| February 16, 1990 | |
| R.C. Shultis | Technical Interpretations |
| Director | Division |
| Publications Division | S. Parnanzone |
| Tel. (613) 957-9232 | |
| File No. 90M02164 |
Subject: IT-148R2 "Recreational Properties and Club Dues"
For your information enclosed is a copy of the Addendum to Adverse Decision Report of December 8, 1989, including relevant attachments, prepared by Appeals Branch on the unreported adverse court decision in Ontario Store Fixtures Inc.
The issues in the case concerned the meaning of "lodge" in paragraph 18(1)(1)(i) of the Income Tax Act and whether the comments in paragraph 3 of IT-148R2 apply equally to individuals and to corporate taxpayers. As regards this latter point, the taxpayer's lawyer argued that his client could claim certain expenses because the lodge was, as indicated in paragraph 3 of the bulletin, "designed primarily for the restricted use of a single family". In our view, "designed" in the quoted phrase is meant as a reference to the use made, not to the physical characteristics, of the lodge. In addition, Corporate Rulings Division has previously given the opinion (see Memorandum of July 23, 1985 to the Toronto District Office) that paragraph 3 of the bulletin is intended to cover only situations involving self-employed individuals, such as authors and salesmen.
We are of the view that paragraph 3 of the bulletin is reasonably clear and therefor we are not recommending an immediate change. However, you may wish to take into account the comments in the attached material during the next "regular" revision of the bulletin.
Bernhard BuetowA/DirectorTechnical Interpretations DivisionLegislative and Intergovernmental Affairs Branch
SP/hm(21) COR "A"
c.c. L.C. Tremblay, A/Director Appeals and Referrals Division