The Income Tax Act was recently amended to enact
unprecedented and potentially onerous public disclosure obligations
on labour organizations and investment funds in which labour
organizations or persons represented by a labour organization have
The amendment enacts a private member's bill to amend the
Income Tax Act. It imposes unusual public disclosure
requirements on labour organizations, including trade unions, and
also on "labour trusts". A labour trust is defined
broadly to include "a trust or fund ... established or
maintained in whole or in part for the benefit of a labour
organization, its members or the persons it represents". It is
unclear whether the definition covers a trust or fund of which only
a subset or a small number of such members or persons are
beneficiaries. There are specific exemptions for registered pension
plans, deferred profit sharing plans, employee life and health
trusts, private health services plans, group sickness or accident
insurance plans, group term life insurance policies, and
supplementary unemployment benefit plans. However, many types of
funded arrangements established by employers for the benefit of
employees could potentially be caught if the employees are members
of, or represented by, a labour organization. Examples of plans not
specifically exempted include retirement compensation arrangements,
group RRSPs and foreign pension plans.
The reporting requirements are extremely onerous and invasive.
They include not only financial statements, but also, among other
things, a list showing every disbursement above C$5,000 and the
name of the payee and purpose of the disbursement.
Remuneration paid by the trust to officers, directors and
trustees earning over C$100,000 must also be reported.
Unlike tax information, which the Canada Revenue Agency (CRA) is
normally prohibited from publicizing, the amendment obligates CRA
to publish these filings on the Internet in searchable format.
For "labour trusts", the first reports must be made
for the 2016 fiscal year and are due June 30, 2017.
The amendment arose from a private member's bill and
therefore was not subject to the same process as a tax bill
originating with the Department of Finance. No explanatory notes
have been published explaining the amendment's purpose or
elaborating on its scope.
The amendment and the manner in which it was enacted have drawn
considerable commentary, including criticism from affected labour
organizations and federations. It is understood that a
constitutional challenge is likely. As well, both major opposition
parties have pledged to repeal the amendment if they are elected in
the upcoming October 2015 election. Furthermore, even if there is
no change in government, it is possible that the Department of
Finance — which did not initiate the amendment — may
consider recommending technical amendments to narrow the scope of
the rules. Nonetheless, as of this writing, these reporting
requirements form part of Canadian law.
Employers who have established funded arrangements for employees
who are members of, or represented by, a labour organization should
consider the potential ramifications of these rules.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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