Handling Union Fees

by Craig Anthony

1 min read

Whether you are employed or self-employed, the Canada Revenue Agency allows you to deduct certain union dues on your tax return. If you employ individuals who pay union dues, there are also tax rules you should understand. If your employees pay their own union dues and you withhold the dues from their pay, detail that information on their paycheque stubs, and at the end of the year, note the amount of dues paid in box 44 of their T4 slips. At tax time, consider reminding employees they can only deduct union dues; they shouldn’t deduct pension plan charges, initiation fees, and licences. If you pay union dues for your employees, the CRA may require you to report the dues as a taxable employee benefit. Essentially, the CRA says that if the dues benefit you, the employer, they are not a taxable benefit to the employee, but if the dues don’t directly benefit you, they are considered a taxable benefit to the employee. The most common example of union dues benefiting the employer is when union membership is legally required as a condition of employment. If the dues benefit you, the employer, don’t report the payments as a benefit on your employees’ pay stubs or T4 slip. In contrast, if your employees benefit from the union, rather than you, the amount of the dues is a taxable benefit. In this case, you should withhold income tax as if the benefit were part of their pay. You should also pay Canada Pension Plan contributions and remit the matching employer amount. In most cases, union dues are not a cash benefit, which means you don’t have to worry about paying employment insurance premiums on that amount. In addition to union dues, the CRA also offers special deductions for liability insurance, membership fees in professional organizations, and professional board dues. As an individual, you should know what’s deductible in your industry, and as an employer, you need to know how to report these fees if you pay or facilitate payment on behalf of your employees.

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