The Debate Surrounding Bill C-397- An Act to amend the Income Tax Act (Golfing Expenses)

October 30, 2013

tax, Uncategorized

By Kelsey Petersen – Thompson Rivers University 2L JD Student

John Williamson, a conservative MP from New Brunswick, may have summarized the thoughts of many Canadians when he, upon learning of the proposition of Bill C-397, argued: “The NDP wants to help CEO’s take their friends golfing.  Many Canadians still can’t make ends meet. But the NDP wants to give a tax credit to corporations…for golf.” While this may be a legitimate concern, MP Randall Garrison, with the support of the federal government’s All Party Golf Caucus, has proposed a legislative amendment which will do just that.

Bill C-397, a private member’s bill currently in the Second Reading in the House of Commons, introduced legislation designed to amend subparagraph 18(1)(l)(i) of the Income Tax Act to permit the deduction of an expense incurred by a taxpayer for the use of a golf course or facility.The question to be put forth in Parliament, whether or not golf related fees can be considered a business expense, will also require having to answer whether there are legitimate distinctions between golf and the other sport and entertainment options that qualify for the deduction.

Currently, the Canadian Income Tax Act holds that businesses can deduct 50% of a meal or entertainment expense from their taxes so long as the event helps them earn income.Since 1971, golf has been held not to qualify for this deduction based on it being an ‘elitist activity’. Proponents of the legislative amendment argue that this is an outdated policy and the sport of golf is being unfairly disadvantaged by this categorization. 

An examination of the accepted sports and entertainment options provides a strong basis of support for an argument of inequality.Canadian companies can deduct the cost of hockey, football and other professional sporting events,concert tickets and expensive meals, all of which invites the question: why is golf not included amongst this category?Jacqueline Nelson, reporter with Canadian Business Magazine, sums up this argument by saying: “In the eyes of the tax man, deals conducted between swings aren’t equal to those done at the rink.” 

The grounds for an argument based on inequality are further supported by the fact that it was not until 1997 when federal laws were amended to include meals and beverages at a golf clubhouse in the 50% deduction. Golf has now evolved into one of Canada’s most popular recreational activities and contributes over $11 billion to Canada’s gross domestic product.One would be hard pressed to maintain the belief that golf courses and facilities do not provide a suitable venue to conduct business.

Parliament, on the other hand, argues that there remains a distinction between golf and other sporting events which allows golf fees to be excluded from an income tax deduction.A spokesperson for the Canadian Department of Finance argued that the business purpose associated with golf was “accessory or subordinate to the recreational and personal nature” of the golf activity.Furthermore, in a more recent report, the Department of Finance has stated that the limitation on the deductibility of golf is said to have been designed to ensure that businesses, using only disposable income to golf, assume the tax burden and do not force Canadian tax payers to subsidize their business outings.

Whether golf, and all other sporting and entertainment events, should be eligible for a 50% deduction under the Canadian Income Tax Act will inevitably be up for reevaluation; yet it is difficult to argue that business conducted at a golf course can be substantially differentiated from the accepted forms of entertainment so not to qualify for an income tax deduction.

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One Comment on “The Debate Surrounding Bill C-397- An Act to amend the Income Tax Act (Golfing Expenses)”

  1. feonicamartinez Says:

    All I can say is every tax should be paid fairly.


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