15 April 1996 External T.I. 9612125 - FOOD AND BEVERAGES AT GOLF CLUBS

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.

		961212
XXXXXXXXXX	B. Kerr

Attention: XXXXXXXXXX

April 15, 1996

Dear Sir/Madam:

Re: Subparagraph 18(1)(l)(i) of the Income Tax Act (the "Act")

This is further to our letter of October 3, 1995, and our recent telephone conversation (Kerr/XXXXXXXXXX) concerning subparagraph 18(1)(l)(i) of the Act in connection with costs incurred at a golf club.

In that letter, inter alia, we stated that with respect to 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 they would not be subject to the provisions of subparagraph 18(1)(l)(i) of the Act. Such expenses would instead be subject to the limit provided under subsection 67.1(1) unless clearly excepted by virtue of the provisions of subsection 67.1(2).

As discussed, this view was similar to the Department's announcement at the 1995 APFF Round Table which was held in Montreal. However, subsequent to the Round Table, we had the opportunity to reconsider our position and your considerable submission was part of our review. Nevertheless, we must inform you that our revised position is as follows: The otherwise deductible cost of the consumption of food or beverages is restricted under section 67.1 of the Act. Section 67.1 has application regardless of where a restaurant is located. Generally, the cost of food or beverages at a restaurant or dining room in a golf club is treated in the same manner as the costs at any other restaurant. However, where the consumption of beverages or food takes place at a golf club in conjunction with a game of golf or other recreational activity it is clear that subparagraph 18(1)(l)(i) is applicable. Subparagraph 18(1)(l)(i) of the Act refers to a golf course or facility, which includes the dining room of a golf club in a situation where it is used in conjunction with a game of golf or other recreational activity at the club.

We trust that these comments may be of assistance and apologize for any inconvenience our previous letter may have caused.

Yours truly,

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