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 cost of green fees and meals following a game of golf are deductible in computing income from a business.
Position TAKEN:
not deductible
Reasons FOR POSITION TAKEN:
18(1)(l)(i)
941763
XXXXXXXXXX B. Kerr
Attention: XXXXXXXXXX
November 7, 1994
Re: Paragraph 18(1)(l) of the Income Tax Act (the "Act")
This is in response to your letter of June 29, 1994, wherein you requested a technical interpretation concerning paragraph 18(1)(l) and section 67.1 of the Act.
When taking clients out for a game of golf, you have asked whether the costs incurred for green fees and meals consumed in the dining room of a golf club after the game would be deductible in computing income from business.
Paragraph 18(1)(a) of the Act denies the deduction of expenses unless they were made or incurred for the purpose of gaining or producing income. However, to the extent that they were incurred for business purposes, subparagraph 18(1)(l)(i) of the Act denies the deduction of expenses incurred for the use of "...a golf course or facility...".
In our view, green fees are for the use of the golf course.
In regards to the meals consumed in the dining room of the golf club, paragraph 2 of Interpretation Bulletin IT-148R2 states:
"The word "facility" as used in subparagraph 18(1)(l)(i), refers solely to a golf course and is intended to extend the words "golf course" to include any amenities provided by a golf club..."
In our view, when the dining room of a golf club is used subsequent to a game of golf it would be considered a "facility" as well as incidental to the recreational use of the golf course. Accordingly, both the green fees and the cost of food or beverages would not be deductible by virtue of the provisions of subparagraph 18(1)(l)(i) of the Act.
In closing, we would like to advise that we have completed our review of, and that the Department will maintain, the position as announced in response to question 60 at the 1993 Revenue Canada Round Table held at the annual conference of the Canadian Tax Foundation where we stated:
"At the 1984 Conference, the Department announced that, where property of a type described in subparagraph 18(1)(l)(i) of the Act is used for business purposes, which purposes do not include the entertainment or recreation of clients, suppliers, shareholders or employees, the Department will not consider that the related expenses, provided they are reasonable, fall within the provisions of paragraph 18(1)(l).
The Department is reviewing this position in light of Sie Mac. Until this review is complete, the Department will follow the 1984 position."
We trust that these comments will be of assistance.
Yours truly,
R. Albert
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch
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