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.
Principal Issues: Deductibility of green fees at a golf course.
Position: Not deductible.
Reasons: Green fees at a golf course are not deductible pursuant to paragraph 18(1)(l).
April 29, 1998
XXXXXXXXXX
Dear XXXXXXXXXX
The Honourable Herb Dhaliwal, Minister of National Revenue, has asked me to respond to your letter addressed to the Honourable Paul Martin, Minister of Finance, concerning the deductibility of green fees at a golf course. A copy of your letter was sent to Mr. Dhaliwal on March 12, 1998.
The Income Tax Act provides several restrictions in deducting expenses from business or property income. One of those restrictions, found in paragraph 18(1)(l), provides that outlays or expenses for the use or maintenance of a property that is a yacht, camp, lodge or golf course or facility are not deductible. It also provides that membership fees or dues in any club cannot be deducted if the main purpose of the club is to provide its members with dining, recreational, or sporting facilities. Therefore, green fees or membership fees in a golf club are not deductible. As noted by Mr. Martin in his letter to you, this restriction has been in place since 1971.
As for entertainment expenses at golf clubs, although paragraph 4 of Interpretation Bulletin IT-148R3, Recreational Properties and Club Dues, indicates that the cost of meals and beverages consumed at a golf club in conjunction with a game of golf is not deductible, the Department has recently reconsidered its interpretation of this provision. The Department now considers that the restriction in subparagraph 18(1)(l) to include only recreational amenities provided by a golf club. Accordingly, this will not include the dining room, banquet halls, conference rooms, beverage rooms or lounges of a golf club and thus 50 per cent of the cost of meals and beverages incurred at a golf club will be allowed as a deduction. As a result, the tax treatment of meals and beverages at a golf club will parallel that of meals and beverages consumed at a restaurant. In administering this new position, the Department will require that meal and beverage expenses incurred at a golf club be clearly itemized.
Any changes to the rules relating to the deductibility of green fees and golf club dues would require an amendment to the Act and a change in tax policy, which have to be considered by the Department of Finance.
I trust that this information will clarify the Department’s position on this matter.
Yours sincerely,
Denis Lefebvre Assistant Deputy Minister Policy and Legislation Branch
J. Gibbons
957-2135
April 8, 1998
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