On June 30, 2015, the Canadian Senate passed Bill C-377, which
amends the Income Tax Act to require labour organizations
and labour trusts to file financial statements and disclose assets,
liabilities, income, and expenditures. This legislation began as a
private member's bill in the House of Commons in 2011, and an
amended version was previously approved by the House. It will apply
to fiscal periods beginning January 1, 2016.
Given that unions receive special tax treatment under the
Income Tax Act, the stated purpose behind the legislation
is to create transparency regarding union finances for the sake of
union members and the public. The legislation has had strong
support from employers and strong opposition from unions.
The new legislation will require annual filings that would
involve detailed disclosure of transactions and disbursements over
$5,000 relating to items such as the following:
Payments made inside and outside Canada for international
labour organizations and trusts.
The information to be disclosed includes a description of the
transaction, the amount paid, the name of the payer and payee, and
the purpose. The percentage of time dedicated to political
activities, lobbying activities, and other non-labour relations
activities is also to be reported for officers, directors,
trustees, and employees of labour organizations and trusts. The
financial information disclosed to the government will be made
public, including through a searchable internet site.
Unions will be expected to comply with the new requirements or
face fines of $1,000 per day, to a maximum of $25,000.
Many unions have opposed this legislation and raised concerns
over privacy issues and whether the legislation is constitutional.
The Alberta government also recently expressed its opposition to
the legislation (other provinces have as well). There have been
threats to challenge the legislation through legal action. We will
continue to monitor these developments.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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