Series 2: Employers and Employees

Folio 2: Employment Expenses

Chapter 1: Employee Professional Membership and Other Dues

Summary

This Chapter deals with the deductibility of professional membership dues in computing an employee’s income or loss from an office or employment.

Readers seeking a less technical discussion of the deductibility of professional membership dues should go to the Annual union, professional, or like dues web page. For information about the income tax treatment of professional membership dues that are paid or reimbursed by an employer, go to the Professional membership dues web page, or see T4130 Employers' Guide – Taxable Benefits and Allowances. For general information regarding the deductibility of employment expenses, see T4044 Employment Expenses.

The Canada Revenue Agency (CRA) issues income tax folios to provide a summary of technical interpretations and positions regarding certain provisions contained in income tax law. Due to their technical nature, folios are used primarily by tax specialists and other individuals who have an interest in tax matters. While each paragraph in a chapter of a folio may relate to provisions of the law in force at the time it was written (see the Application section), the information provided is not a substitute for the law. The reader should, therefore, consider the Chapter’s information in light of the relevant provisions of the law in force for the particular tax year being considered.

The CRA may have published additional guidance and detailed filing instructions on matters discussed in this Chapter. See the CRA Forms and publications web page for this information and other topics that may be of interest.

Discussion and interpretation

General limitation for deducting employment expenses

1.1 Subsection 8(2) provides that no deductions are allowed in computing income from an office or employment except as specifically permitted under section 8. Generally, these deductions are restricted to certain expenses incurred while performing the duties of the office or employment. Subsection 248(1) establishes that:

• an office includes a position entitling an individual to a fixed or ascertainable stipend or remuneration;
• an officer is a person holding an office;
• employment is the position of an individual in the service of some other person. Civil or common law will generally determine whether an individual is in the service of another person; and
• an employee is an individual holding employment.

Throughout this Chapter, a reference to employment includes an office and a reference to an employee includes an officer.

Professional membership dues

Requirements for deducting professional membership dues

1.2 Subparagraph 8(1)(i)(i) provides a deduction from employment income for certain annual professional membership dues paid in the year. To qualify for deduction, the following requirements must be met:

1. the payment of annual professional membership dues must be necessary to maintain a professional status that is recognized by statute (federal, provincial, territorial or foreign);
2. the dues must be paid by the employee in the year, or paid on behalf of the employee in the year if such payment was required to be included in the employee’s income for the year;
3. the dues must reasonably relate to the employment income source;
4. the employee must not have been reimbursed, or be entitled to a reimbursement, in respect of the dues; and
5. the employee’s expenses for annual professional membership dues must be reasonable in the circumstances.

The balance of this Chapter discusses these requirements in more detail.

Membership dues

1.3 Subparagraph 8(1)(i)(i) refers to membership dues, which is generally understood to mean the fee or charge required for membership or affiliation. Other types of payments, such as those described in ¶1.4 and 1.5, are not deductible as membership dues under subparagraph 8(1)(i)(i), even if they are made in order for an employee to maintain a professional status.

1.4 Subparagraph 8(1)(i)(i) also requires that membership dues be annual dues. In order to be considered annual, dues must be of a recurring nature (that is, not a once and for all fee or charge paid on becoming a member). As a result, a payment for an initiation or entrance fee, special assessment, or other amount that is generally considered to be of a non-recurring nature will not be an annual membership due for purposes of subparagraph 8(1)(i)(i).

1.5 Other payments that will not be considered annual membership dues eligible for deduction under subparagraph 8(1)(i)(i) include:

• examination fees
• tuition or training costs including costs to obtain continuing professional education credits
• licence fees
• dues paid by students before becoming members of a professional organization
• costs to obtain a criminal record check
• mess dues paid by members of the Canadian Forces
• membership fees for voluntary, off-duty firearm practice at firing ranges or clubs

Professional status

1.6 For annual membership dues to be deductible, one of the requirements described in ¶1.2(a), is that the payment be necessary to maintain a professional status. It is the CRA’s view that an employee would likely have a professional status where they possess advanced education or training, and satisfy other conditions and requirements established by a professional organization. In this regard, a professional organization may require its members to complete a recognized certification or licensing process, maintain certain standards of education or professional and ethical training and conduct, or satisfy continuing education requirements in order to achieve and maintain a professional status. Depending on the organization, a member's professional status may or may not be identified by a professional designation.

