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.
Principal Issues: A union provides a cash gift upon retirement (anywhere from $300 to $600), to members in good standing. Whether or not the gift is taxable.
Position: No.
Reasons: The Supreme Court of Canada decision in Wally Fries, 90 DTC 6662, held that payments received by a union member in the form of strike pay were not "income from a source". Similarly, it is our view that a retirement gift provided by a union from union funds to a member of the union is not income from a source and is consequently not taxable under the Act.
March 15, 2005
Pat O'Connor HEADQUARTERS
Manager, Policy and Technical Enquiries Kathryn McCarthy, CA
Trust Accounts Division
Attention: B. Larocque
2005-011406
Cash Retirement Gift from a Union
We are writing in response to your letter of February 1, 2005, concerning the above noted subject.
You described a situation where a union provides a cash gift upon retirement (anywhere from $300 to $600), to members in good standing. You enquired as to whether or not the gift is taxable under the Income Tax Act (the Act).
The Supreme Court of Canada decision in Wally Fries, 90 DTC 6662, held that payments received by a union member in the form of strike pay were not "income from a source". Similarly, it is our view that a retirement gift provided by a union from union funds to a member of the union is not income from a source and is consequently not taxable under the Act.
It should be noted that our response is premised on the understanding that the amount of the gifts is relatively insignificant. If the retirement gift were significant, consideration may be given to the application of subsection 8(5) with respect to the employee's deduction of union dues.
We trust our comments will be of assistance to you.
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
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