26 March 1999 External T.I. 9906535 - T4 REPORTING OF MEMBERSHIP DUES

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: Reporting association dues on T4

Position: No provision for reporting

Reasons: Instructions in Employers' Guide to Payroll Deductions_ Basic Information

XXXXXXXXXX 990653
D. Duff
March 26, 1999

Dear XXXXXXXXXX:

Re: T4 Reporting of Membership Dues

This is in reply to your letter of February 15, 1999 and further to your telephone conversation (XXXXXXXXXX/Duff) of March 23, 1999 regarding the reporting of association dues on the T4s of your members.

You have indicated that XXXXXXXXXX is not a union, rather it is an association of non-unionized management personnel who work for the City of XXXXXXXXXX (the “City”). It is your opinion that XXXXXXXXXX meets the definition in the postamble to subparagraph 8(1)(i)(iv) of the Income Tax Act (the “Act”), therefore membership dues are deductible from employment income. This provision refers to “an association of public servants the primary object of which is to promote the improvement of the members’ conditions of employment or work”. The City deducts membership dues from the employees’ pay and remits it to XXXXXXXXXX . It previously reported these amounts on the employees’ T4s as union dues but stopped for the XXXXXXXXXX year because it no longer believes it is allowed to do so. XXXXXXXXXX issued receipts to its members for the XXXXXXXXXX year so they could claim the deduction on their income tax returns.

Our Comments

Subsection 200(1) of the Income Tax Regulations requires every person making a payment described in subsection 153(1) of the Act to make an information return in prescribed form. Paragraph 153(1)(a) refers to the payment of salaries and wages, and the prescribed form for these payments is the T4. Subsection 163(2) of the Act provides that any person making a false statement on a return is liable to a minimum penalty of $100.

The Employer’s Guide to Payroll Deductions-Basic Information provides the instructions for completing a T4. It states that Box 44 is to be used for reporting union dues withheld and remitted by the employer. There is no similar comment for reporting the dues remitted and paid to an association of public servants. Accordingly, we agree that these amounts should not be reported by an employer on a T4 and that the recipient association should issue receipts to the members.

We trust our comments will be of assistance to you.

Yours truly,

Roberta Albert, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch