Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Tax policies relating to the deductibility of entertainment expenses business people make when entertaining their clients at golf clubs.
Position: For policy on meals and beverages we referred to ITTN#12. For the fairness of paragraph 18(1)(l) of the Act allowing other forms of entertaining clients at a golf club as deductible expenses relate to tax policy this is the responsibility of the Department of Finance Canada.
Reasons: See above.
June 19, 2012
XXXXXXXXXX
Dear XXXXXXXXXX:
XXXXXXXXXX, Member of Parliament, forwarded me a copy of your correspondence, which I received on April 26, 2012, concerning tax policies relating to the deductibility of entertainment expenses business people make when entertaining their clients at golf clubs.
The Canada Revenue Agency (CRA) is responsible for administering the tax legislation as enacted by Parliament. Subparagraph 18(1)(l)(i) of the Income Tax Act denies deductions for expenses made by a taxpayer for the use or maintenance of a yacht, a camp, a lodge, or a golf course or facility. However, as explained in ITNEWS-12, Income Tax – Technical News No. 12, the CRA considers that the restriction on deducting expenses relating to the maintenance or use of a golf club applies only to the recreational amenities provided by the golf club. Accordingly, this will not include the golf club’s dining room, banquet hall, conference room, beverage room, or lounge. Consequently, the tax treatment of meals and beverages consumed at a golf club is the same as that of meals and beverages consumed at a restaurant.
Your comments regarding the fairness of paragraph 18(1)(l) of the Act allowing other forms of entertaining clients at a golf club as deductible expenses relate to tax policy, which is the responsibility of the Department of Finance Canada. If you still have concerns, you can contact the Tax Policy Branch of Finance Canada by writing to 140 O’Connor Street, Ottawa ON K1A 0G5.
I trust that the information I have provided is helpful.
Yours sincerely,
Gail Shea, P.C., M.P.
c.c.: XXXXXXXXXX
Prepared by:
Michael Cooke
613-957-2133
2012-044268
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