5 October 1995 External T.I. 9504785 - MEANING OF "FACILITY"

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Whether the expense for meals and beverages incurred at a golf club would be disallowed under subparagraph 18(1)(l)(i) of the Act.

Position TAKEN:

Expenses incurred for food or beverages consumed in the club dining room or lounge would not be disallowed under the provisions of subparagraph 18(1)(l)(i) provided that each expense is clearly itemized. However, such expenses would be subject the provisions of paragraph 18(1)(a), and sections 67 and 67.1.

Reasons FOR POSITION TAKEN:

Meaning of the term "facility" and the modern rule of statutory interpretation and previous position.

		950478
XXXXXXXXXX	B. Kerr

Attention: XXXXXXXXXX

October 5, 1995

Dear Sirs:

Re: Meals and Beverages

This is in response to your letter of February 15, 1995, wherein you requested our views on the application of paragraph 18(1)(l) of the Income Tax Act (the "Act") in respect of the cost of meals and beverages consumed in the dining room or lounge of a golf club that the taxpayer is a member of. We apologize for the delay in responding.

Our Comments

As stated in our previous letter to you dated November 7, 1994, the Department is maintaining the position expressed in response to question 60 at the 1993 annual conference of the Canadian Tax Foundation concerning the application of subparagraph 18(1)(l)(i) of the Act.

Clearly, membership fees in a golf club would be denied under the provisions of paragraph 18(1)(l) of the Act. However, the Department has reviewed the interpretation expressed in our November 7, 1994, letter and it is now our view that the word "facility" as used in subparagraph 18(1)(l)(i) does not include a dining room situated at a golf club. Therefore, expenses incurred for food and beverages at a golf club or for the use of the dining room, lounge, banquet hall or conference room of a golf club, provided that each expense is clearly itemized and not part of an all inclusive charge, would not be subject to the provisions of subparagraph 18(1)(l)(i) of the Act. Such expenses would instead be subject to the provisions of paragraph 18(1)(a), and sections 67 and 67.1 of the Act.

As stated in Information Circular 70-6R2 dated September 28, 1990, the opinions expressed in this letter are not rulings and are consequently not binding on the Department.

We trust that these comments will be of assistance.

Yours truly,

R. Albert
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch