23 June 1992 Income Tax Severed Letter 9211365 - Food, Beverages and Entertainment Expenses

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.

SUBJECT: FOOD, BEVERAGES AND ENTERTAINMENT EXPENSES SECTION: 67(1)]

921136
Glen Thornley
(613) 957-2101

June 23, 1992

Dear Sirs:

Re: Food, Beverages and Entertainment Expenses

This is in reply to your letter of April 6, 1992 requesting our views on the application of section 67.1 of the Income Tax Act (the "Act") to the payments made to obtain concert ticket and food or entertainment vouchers by a radio broadcasting business in connection with a business promotion.

In your view payments made for restaurant, entertainment and concert vouchers awarded as prizes as part of a promotion to increase the listening audience of the radio station should not be subject to the 80% limitation imposed by section 67.1 of the Act because there is no element of personal consumption applicable to any employee of the business or to any customer of the business who would be in a position to purchase advertising air time.

In our view, whether intended or not, such payments appear to fall clearly within the provisions of section 67.1 under which a restriction has been placed on the amount of food, beverages and entertainment expenses that a business may claim. We do not agree that paragraph 67.1(2)(a) of the Act would apply in the way you suggest to exempt a radio broadcasting business from subsection 67.1(1) with respect, for example, to restaurant meals, although paragraph 67.1(2)(a) would apply with respect to amounts paid for entertainment, such as radio programs, acquired in the ordinary course of a business of providing such entertainment for compensation.

In closing we note that it is the responsibility of the Department of Finance to enact legislation. You may wish to address your concerns about this matter to that Department.

We trust our comments will be of assistance to you.

Yours truly,

E. Wheeler
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch