For many business people, golf is a way to network, entertain clients and donate to charity. But is it tax deductible? Here are answers to some frequently asked questions.
Can I deduct green fees and cart rental costs related to business meetings?
“The Income Tax Act states specifically that you cannot deduct expenses for the use of a golf course, like green fees,” says chartered accountant Sam Lieberman of Toronto. “It also disallows deductions for membership fees or dues in any club if the main purpose of the club is to provide its members with dining, recreational or sporting facilities.”
Can I deduct business-related meals and drinks consumed at a golf course?
“It has been determined that 50 per cent of expenses relating to pre- and post-golf meals and refreshments may be deducted, provided they were for business purposes and detailed bills are available,” says Lieberman.
Are the cost of golf shirts and hats offered to clients as promotional items deductible?
“Yes,” says Lieberman. “These would be 100-per-cent deductible as normal advertising and promotion expenses.”
If I take a client as a guest with me to watch a golf tournament, such as the Canadian Open, can I claim it as a deduction?
“This situation would fall under the same rules as business-related hospitality, such as meals and refreshments,” Lieberman says. “Therefore, 50 per cent of the expense may be deducted, providing it is for business purposes and the appropriate documentation is provided.”
If I play in a charity golf tournament, can my business or I get a tax receipt?
“Yes, but the amount is restricted,” says Lieberman. “For example, if you pay a $100 entry fee and $60 of that goes toward green fees and the remaining $40 goes to charity, the donation receipt should be for $40.”
If my business donates a gift to a charity golf tournament, is that amount deductible?
“Yes, the cost of the gift or its fair market value is 100-per-cent deductible,” says Lieberman. “For example, if you donate 1,000 golf balls to the tournament with your company logo on them, it is considered an advertising and promotional expense and is deductible.”
If the amount is not a promotional expense it may still count as a charitable gift and thus be deductible. That’s why it is so important to get the right information from the right advisor.
How can a CA help me determine what golf-related business expenses are deductible?
“Chartered Accountants possess specialized knowledge of the Income Tax Act rules and regulations,” Lieberman says. “They are also familiar with the Canada Revenue Agency’s interpretation bulletins, court cases and current tax cases.”
Source : REM