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Subscriptions to Trade and Professional Associations
7.84. The present law contains a special provision (section 73) in regard to subscriptions to trade and professional associations, which draws a distinction between a taxpayer carrying on a business and an employed person. The former may deduct the subscription, without limit on the amount, when membership of the association to which the sum is paid is a pre-condition of the taxpayer carrying on the business.
7.85. The employed person, and a taxpayer carrying on a business whose subscription is not a pre-condition, is entitled to a deduction limited to $42 of any periodical subscriptions paid by him in respect of his membership of any trade, business or professional association. There is a further provision under which an amount greater than $42 in respect of one subscription may be allowed, if the subscription is made to an association that incurs expenses in carrying out any activity on behalf of its members where those expenses would be deductible by the member if incurred by him directly.
7.86. Subscriptions that do not fall within the special provision relating to subscriptions may nonetheless be deductible under the general provision in regard to expenses in deriving income. Deduction under the general provision, while not limited in amount, may in other respects be narrower in its operation.
7.87. The special provision has the advantage of determinateness and, subject to the recommendation made below, should be retained. In cases where the subscription is less than $42, the test will be simply whether the payment has been made to a trade, business or professional association. On the other hand, there is some prospect that what is really private expenditure may attract a deduction: the association may offer some of the amenities of a club. Hence there may be need to protect the Revenue by a more restrictive definition of a qualifying association.
7.88. The limit of $42 may, with a fall in the value of money, be thought to have become too restrictive. That limit, it is true, can be exceeded in the circumstances described above; but except in the case of a taxpayer carrying on a business who is compelled to be a member, the calculation of the amount deductible involves a measure of complexity where the claim exceeds $42. An increase in the present ceiling of $42 is therefore recommended.