On this page

• Determine if the benefit is taxable
• Calculate the value of the benefit
• Withhold payroll deductions and remit GST/HST
• Report the benefit on a slip
• References

Determine if the benefit is taxable

Generally, professional membership dues you pay or reimburse to your employees are taxable. Depending on your situation, the benefit may not be taxable under the CRA's administrative policy .

What are professional membership dues

Certain professions (for example engineers, accountants, lawyers, and doctors) require practitioners to maintain a professional status recognized by statute. To maintain their professional status, membership dues must be paid to the governing body.

An employee can deduct annual professional membership dues to the extent that the dues apply to the source of income, as long as all the following conditions are met:

• Annual dues are necessary to maintain professional status
• Amount paid as dues are not considered entrance fees
• Amount claimed is paid in the taxation year and the employee is not reimbursed or entitled to be reimbursed
• Professional status is recognized by a Canadian, provincial, or foreign statute

Non-taxable situation

Under the CRA's administrative policy, if you pay or reimburse an employee's professional membership dues, the benefit is not taxable if any of the following conditions apply:

• Membership in an organization or association is a condition of employment
• If membership is not a condition of employment, you (as the employer) must clearly determine that you are the primary beneficiary. This determination is a question of fact and you must be prepared to justify your position if asked

You should tell your employee that they cannot deduct from their employment income any non-taxable dues that you have paid or reimbursed to them.

Taxable situation

If the payment for professional membership dues does not meet one of the conditions above, the benefit is taxable.

Continue to: Calculate the value of the benefit.

Calculate the value of the benefit

If the benefit is taxable, the value of the benefit is equal to:

• Professional membership dues paid by the employer that are taxable
• -minus Any amounts your employee reimbursed you
• =equals Value of the benefit to be included on the T4 slip

Example 1 – Calculations

Caroline is a registered massage therapist working as a salesperson at a department store in Ontario. Caroline's annual dues are $1,000. Her employer receives the invoice and pays the full amount of dues directly to the governing body. Caroline does not reimburse her employer.

The amount paid by Caroline’s employer is a taxable benefit because the dues are not a condition of Caroline’s employment with her employer. Her taxable benefit is calculated as follows:

• $1,000 is the professional membership dues paid by the employer
• minus $0 because Caroline does not reimburse her employer
• equals $1,000 is the value of the benefit to be included on Caroline's T4 slip

The amounts must be included in the pay period they were received or enjoyed.

Example 2 – Calculations

In the same scenario as example 1, Caroline reimburses her employer 50% of the dues paid by the employer. Her taxable benefit is calculated as follows:

• $1,000 is the professional membership dues paid by the employer
• minus $500 ($1,000 - 50%) is the amount Caroline reimbursed to her employer
• equals $500 is the value of the benefit to be included on Caroline's T4 slip

The amounts must be included in the pay period they were received or enjoyed.

Example 3 – No calculation

Steve holds and maintains a Chartered Professional Accountants (CPA) designation in Ontario. Steve is promoted to a new role where his accounting designation is a condition of employment. Steve's annual dues are $1,000. His employer reimburses him the full amount of the annual professional membership dues after Steve starts in his new position.

The amount paid by Steve’s employer is not a taxable benefit because his membership in the organization is a condition of employment.

You do not need to do any calculations.

References

Legislation