7 January 1997 Ministerial Letter 9633768 - MEALS AT A GOLF COURSE

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.

MINISTER/DEPUTY MINISTER'S OFFICE 96-05554M
ADM'S OFFICE
RETURN TO 15TH FLOOR, ALBION TOWER

January 7, 1997

XXXXXXXXXX

Dear XXXXXXXXXX:

Thank you for your correspondence of July 25, 1996, concerning the deductibility of food and beverage expenses incurred at golf clubs.

The role of Revenue Canada is to administer and enforce the Income Tax Act as passed by Parliament. Your concerns relate to tax policy, which is the responsibility of the Department of Finance. We have previously referred the issue of food and beverage expenses incurred at a golf club to the Department of Finance.

I would like to explain that an expense is deductible only if it is incurred for the purpose of gaining or producing income from a business or property, is reasonable in the circumstances, and is not restricted by any other provision of the Income Tax Act.

The Act specifically prohibits the deduction of expenses incurred for the use or maintenance of property that is a yacht, a camp, a lodge or a golf course or facility. The Department interprets the word "facility" as including all amenities provided by a golf club such as a health club, swimming pool, curling rink or tennis court.

It also includes the dining facility 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.

The otherwise deductible cost of food, beverages or entertainment is generally restricted to 50 per cent under the Act. This provision applies regardless of where a restaurant is located. Generally, the cost of food or beverages at a restaurant or dining facility in a golf club is treated in the same manner as the cost at any other restaurant. However, where the consumption of food or
beverages takes place at a golf club in conjunction with a game of golf or other recreational activity, the more specific provision of the Act is applicable to deny the deduction of all costs incurred.

I appreciate being informed of your concerns.

Yours sincerely,

Jane Stewart, P.C., M.P.

Roberta Albert
957-2100
November 25, 1996