1 May 1998 Internal T.I. 9807867 F - MEANING OF "LABOUR ORGANIZATION"

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 organization which promotes sound labour relations, negotiates collective agreements and pursues other similar activities on behalf of its employer-members qualifies as a labour organization.

Position: No.

Reasons: The expression "labour organization" refers to organizations that carry on labour related activities for the benefit of workers.

		May 1, 1998

	MONTREAL TAX SERVICES OFFICE		HEADQUARTERS
	Business Audit				A. St-Amour
(613) 957-8953
	Attention:  John Monti
							7-980786

XXXXXXXXXX
Tax exempt corporation - paragraphs 149(1)(k) and
149(1)(l) of the Income Tax Act (the "Act")

This is in response to your memorandum dated March 13, 1998, requesting our opinion as to whether XXXXXXXXXX is a labour organization and is tax exempt by virtue of paragraph 149(1)(k) of the Act and/or 149(1)(l). As explained in a telephone conversation by Mrs. St-Amour, the matter relating to the application of 149(1)(l) as been referred to the Audit Directorate (see attached memorandum). Therefore, this memorandum will only provide an opinion on the interpretation of 149(1)(k) of the Act.

Per the Annual Report submitted with your memorandum of March 13, 1998, it appears that XXXXXXXXXX is controlled by its members which are all XXXXXXXXXX. The By-laws or any other corporate documents should also be examined to confirm this fact.

The expression "labour organization" is not defined in the Act and must, therefore be interpretated in the context of its ordinary meaning and the jurisprudence. In this regard, in L.I.U.N.A. Local 527 Members' Training Trust Fund v The Queen, 92 DTC 2365 (TCC), the Court concluded on the non application of paragraph 149(1)(k) in that particular situation because the Fund was controlled equally by representatives of labour and management and substantially funded by contributions from the members of an employer's organization. In defining the expression "labour organization", the Court referred to Stone v Textile Examiners & Shrinkers Employers' Ass'n as follows:

"The ordinary definition of trade union or labor organization is thus stated: "A combination of workmen of the same trade or of several allied trades, for the purpose of securing by united action the most favorable conditions as regards wages, hours of labour, etc., for its members.." .

The ordinary meaning of this term is defined similarly in dictionaries such as, for example, Black's Law Dictionary.

In our view, in order to qualify as a "labour organization" for the purpose of 149(1)(k), the organization must by organized and operated for the benefit of labour, which is normally understood to refer to the workers or employees. Although XXXXXXXXXX has in its mandate, as disclosed in its Letters Patent, to consider and adopt methods for promoting sound labour relations, to negotiate collective agreement and to pursue other related undertakings and agreements as to rates of pay, hours of work and other terms and conditions of employment, it is all done on behalf of its employer-members. Since such an organization's mandate is to further the interests of employers only, we are of the view that it is not a labour organization.

for Director
Financial Industries Division
Income Tax Rulings and
Interpretation Directorate
Policy and Legislation Branch