30 August 1996 Ministerial Letter 9628388 - MEALS AND BEVERAGES - GOLF CLUB

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.

								August 30, 1996

	HEADQUARTERS					HEADQUARTERS
	Client Services Directorate		B. Kerr
	Correspondence Section			957-2139
	Nycole Lafond, Chief

	Attention:  C. Horton
								962838

Food and Beverage Expenses at a Golf Club

This is in response to your letter of August 23, 1996, requesting an insert for Ministerial Correspondence, concerning the deductibility of food and beverage expenses incurred at golf clubs.

We provide the following insert for inclusion:

In order to be deductible, an expense must be incurred for the purpose of gaining or producing income from a business or property, must be reasonable in the circumstances, and must not be restricted by any other provision of the Income Tax Act (the "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 courts. It also includes the dining facilities 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 the consumption of food or beverages or the enjoyment of entertainment is generally restricted to 50% under Act. The provision has application 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 costs 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, it is clear that the more specific provision of the Act is applicable to deny the deduction of all costs incurred.

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