Recognized by statute

1.7 As described in ¶1.2(a), to be deductible, membership dues must not only be necessary to maintain professional status, but that status must also be recognized by statute. Note that the status in question is that of the employee and not that of the organization or association. In Montgomery et al. v. The Queen, [1999] 2 CTC 196, 99 DTC 5186, the Federal Court of Appeal stated that the purpose of the phrase “recognized by statute” is to establish a standard against which the validity of the professional status is measured. The Court clarified that the phrase “recognized by statute” should be afforded a broad interpretation, and that “recognized by statute” does not necessarily mean that a professional status was incorporated, created, or regulated by a particular statute.

1.8 The term statute is generally defined to mean a law or act that is passed by a legislative body. As such, an employee’s professional status is recognized by statute where it is recognized by any federal, provincial, territorial, or foreign statute, including:

• the statute (or supporting regulations) that created or regulates the professional organization;
• any other statute (or supporting regulations) that acknowledges the existence, validity, or character of the professional status.

1.9 A professional status that is acknowledged only in an organization’s bylaws does not satisfy the recognized by statute requirement described in ¶1.2(a).

1.10 In determining whether an employee’s professional status is recognized by statute, consider the following:

1. A professional status will be recognized by statute if a statute or its regulations require that certain services be performed only by a member of a particular professional organization, even if the organization itself is not regulated by statute.
2. It is the employee’s professional status and not that of the organization that must be recognized by statute. The fact that a particular organization is created by statute would not, in and of itself, mean that all of its members have a professional status recognized by statute. For example, an organization may offer different categories of membership, each of which may or may not be associated with a professional status.
3. An employee’s professional status does not necessarily have to be recognized by statute in the jurisdiction of employment. For example, an employee who resides and works in Alberta may belong to an association in Australia where the professional status of the employee is recognized by statute. In this situation, the employee would be entitled to deduct the annual membership dues paid to the association provided that the other requirements described in ¶1.2 have also been met.

Dues necessary to maintain a professional status

1.11 To qualify for deduction under subparagraph 8(1)(i)(i), the payment of annual professional membership dues must be necessary to maintain a professional status recognized by statute. It is the CRA’s view that the payment of dues will likely be considered necessary to maintain a professional status only where:

• membership in the professional organization is mandatory (that is, is not voluntary) in order to maintain professional status; and
• the non-payment of annual professional membership dues would adversely affect or cause the employee to lose their professional status.

1.12 If membership in a given association does not affect professional status (for example, membership in the Canadian Medical Association for physicians), the annual dues paid to that association will not qualify for deduction under subparagraph 8(1)(i)(i). This will be the case even if a particular membership entitles an employee to a designation of letters after their name. Alternatively, if membership is necessary to maintain professional status, the annual dues paid will qualify for deduction. An example would be a physician’s membership in the provincial college of physicians and surgeons. Subject to these limitations, an employee may be entitled to claim the annual dues paid to more than one professional organization. For example, a physician may belong to the College of Physicians and Surgeons in two provinces.

1.13 In some instances, a provincial organization may require payment of annual dues that are, in part, passed on to a national association. Where membership in that provincial organization is necessary to maintain an employee’s professional status, the entire amount of annual dues paid will be considered necessary to maintain professional status. This will be the case even though direct membership in the national association by the employee will not affect the employee’s professional status.

1.14 An employee may work in a province or territory that does not have legislation that recognizes their professional status. Therefore, it may be necessary for the employee to belong to an organization in another province in order to maintain professional recognition outside their province of residence. In such cases, the annual dues paid to that organization may be deductible (see ¶1.10(c)). There may also be situations where an employee must belong to a national organization in order to maintain their professional status. In such situations, the annual dues paid to the national organization may similarly be deductible under subparagraph 8(1)(i)(i).

1.15 An employee cannot generally deduct the annual dues paid to both a national and provincial organization, unless it is essential for the employee to belong to both organizations in order to maintain their professional status. The test is always whether membership in a particular professional organization is an essential prerequisite for carrying on that profession in the territory controlled by the organization, regardless of whether the member is actually carrying on the profession in that territory.

Dues must reasonably relate to employment income

1.16 In determining whether professional membership dues reasonably relate to the employment income source (as described in ¶1.2(c)), it is not necessary that the payment of annual dues be essential for the employee to hold their position or job. However, there must be a reasonable connection between the professional membership and the position or job held by the employee.

