29 April 1997 External T.I. 9710715 - PROFESSIONAL DUES PAID BY EMPLOYER AND 8(1)(I)

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 an employee can get an 8(1)(i)(i) deduction for professional membership dues when the dues have been paid by the employer but included in the employee's income as a taxable benefit

Position:

yes

Reasons:

the amount is considered to have been effectively paid by the employee

Office of the Superintendent of
Financial Institutions Canada
255 Albert Street 971071
Ottawa, Ontario Sandra Short
K1A 0H2

Attention: Bruce P. Manion, Director, Finance and Corporate Planning

April 29, 1997

Dear Sirs:

Re: Deductibility of Professional Dues

This is in reply to your enquiry of April 23, 1997, in which you ask whether an employee can deduct the cost of annual professional dues when the dues have been paid by the employer.

Our Comments:

As you are aware, subparagraph 8(1)(i)(i) of the Income Tax Act (the "Act") permits a deduction from income from an office or employment of amounts paid by a taxpayer (employee) for annual professional membership dues, the payment of which are necessary to maintain a professional status recognized by statute. Deductions under paragraph 8(1)(i) of the Act are allowed only to the extent that the employee has not been reimbursed, and is not entitled to be reimbursed. However, when the payment of such dues are paid by the employer, in circumstances which require the employer to include the payment in the employee's income as a taxable benefit, the Department considers the amount to have effectively been paid by the employee. Consequently, the employee is permitted the related deduction so long as he or she otherwise qualifies for purposes of subparagraph 8(1)(i) of the Act. We refer you to Interpretation Bulletin IT-158R2, which discusses the circumstances under which an employee may ordinarily deduct annual dues.

We would add that a taxable benefit results when an employer pays an employee's professional or other membership fee and the employee is the primary beneficiary of the payment.

We trust our comments will be of assistance to you.

Yours truly,

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