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.
October 11, 1995
Audit Directorate HEADQUARTERS E. Gauthier B. Kerr A/Director General 957-8953
951918
Expenses incurred at a Golf Club - Subparagraph 18(1)(l)(i)
For your information, we have recently discussed this issue with the Department of Finance and they are in agreement with the Department adopting the following position:
Expenses incurred for food and beverages at a golf club or for the use of the dining room, lounge, banquet halls or conference rooms of a golf club will not be subject to subparagraph 18(1)(l)(i). This position is based on our view that the word `facility' does not include these elements. Such expenses would instead be subject to the provisions of section 67.1 of the Act. In administering this position, we would require each expense to be clearly itemized. In other words, an all-inclusive charge that is not broken down would not be acceptable.
In addition, when the dining facility of a yacht, a camp or a lodge is used on its own and not in conjunction with the recreational nature of that property, then expenditures for meals and beverages consumed at the dining facility located there will not be subject to the provisions of subparagraph 18(1)(l). It is unlikely that many taxpayers would solely use the dining facilities at these properties.
Otherwise, we maintain the view that the dining facilities of a yacht, a camp or a lodge are included in the ordinary meanings of these terms and expenses incurred at these properties would have to fall within the position as announced at the 1984 and 1993 Revenue Canada Round Tables of the Canadian Tax Foundation in order to be excluded from subparagraph 18(1)(l)(i). Where property of the type described in subparagraph 18(1)(l)(i) is used for genuine 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, provided they are reasonable, fall within the provisions of paragraph 18(1)(l).
Roy Shultis
Acting Director General
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch