Tax Tip: How to Claim Union Dues

Do you pay union dues?  Then you will qualify for a tax deduction and possibly a GST/HST rebate.  Here’s what you need to know:

Excerpt from Knowledge Bureau’s Advanced T1 Tax Update Course

Section 8(1) of the Income Tax Act allows the taxpayer to deduct amounts paid or those paid on his or her behalf that have been included in income.  Note: Union dues withheld by the employer are exempt from income tax withholding.   The payments made can include:

• Professional membership dues required to maintain professional status
• Trade union dues paid to maintain membership in a trade union or an association of public servants
• Annual union dues withheld by the employer and remitted to the union under a collective agreement, even if the employee is not a member of the union 
• Dues to an advisory committee or to a professional board where payment is required under the laws of a province

The deduction will be allowed so long as the taxpayer was not reimbursed or entitled to be reimbursed for the payment. However, amounts paid to the above organizations are not deductible if the payments are for:

• A superannuation fund or plan
• A fund or plan for annuities or insurance (except malpractice insurance required by law) or similar benefits
• Any other purpose not related directly to the ordinary operating expenses of the committee or similar body, board or trade union

Official receipts are required for amounts not shown on the employee's T4 Slip. Claim the deduction on line 21200 of the T1 return.

There is a bonus here - many professional dues are subject to GST, and the employee may claim the GST/HST included in the dues paid as a rebate on the tax return. Complete Form GST370 Employee and Partner GST/HST Rebate Application and then – spoiler alert -  include the rebate received on line 10400 for the tax year in which it was received. 

Note:  If GST/HST was paid on union dues, the amount will be shown separately on the receipt, along with the payee's GST registration number.  If there is no number, there is no claim.

Bottom Line:  There is no such thing as a “simple” tax return.  Knowing more about your tax filing rights – and working with a tax specialist – can help you make more and save more because you have really dug deep for all the deductions you are entitled to.  Remember the more deductions you have, the lower your net income and the higher your probability of increasing claims for refundable and non-refundable tax credits. 

Evelyn Jacks is Founder and President of Knowledge Bureau, holds the RWM™, MFA ™, MFA-P™ and DFA-Tax Services Specialist designations and is the best-selling author of 55 books on tax filing, planning and family wealth management.  Follow her on twitter @evelynjacks.

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