i) of the Act. Accordingly, receipts in that regard should not be issued to the Trainees. These comments are also consistent with paragraph 8 of Interpretation Bulletin IT-158R2, which indicate that when students pay dues prior to becoming members of a professional organization, they are not deductible under subparagraph 8(1)(i)(i) of the Act.
Issue 2
The second concern relates to the deductibility of a late payment penalty by a continuing professional member of the Association when the annual dues are not paid by the individual within a certain time frame.
It is our view that an individual is not entitled to deduct a late payment penalty under subparagraph 8(1)(i)(i) of the Act, as it does not form part of the annual professional membership dues.
Issue 3
The third concern relates to a former member who decides to become reinstated as a member of the Association after having resigned or having taken a leave of absence from the Association. The issue is whether the individual is entitled to deduct the fee that must be paid upon application for reinstatement of his or her previous status.
It is our view that an individual would not be entitled to deduct the reinstatement fee under subparagraph 8(1)(i)(i) of the Act as it does not form part of the annual dues.
For your convenience, we have enclosed a copy of Interpretation Bulletin IT-158R2 "Employees' Professional Membership Dues".
We trust our comments will be of assistance to you.
Yours truly,
John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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