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June 11, 2001
FI Group - Professional Allowance - Taxability
The Memorandum of Settlement between the Association of Public Service
Financial Administrators (APSFA) and Treasury Board Secterariat (TBS), signed on
January 12, 2001, provided for a lump sum payment of $800 in recognition of fees
paid during the first year of the agreement to one of the professional
accounting organisations, without proof of payment. Article 54 of the FI
collective agreement provides for on-going reimbursement of such fees to a
maximum of $800 when eligibility for a professional accounting designation from
one of these associations is a qualification specified in the Standards for
Selection and Assessment for the Financial Management Group. If the payment of
such fees is a requirement for the continuation of duties, there is no maximum. Effective
January 1, 2001, proof of payment is required.
Departments, members of the FI Group, and APSFA have recently raised concerns
regarding the taxability of the lump sum payment, as well as the ongoing
reimbursement of professional membership fees. This bulletin clarifies the
employer's (TBS) position, on the taxability of the Professional Allowance.
Section 2.20 of CCRA publication T4130, Employer's Guide, Taxable Benefits
2000-2001 specifies the following:
- When membership in the organisation or association is a condition of
employment, the employer is considered the primary beneficiary and
consequently, there is no taxable benefit to the employee.
- When membership is not a condition of employment, the question of primary
beneficiary is to be determined by the employer.
- In all situations, when an employee's professional membership dues are
reimbursed and the primary beneficiary is the employee, there is a taxable
benefit to the employee.
It has been determined that the employer is the primary beneficiary of the
employee's membership in a professional association pursuant to Article 54 of
the Financial Administration collective agreement. The on-going reimbursement
of professional membership fees to members of the FI Group is therefore not
taxable. It should be noted, however, that the retroactive $800 lump sum
payment remains a taxable benefit.
Arrangements are being made with Public Works and Government Services Canada
(PWGSC) to ensure that the PWGSC Pay System entitlement codes being used to
process the on-going allowance reflects this decision. Further details will be
issued to client departments by PWGSC in the near future.
Departmental Compensation Managers should direct any
questions that they may have to their corporate compensation officials who, if
need be, can contact the Pay Administration Section.
Thomas A. Smith
Director, Pay Administration
Labour Relations Division
Human Resources Branch
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