Canada can be a fantastic country to work in. A big part of this is because there are so many unionized jobs here, which is great if you want a say in how your employer treats you. But, arguably the main downside of being part of a union is that you’ll have to pay union dues.
The question is, are union dues tax deductible in Canada? Keep reading to learn more about being part of a union in Canada and how your union contributions can affect your income.
Key Points
- Many types of union and professional membership dues are tax deductible in Canada.
- The amount of dues you can deduct is indicated in Box 44 on your T4 slip.
- Not all types of union dues can be deducted, including initiation fees and membership dues if you’re a member of a pension plan.
What Are Union Dues?
To be part of a union at work, you must make regular payments to help finance its most essential operations. For example, organizing member-driven programs and negotiations or enforcement.
Workers only need to pay dues once the first union contract is implemented. The union staff, management, and bargaining committee have no say. The contract only takes effect after its members have voted on it (a.k.a. ratification).
If a contract already exists, anyone filling a union position will be instantly covered by its benefits and protections.
Are Union Dues Tax Deductible In Canada?
Yes, there are types of union and professional membership dues that are tax deductible. If the CRA contacts you to inquire about the union contributions that you claimed on your taxes last year, you must present your T4 slip, which shows the amount of dues your employer deducted from your salary.
How Much Are Union Dues?
Elected union officials will generally charge union dues as a percentage of a member’s gross income. So, if dues are 1%, workers must pay $1 per $100 they earn.
For example, the Ontario Public Service Employees Union (OPSEU) has some of the lowest dues for unions in North America. Currently, they charge 1.375% of an employee’s gross salary and no initiation fees, meaning you’ll pay $13.75 per $1,000 you earn.
Dues are taxable and you don’t need to pay them until you’ve bargained your first collective agreement.
What Happens To The Union Dues Employers Deduct?
Public Works and Government Services Canada collect union dues from an employee’s paycheque through the Regional Pay System. Those dues are then remitted to the appropriate bargaining agents monthly.
Can You Claim Union Dues On Your Taxes?
As mentioned, you can claim union and professional membership dues on your income taxes to get a deduction. This includes any dues you must pay as an employee or that your employer takes out of your yearly income and pays on your behalf. The CRA allows you to claim these types of paid union/professional dues on your tax return:
- Dues to uphold professional status, under applicable laws
- Dues to professional boards, as required by provincial/territorial law
- Dues to party of advisory committees, as required by provincial/territorial law
- Insurance premiums for professional or malpractice liability coverage
- Yearly dues, as a member of a trade union or association of public services
What Do You Need To Claim Union Dues?
By the end of February, your employer has to give each employee a T4 slip to declare their work income for the previous tax year. The amount of dues you can deduct is in Box 44.
How To Claim Your Union Contributions?
You can claim a deduction on Line 21200 and, if your employer is registered for GST/HST, it may be possible to claim a refund for a portion of your dues.
When claiming your union contributions on your income taxes, make sure the amounts are accurate and that you don’t claim more than one deduction for them. Claiming your dues twice can lead to a notice of reassessment, as well as a penalty tax and interest owing.
Your employer may add a deduction for your dues to your T4 slip. You may also get a tax receipt from the professional organization or association collecting your dues.
What Union Dues Can’t You Claim?
In Canada, you can’t claim a tax deduction for:
- Initiation fees
- Licenses
- Special assessments
- Charges not related to a company’s operating costs
- Membership dues, if you’re a member of a pension plan
If your employer pays or reimburses you for professional membership dues at work, you can’t claim a tax deduction on your employment income. However, you get a taxable benefit if you’re the primary beneficiary and your employer covers those dues. The benefit is on your T4 slip, in box 14 (employment income) or under code 40 (other information).
What Are Professional Membership Dues?
Professional membership dues are paid by employees in certain professions, such as lawyers, doctors, engineers, and accountants. To maintain professional status that is recognized by statute, they are required to pay professional membership dues to the governing body.
Can You Claim Professional Membership Dues?
Yes, certain professional membership dues can be claimed on your income tax return, as long as your professional membership dues are:
- Applied to the source of income
- Not considered entrance fees
- Required to maintain professional status and the professional status is recognized by a Canadian, provincial, or foreign statute.
- Not reimbursable
Bottom Line
Speak with your potential employer before you accept a unionized job. While certain union and professional membership dues are tax-deductible, they’re usually compulsory and may reduce your employment income, so it’s important to be aware of them.
