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.
MINISTER/DM'S OFFICE 94-04725M
ADM'S OFFICE
CENTRAL RECORDS
RETURN TO RULINGS, ROOM 303, MET. BLDG.
AUTHOR
SUBJECT OR CORPORATE FILE
XXXXXXXXXX
Dear XXXXXXXXXX:
I am writing in response to your letter of May 3, 1994, expressing concerns about the impact of the application of the Income Tax Act to restrict the deduction of expenses incurred at resorts. I apologize for the delay in responding.
The Income Tax Act 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 has interpreted this to mean that, where this property is used for business purposes, which purposes do not include the entertainment or recreation of clients, suppliers, shareholders or employees, the Department will not consider that the related expenses fall within the restriction. This position will allow the deduction of expenses, provided they are reasonable, for genuine business meetings held in resort hotels. However, no deduction is available in situations where some business meetings may be involved but the main activity is recreation.
As you are requesting an amendment to the Income Tax Act, I have forwarded a copy of this correspondence to the Honourable Paul Martin, Minister of Finance, who is responsible for legislative amendments.
I trust that I have explained the Department's position.
Yours sincerely, David Anderson, P.C., M.P.
C.C. The Honourable Paul Martin, P.C., M.P.
Minister of Finance
Bill Kerr
941858
October 3, 1994