28 April 1998 Internal T.I. 9806347 - DEDUCTIBILITY OF ANNUAL 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:

Deductibility of annual fees to paid to XXXXXXXXXX

Position:

Non deductible for an employee.

A self-employed individual may in certain circumstances deduct the annual membership fees.

Reasons:

Employees - XXXXXXXXXX fees do not meet the requirements of paragraph 8(1)(i).

Self-Employed: If the individual can demonstrate that the XXXXXXXXXX fees relate to his or her income from business, the fees will be deductible pursuant to paragraph 18(1)(a).

		April 28, 1998
	Winnipeg Taxation Centre	HEADQUARTERS
	T1 Client Services	Karen Power, C.A.
	Enquiries and Adjustments	(613) 957-8953

	Attention: Hilda Olesiuk
		980634

Deductibility of Annual Dues to XXXXXXXXXX

This is in reply to your round trip memorandum concerning the deductibility of annual dues paid to XXXXXXXXXX. As you have not specified whether the individuals requesting a deduction are employees or self-employed, we have provided comments with respect to both scenarios.

Our Comments

Employee

Under paragraph 8(1)(i) of the Income Tax Act (“the Act”), an employee may deduct certain dues in computing income or loss from an office or employment. Paragraph 8(1)(i) reads as follows:

“i) annual professional membership dues the payment of which was necessary to maintain a professional status recognized by statute,

...

(iv) annual dues to maintain membership in a trade union as defined:

(A) by section 3 of the Canada Labour Code, or

(B) in any provincial statute providing for the investigation, conciliation or settlement of industrial disputes,

or to maintain membership in an association of public servants the primary object of which is to promote the improvement of the members’ conditions of employment or work,

(v) annual dues that were, pursuant to the provisions of a collective agreement, retained by the taxpayer’s employer from the taxpayer’s remuneration and paid to a trade union or association designated in subparagraph (iv) of which the taxpayer was not a member, and

(vi) dues to a parity or advisory committee or similar body, the payment of which was required under the laws of a province in respect of the employment for the year,

In our view, annual membership fees paid to XXXXXXXXXX by an employee are not deductible pursuant to paragraph 8(1)(i) of the Act as they are not incurred to maintain a professional status nor do they meet the requirements of subparagraphs (iv) through (vi). Furthermore, there are no other provision within the Act which would permit the deduction of XXXXXXXXXX fees to an employee.

Self-Employed

Paragraph 2 of Interpretation Bulletin IT-211R states that:

“Subject to the limitations of subparagraph 18(1)(l)(ii), membership fees in professional associations, trade or commercial associations, learned societies, service clubs and cultural organizations will be allowable deductions from income if they can reasonably be shown to relate to the earning of income from the business or property.”

In our view, if a self-employed individual can demonstrate that membership in XXXXXXXXXX relates to the earning of income from his or her business, the yearly annual fees would be deductible by them under paragraph 18(1)(a) of the Act.

Roberta Albert, C.A.

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

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