Managing Your Money

Golf can be fantastic or frustrating – often at the same time.  But, whether you’re a low handicap whiz or a weekend duffer, here are a few fair ways to tee up tax savings while you ‘enjoy’ your time on the links.

Stroke off business expenses.  Some years ago, Revenue Canada (now called the Canada Revenue Agency, CRA) changed the policy on the deductibility of business meals and entertainment expenses to include food and beverages consumed in the ‘non-recreational areas’ of golf clubs.  Since that time, you have been able to apply the 50% deduction for business-related expenses (subject to restrictions) to costs incurred in the dining rooms, banquet halls, conference rooms and lounges of golf clubs. 

To receive this deduction, there must be a genuine business purpose to the use of the facilities and the expenses cannot be incurred in conjunction with a game of golf or other recreational activity at the golf club.  In practical terms, this means the CRA still will not allow you to deduct greens fees or membership dues for access to a golf club, including any portion attributable to the golf club’s recreational facilities.

To validate your deduction, be sure to clearly itemize all of the business- and entertainment-related meal and beverage expenses you incurred at the golf club.

Employ a promotional stance.  As a general rule, when an employer pays or reimburses an employee for club dues or membership fees, the employee is required to report this as a taxable benefit.  However, the CRA will allow an exception if the membership is principally for the employer’s advantage – say to promote the company or build business.  In this case, the employee is not considered to have received a taxable benefit and the dues or fees need not be included in the employee’s income for tax purposes.

Give to receive.  Charity events can also shave your taxes.  When you purchase a ticket to a charity golf event, the charity is allowed to issue a tax receipt for the difference between the price of the admission ticket and the fair market value of the golf game plus any other entertainment and meals you receive as a participant.  For example, if the cost of your ticket is $200, but the real cost to the charity (for your golf game, meal, prizes, etc.) is just $45 thanks to donations or reduced greens fees, the charity may establish that the ‘fair market price’ of your ticket is a more realistic $75 – which means that you would receive a tax receipt for $125, not $155.

You should also be aware that a major hole-in-one prize could cost you a tax deduction.  That’s because a charity is not allowed to issue any tax receipts when a fundraising golf tournament offers players the right to win prizes of more than a nominal amount. [IG1]  You’ll also lose your deduction if your employer buys a block of tournament tickets and provides them as freebees to company employees.  In that case, the charity issues a tax receipt to the business.  However, in situations where an employer buys the tickets from the charity and the employees, in turn, buy the tickets from their employer, the business can give the charity a list of donors who will each receive a receipt in their name.

To hit the ‘sweet spot’ on all your tax deductions and sharpen your overall financial game, it pays to talk with your financial services ‘pro’.

This column, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your Investors Group Consultant.