Principal Issues:
1) Is a meal allowance subject to section 67.1?
2) Are amounts paid by a recruiter of hockey players for the purchase of tickets to attend hockey games subject to section 67.1?
3) Is an event such as a gala organized by a professional association an entertainment for the purposes of section 67.1?
Position: 1) Yes 2) Yes 3) None
Reasons:
1) A travel allowance or a portion of a travel allowance paid to an employee that represents amounts paid or payable for food, beverages or entertainment is subject to section 67.1 unless subsection 67.1(2) applies.
2) Amounts paid for tickets, among other thing for a sporting event, are entertainment expenses. Since a hockey game is a sporting event, the amount paid by a hockey player’s recruiter for hockey games tickets is subject to section 67.1.
3) Question of fact.
XXXXXXXXXX I. Landry, M. Fisc.
2017-071438
April 9, 2018
Dear Ms. XXXXXXXXXX,
Subject: Application of section 67.1
This is in response to your request of July 11, 2017, in which you sought our comments on the application of section 67.1 of the Income Tax Act (the "Act").
All legislative references are to the provisions of the Act.
During our telephone conversation (XXXXXXXXXX/Landry), we agreed to provide our comments on the following questions. You wish to know if a meal allowance is subject to section 67.1. You also wish to know if the amounts paid by a hockey player recruiter for the purchase of tickets to attend hockey games are subject to section 67.1, even if those amounts were paid by the taxpayer in the course of his employment. Finally, you wish to know if a gala or recognition party organized by a professional association is entertainment for the purposes of section 67.1.
Our Comments
This technical interpretation provides general comments on the provisions of the Act and related legislation, where referenced. It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R7, Advance Income Tax Rulings and Technical Interpretations.
A travel allowance or a portion of a travel allowance that is paid to an employee, representing amounts paid or payable for food, beverages or entertainment, is subject to the limitation set out in section 67.1 unless the exceptions in subsection 67.1(2) apply.
The term "entertainment" is not defined in the Act and therefore, one must refer to its ordinary meaning. Paragraph 67.1(4)(b) states, however, that entertainment includes amusement and recreation. As stated in paragraph 18 of Interpretation Bulletin IT-518R (footnote 1), we are of the view that the cost of tickets for a theatre, concert, athletic event or other performance are entertainment expenses. Since a hockey game is an athletic event, we are of the view that the amounts paid by a hockey player recruiter for the purchase of tickets to attend hockey games are subject to section 67.1 even if these amounts were paid by a taxpayer in the course of his or her employment.
The question of whether certain events such as a gala or a recognition party organized by a professional association are entertainment for the purposes of section 67.1 is a one of fact that can only be answered after an analysis of the circumstances of each situation. The Tax Rulings Directorate does not rule on questions of fact in the context of a technical interpretation. Therefore, we cannot speak specifically on this issue in this context.
Best regards,
Michel Lambert, CPA, CA, M. Fisc.
Manager
Employment Income Section
Business and Employment Income Division
Income Tax Rulings Directorate
Legislative Policy and
Regulatory Affairs Branch
FOOTNOTES
Due to our system requirements, footnotes contained in the original document are reproduced below:
1 CANADA REVENUE AGENCY, Interpretation Bulletin IT-518R, « ARCHIVED - Food, Beverages and Entertainment Expenses», last updated on April 16, 1996.