Other deductible dues

1.17 Where the requirements outlined in ¶1.2(b) through (e) have otherwise been met, certain other annual dues paid by, or on behalf of, an employee in the year may qualify for deduction under subparagraphs 8(1)(i)(iv), (v), (vi), or (vii) as described in ¶1.18 to 1.21.

Annual dues paid to maintain membership in a trade union

1.18 Annual membership dues that cannot be deducted under subparagraph 8(1)(i)(i) may be deductible under subparagraph 8(1)(i)(iv). Subparagraph 8(1)(i)(iv) provides a deduction for annual dues, the payment of which is necessary to maintain membership in:

• a trade union (see Interpretation Bulletin IT-103R, Dues Paid to a Union or to a Parity or Advisory Committee); or
• an association of public servants, the primary object of which is to promote the improvement of the members’ conditions of employment or work.

1.19 Under the terms of a collective agreement, an employer may be required to retain annual dues from an employee’s remuneration and remit these dues to a trade union or association designated in subparagraph 8(1)(i)(iv), of which the employee is not a member. The employee may deduct such dues under subparagraph 8(1)(i)(v).

Dues paid to a parity or advisory committee

1.20 Subparagraph 8(1)(i)(vi) provides a deduction for dues paid by an employee to a parity or advisory committee or similar body, where the payment was required under the laws of a province or territory in respect of their employment for the year. The phrase parity or advisory committee means a body, usually consisting of representatives of employers and employees, set up under provincial or territorial laws to oversee collective agreements.

Dues paid to a professions board

1.21 Subparagraph 8(1)(i)(vii) provides a deduction for dues that an employee is required to pay to a professions board under the laws of a province, such as the Office de professions du Québec.

Non-deductible dues

Dues paid by students

1.22 Dues paid by a student before becoming a member of a professional organization are not deductible under subparagraph 8(1)(i)(i) but may qualify as an eligible tuition fee for purposes of the tuition tax credit. For information regarding eligibility for this tax credit, see Income Tax Folio S1-F2-C2, Tuition Tax Credit.

Dues not deductible by virtue of subsection 8(5)

1.23 Subsection 8(5) denies a deduction of dues under subparagraphs 8(1)(i)(i), (iv), (vi), and (vii) to the extent that the dues are, in effect, levied:

• for or under a superannuation fund or plan (paragraph 8(5)(a));
• for or under a fund or plan for annuities, insurance (other than professional or malpractice liability insurance that is necessary to maintain a professional status recognized by statute) or similar benefits (paragraph 8(5)(b)); or
• for any other purpose not directly related to the ordinary operating expenses of the committee or similar body, association, board or trade union, as the case may be (paragraph 8(5)(c)).

1.24 Dues levied for special purpose funds that are not directly related to the ordinary operating expenses of a union would not be deductible pursuant to paragraph 8(5)(c). A union's ordinary operating expense can generally be defined as an expenditure which falls into place as part of the undistinguished common flow of the trade union's normal business activity and arising out of no special or particular situation.

Employee goods and services tax/harmonized sales tax (GST/HST) rebate

1.25 An employee may be entitled to claim a rebate of the GST/HST paid on professional or similar dues that were deducted in computing the employee’s employment income for the year. For information regarding eligibility and how to apply for a GST/HST rebate, see Chapter 11 of Guide T4044, Employment Expenses.

Application

This Chapter, which may be referenced as S2-F2-C1, is effective July 15, 2025 and replaces and cancels Interpretation Bulletin IT-158R2, Employees’ professional membership dues.

Any technical updates from the cancelled interpretation bulletin can be viewed in the Chapter History page.

Except as otherwise noted, all statutory references herein are references to the provisions of the Income Tax Act R.S.C., 1985, c.1 (5th Supp.), as amended and all references to a Regulation are to the Income Tax Regulations, C.R.C., c. 945, as amended.

Links to jurisprudence are provided through CanLII.

Income tax folios are available in electronic format only.

Reference

Subparagraph 8(1)(i)(i) (also subparagraphs 8(1)(i)(iv), 8(1)(i)(v), 8(1)(i)(vi) and 8(1)(i)(vii)); subsections 8(2), 8(5), and the definitions of office, officer, employee, and employment in subsection 248(1)