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 place where an event is held, such as conference facilities, constitutes a "particular place of business" for purposes of paragraph 67.1(2)(e) of the Act.
Position TAKEN:
It does not constitute a "particular place of business".
Reasons FOR POSITION TAKEN: A particular place of business refers to a place where the business of the employer is regularly conducted.
5-941052
XXXXXXXXXX C. Chouinard
Attention: XXXXXXXXXX
August 8, 1994
Dear Sir:
Re: Food and Beverage Expenses - Paragraph 67.1(2)(e) of the Income Tax Act
We are writing in reply to your letter of April 15, 1994 wherein you requested our comments on the application of paragraph 67.1(2)(e) of the Income Tax Act (the Act") where an employer provides food and beverages to all its employees at an event held at an offsite location.
More specifically, you ask whether the offsite location would constitute "a particular place of business" for purposes of paragraph 67.1(2)(e) of the Act. In your opinion, if the offsite facility is considered "a particular place of business", the costs incurred by the employer for food and beverages provided at the offsite facility will not be subject to the 80% limitation (increased to 50% in the February 1994 budget) provided in subsection 67.1(1) of the Act.
Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R2. The following comments are, therefore, of a general nature only, and are not binding on the Department.
Under paragraph 67.1(2)(e) of the Act, the 80% limitation does not apply if the employer incurs the amount for food, beverages or entertainment generally available to all its employees employed at a particular place of business. This exempts costs incurred for an event to which all employees at a particular place of business have access. It is a question of fact whether a particular location constitutes "a particular place of business" for purposes of paragraph 67.1(2)(e) of the Act. However, as indicated in paragraph 2(e) of Interpretation Bulletin IT-518, "a particular place of business" can include a cluster of buildings, a building or a portion of a building, depending upon the circumstances. In our view, the place where an event is held, such as a restaurant, rented hall or conference centre, is not a "particular place of business" of the employer, since it is not the place where the employer regularly conducts business. Therefore, the conference facilities in the situation you have described would not be considered a particular place of business.
Furthermore, for the exception in paragraph 67.1(2)(e) of the Act to apply, it is not necessary for the event to be held at the place of business of the employer. It may be held at a restaurant, rented hall or other location. Since there is no requirement in paragraph 67.1(2)(e) of the Act that the food and beverages be provided at the place of business of the employer, the fact that the event referred to in your letter will be held at an offsite location is of no consequence as regards the application of paragraph 67.1(2)(e) of the Act. Therefore, if all the employees working at a particular place of business of the employer have access to the planning meetings you describe, paragraph 67.1(2)(e) will apply to exempt the food and beverages provided to the employees from the 80% limitation.
Unless as otherwise stated, all references to statute are to the Income Tax Act, S.C. 1970-71-72, c.63, as amended and consolidated to June 10, 1993.
We trust that these comments will be of assistance.
Yours truly,
R. Albert
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch
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