A union ceased operations and distributed all its net funds to its members in amounts based on their respective seniority. In indicating that a portion of the sums distributed appeared to be taxable under s. 6(1)(j), with the balance being proceeds of disposition of memberships (having a nominal adjusted cost base), the Directorate stated:
[T]here are good arguments to state that the amount received … by each of the members, up to the amount of their union dues paid in XXXXXXXXXX, constitutes a refund of their annual dues that reduces or cancels the deduction provided for in subparagraph 8(1)(i)(iv) in computing their employment income. For those members who received an amount in excess of their annual contribution of XXXXXXXXXX, we are of the view that it would be more difficult to argue that this excess is a refund of annual contributions from previous years. In our view, the better position would be to treat the excess portion as a capital payment (a distribution of the residual assets of the union) received as proceeds of disposition of their rights.