At a golf day organized for all its employees, the company pays for the green fees, the rental of golf equipment, and the food (shown separately on the invoice) provided to the employees.
(a) Does s. 18(1)(l) take precedence over s. 67.1(2)(f) where the event is offered to all employees? CRA responded:
[A]lthough paragraph 67.1(2)(f) applies to clarify that subsection 67.1(1) does not apply, it does not permit the deduction of an expense that is not deductible under paragraph 18(1)(l), such as amounts paid for the use of a golf course.
(b) Is the food offered at the golf club after the golf game come within the exception in paragraph 67.1(2)(f)?
In 1998, the Canada Revenue Agency amended its policy … . Consequently, a facility does not include a golf club's dining room, reception rooms, conference rooms, lounges or bar so that the deduction of expenses incurred for the purchase of food and beverages at a golf club is no longer prohibited by subparagraph 18(1)(l)(i).
Thus, assuming that the expense in respect of the food provided to all employees on the golf day is made for the purpose of earning business income, is reasonable in the circumstances and is one of six or fewer special events held in the year by the business, the exception in paragraph 67.1(2)(f) would apply.