Recreational facilities and club dues

The use of a recreational facility or club is a taxable benefit for an employee in any of the following situations:

• You pay, reimburse, or subsidize the cost of a membership at a recreational facility, such as an exercise room, swimming pool, or gymnasium.
• You pay, reimburse, or subsidize the cost of memberships to a business or professional club (that operates fitness, recreational, sports, or dining facilities for the use of their members but their main purpose is something other than recreation.)
• You pay, reimburse, or subsidize the cost of membership dues in a recreational facility of the employee's choice, up to a set maximum. In this case it is the employee who has paid for the membership, owns it, and has signed some kind of contract with the company providing the facility.
• You pay, reimburse, or subsidize the employee for expenses incurred for food and beverages at a restaurant, dining room lounge, banquet hall, or conference room of a recreational facility or club.
• You provide recreational facilities to a select group or category of employees for free or for a minimal fee, while other employees have to pay the full fee. There is a taxable benefit for employees who do not have to pay the full fee.

However, the use of a recreational facility or club does not result in a taxable benefit for an employee in any of the following situations:

• You provide an in-house recreational facility and the facility is available to all your employees. This applies whether you provide the facilities free of charge or for a minimal fee.
• You make an arrangement with a facility to pay a fee for the use of the facility, the membership is with you and not your employee and the facility or membership is available to all your employees. Membership will be considered to be made available to all employees as long as each employee can use the membership even if an employee chooses not to.
• You provide your employee with a membership in a social or athletic club and it can be clearly demonstrated that you are the primary beneficiary of the membership. The membership is a taxable benefit to your employee if the membership in or use of the club’s facilities provides only an indirect benefit to you. This would be the case where the employee becomes physically healthier as a result of using the club’s facilities and becomes generally better able to perform his or her duties (for example, fewer sick days, less downtime, remain fit for duty).

Include any GST/HST that applies in the value of such a benefit.

Payroll deductions

If the benefit is taxable, it is also pensionable. Deduct income tax and CPP contributions. If the taxable benefit is paid in cash, it is insurable. Deduct EI premiums. If it is a non-cash benefit, it is not insurable. Do not deduct EI premiums.

Reporting the benefit

Report the taxable benefit in box 14 "Employment income" and in the "Other information" area under code 40 at the bottom of the T4 slip. For more information, see T4 – Information for employers.

Forms and publications

• Interpretation Bulletin IT148, Recreational Properties and Club Dues
• Income Tax Folio S2-F3-C2, Benefits and Allowances Received from Employment

Date modified:

2016-12-08