Changes to Income Tax Act Require Labour Organizations to Provide Comprehensive Financial Disclosure
On December 12, 2012, Bill C-377 – known as An Act to amend the Income Tax Act (requirements for labour organizations) – passed the third reading in the House of Commons and is now on the cusp of becoming law. Once passed, this Bill will require trade unions and any other organized labour group to file comprehensive financial statements within six months of the end of each fiscal period.
These statements, which will be available to the public, will include:
- Financial statements, including a balance sheet showing the assets and liabilities of the labour organization, as well as a statement of income and expenditures;
- Statements for the fiscal period setting out the aggregate amount of all transactions and disbursements valued over $5,000, along with the identity of the payer and payee, including:
- accounts receivable;
- all loans exceeding $250 receivable from officers, employees, members or businesses;
- the purchase and sale of investments and fixed assets;
- accounts and loans payable;
- the identity of officers, directors, trustees, and employees of the organization with compensation over $100,000, and the disbursements made to each of them in the form of salaries, stipends, vehicles, benefits, pensions, bonuses, gifts, and any other type of compensation;
- the aggregate amount of disbursements in the form of salaries, stipends, vehicles, benefits, pensions, bonuses, gifts, and any other type of compensation paid to all other employees and contractors of the organization;
- a reasonable estimate of percentage of time dedicated to political activities, lobbying efforts and other non-labour relations activities;
- disbursements spent on labour relations activities, political activities, lobbying efforts, conferences, conventions, education, training, constructions, gifts and grants; and
- the aggregate amount of disbursements spent on administration, general overhead, organizing efforts, collective bargaining and legal activities, excluding information protected by solicitor-client privilege;
- Statements for the fiscal period listing all transactions with non-arm’s length parties; and
- For labour organizations with headquarters situated outside of Canada, statements of amounts paid to the organization on behalf of resident Canadian taxpayers, and any expenditures made that directly relate to its Canadian operations.
These amendments are scheduled to come into force for the fiscal periods that begin within six months after the day on which the Bill receives royal assent. Any labour organization that contravenes the amendments imposed by the Bill will be liable on conviction to a fine of $1,000 per day of non-compliance, to a maximum of $25,000.
If you have any questions about the implications of these changes to the Income Tax Act, or any other questions relating to workplace law, please do not hesitate to contact a Mathews Dinsdale lawyer.
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