Union Financial Disclosure Law Passes Senate02-Jul-15
By Tom Ross
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:
- Employee compensation in excess of $100,000;
- Contractor compensation;
- Labour relations activities;
- Collective bargaining activities;
- Legal activities (excluding privileged information);
- Organizing activities;
- Education and training activities;
- Lobbying activities;
- Political activities;
- Conferences and conventions;
- Contributions, gifts, and grants;
- Investments purchased or sold;
- Accounts payable and accounts receivable;
- Loans payable;
- General overhead; and
- 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.