Many business deals are entered into or discussed while at a hockey game or on the links.
Entertainment costs could be the costs of tickets for a theatre, concert, athletic event, fashion show or other performance; the cost of private boxes at sports facilities; a hospitality suite; the cost of a cruise; the cost of entertaining guests at night clubs, athletic, social and sporting clubs; the cost of a tour leader or security. It not only includes the actual cost but also gratuities and cover charges.
However, expenses related to the use or maintenance of a yacht, camp, lodge or golf course or facility is not allowed as a tax deduction.
Many business deals have been struck on the golf course. For many companies, golf is the business entertainment of choice for the summer months. Any expense incurred for use of a golf course, such as membership fees, initiation fees or daily green fees, cannot be deducted for tax purposes at all. This rule has been in Canadian tax law for decades and has never been updated to take into account that golf is at least as valid an entertainment expense as a night out on the town.
However, meal and beverage expenses consumed at a golf club are 50% tax deductible, as with any other meal or entertainment expense. However, it's important that the amount charged for meals and beverages be clearly itemized on bills from the golf club—fortunately most clubs understand and automatically do this. The deduction of an all-inclusive charge from a golf club, that includes meals and beverages, is not tax deductible.
The Charity Golf Tournament
If you play in a charity golf tournament, you will be charged a fee to play. This fee will be comprised of various components, allowing the organizers to cover the cost to play golf such as green fees and the rental of golf carts, door prizes and a meal. It will also cover an amount that will be a donation to the cause for which the tournament is being organized.
In computing what qualifies as a charitable donation, the organizers will have to value the various components that comprise the entrance fee. These amounts are not considered to be a charitable donation as you are getting something of value for this. The excess amount charged, however, is a charitable donation and the charity that is benefiting from the tournament will issue you a charitable donation receipt for this amount.
A maximum of two conventions a year can be claimed as a business expense. The conventions have to relate to your business and be held by a business or professional organization within the geographical limits of where the sponsor of the convention usually conducts business.
Convention fees could include the cost of food, beverages, or entertainment. The convention organizer may not show these amounts separately on your bill. In this case, you must subract $50 per day from the total convention fee. You can then deduct the $50 as a meal expense, subject to the 50% rule.