DM'S OFFICE (2) Y.S. #93-3887T ADM'S OFFICE (3) RETURN TO RULINGS, ROOM 303, MET. BLDG.
XXXXXXXXXX
Dear XXXXXXXXXX
I am replying to your letter of June 11, 1993, addressed to the Honourable Otto Jelinek, former Minister of National Revenue, concerning the tax treatment related to certain contributions being made by members of labour unions involved in the XXXXXXXXXX I regret the delay in responding.
You describe a situation within XXXXXXXXXX
XXXXXXXXXX
The issue being raised is whether these specific employee contributions would be tax deductible to the employee making the contributions. You would like confirmation from the Department that the contributions would not be tax deductible.
The deductibility of contributions to a particular fund under the Income Tax Act depends on the terms and conditions under which the fund is created. Due to the confidentiality provisions of the Income Tax Act, the Department is not able to provide you with confirmation with respect to a particular fund.
However, I can provide you with some general comments regarding the deductibility of dues collected by an organized trade union from its members. The Income Tax Act permits the deduction of amounts paid by an employee as dues to maintain membership in a trade union. It specifically denies that deduction to the employee to the extent that the dues are levied for any purpose not directly related to the ordinary operating expenses of the trade union. Generally, special purpose levies fall outside the parameters of "ordinary operating expenses". In respect of any particular fund, if that is determined to be the case, the special levy would not be deductible and, consequently, receipts should not be issued for that amount.
I can assure you that, where a situation apparently involving non- compliance is brought to the attention of the Department, it is thoroughly investigated and appropriate action taken.
I regret that I am unable to provide you with a more specific reply to the issues raised in your letter, but I trust that my comments will serve to clarify the Department's position in this regard.
Yours sincerely,
Pierre Gravelle, Q.C.
Y.S. #93-3887T