Before addressing the treatment of $5,000 paid by a union to an active member on the member’s death, CRA discussed the treatment of amounts paid during a member’s lifetime, noting that refunds would entail denial of s. 8(1)(i) deductions of the dues, and that “the portion of the refund that exceeds the taxpayer’s annual dues must be added to the taxpayer’s income by virtue of paragraph 6(1)(j).” CRA then stated:
[I]f the deceased taxpayer had, at the time of death, rights or things under the applicable contracts, the provisions of subsection 70(2) could apply. Thus, by virtue of this subsection, the value of the rights or things that the deceased had at the time of death must be included in the individual’s income upon the realization or disposition of such rights or property unless the individual’s legal representative elects to file a separate income tax return or subsection 70(3) applies.
Thus, to the extent that subsection 70(2) applies to deceased members who receive the $5,000, it is our view that the tax consequences would be as explained above with respect to union dues.