Many business people find the golf course a great place to close a deal.
Even better, some of the costs associated with the 18 holes could pay off as a tax deduction.
This tax break, however, is only for Americans.
Our golfing business neighbors to the north aren't allowed such a tax deduction. But that might soon change.
"A caucus of about two dozen parliamentarians from across all political stripes is pushing to persuade Canadian Finance Minister Jim Flaherty, himself an occasional golfer, to throw out the old law — introduced in an era when policy makers still viewed golf as an elitist pursuit," reports the Wall Street Journal.
Similar business deduction rules: Canada's and America's business meals and entertainment (M&E) expense deductibilty rules are similar.
Canadian tax law limits the M&E business tax deduction to 50 percent of the amount spent. That 50 percent limit also generally applies to U.S. business M&E expenses.
For American taxpayers, that means that the business discussions conducted between the birdies, bogies and sand traps allow them to deduct half the cost of the rounds.
In Canada, though, 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, according to BDO Canada.
"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," adds the accounting firm's website on the subject.
Outdated tax law: The Canadian tax law restricting golf-related business deduction has been on the books for more than 40 years ago. Specifically, notes the WSJ article:
"Since 1971, Canadians have been barred from deducting greens fees for business-related golf outings. Canadian companies and businessmen can deduct hockey and other professional sports events, theater and concert tickets, and pricey meals at the country's finest restaurants, so long as they are business-related. But deducting a host of golf-related expenses — a staple of the tax code south of the border in the U.S. — is out of bounds."
If Canadian tax laws do eventually look like America's Internal Revenue Code when it comes to writing off golf-related business expenses, the change will be in large part due to a public relations and government lobbying effort launched last year by the National Allied Golf Association, or NAGA.
In addition to the golf deduction component, NAGA is using the campaign to to highlight golf's impact on Canada's economy, growing citizen participation rates — golf is the country's most popular recreational activity, beating out even the national pastime of hockey — and golf courses as environmental stewards.
"More and more people are becoming aware of our push to increase awareness of an outdated tax system in Canada that does not allow green fees to be deducted for business-related golf outings," said PGA of Canada CEO Gary Bernard, who also serves as chair of NAGA.
You also might find these items of interest:
