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.
MAR 29 1989
Dear XXXX
I am writing in response to your letter of January 6, 1989, addressed to my predecessor, the Honourable Elmer MacKay, wherein you have expressed your concerns relating to the deductibility of certain union dues and the general non-inclusion of strike pay in income for tax purposes. I apologize for the delay in replying.
The Income Tax Act generally permits a taxpayer to deduct from employment income amounts paid as annual dues to a trade union or an association of public servants provided such annual dues are levied for the ordinary operating expenses of the trade union or association to which they were paid. The revision to Interpretation Bulletin IT-103 , published November 4, 1988, reflects the Department's acceptance of the Federal Court, Trial Division's definition of "annual". The term "annual" is not defined in the Act and the Department will follow the court's definition that an amount need only be "paid in the year" and "of a recurring kind" to be considered "annual".
Where a trade union incurs reasonable costs in prosecuting a legal strike and provides relief payments to members in need, but to which they are not entitled as a contractual right, such costs are related to the ordinary operating expenses of, the trade union. For this reason, the part of the annual dues of a member that is levied for the purpose of providing for the current or anticipated costs of prosecuting legal strikes of the union is, if reasonable in the circumstances, deductible for tax purposes.
The taxability of strike pay, or more generally, the taxability of payments received by union members, is discussed in Interpretation Bulletin IT-334R . Financial assistance paid by a union to its members during the course of a strike is not generally income of the members for the purposes of the Act. However, such amounts, when received by members, will be taxable if they are received as a consequence of the members being employees of the union.
The concerns expressed in your letter are tax policy issues which could only be addressed through amendments to the Act. I have, therefore, forwarded a copy of this correspondence to the Honourable Michael Wilson, Minister of Finance, who is responsible for legislative amendments, for his consideration.
I wish to thank you for bringing these concerns to my attention.
Yours truly,
(957-2134) / YS 9010005 March 16, 1989
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