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.
Dear Sirs:
Re: Meals and Entertainment and Section 67.1 of the Income Tax Act
We are writing in reply to your letter of May 7, 1991, wherein you requested that we confirm your opinion that the 80 percent entertainment expense limitation under subsection 67.1(1) of the Income Tax Act (the Act) would not apply because the business (described in the following hypothetical situation) would fulfil the requirements of paragraph 67.1(2)(a) of the Act.
1.
2.
3. 24(1)4.
5.
6. 24(1)
Our Comments
From the information provided it would appear that "the ordinary course of the business carried on by" the organizer consists of both dance instruction coupled with an operation that could best be characterized as either that of a tour operator or quasi-travel agent and that would not meet the exclusion provided for under paragraph 67.l(2)(a) of the Act. The provision of meals and entertainment by the organizer would, in our view, be secondary to the other services provided by the organizer in the above situation. As a result, it is our opinion that subsection 67.1(1) would apply to restrict the amount deductible for meals, entertainment, etc., by this business operation.
The above opinions are consistent with the comments set out in paragraph 2(a) of IT-518 and on page 89 of the "Explanatory Notes to Draft Legislation and Regulations Relating to Income Tax Reform" issued by The Minister of Finance in April 1988.
We trust our comments will be of assistance to you.
Yours truly,
for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1991
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1991
Email this Content