An estimated six million Canadians play golf each year—that’s more participants than any other recreational activity in the country, including hockey. But although Canada’s real national pastime is played on the green, in the tax man’s eyes business deals conducted between swings aren’t equal to those done at the rink. One group of parliamentarians, calling themselves the All Party Golf Caucus, thinks it’s time to bring deal-making back outdoors.
In Canada, businesses can deduct 50% of a meal or entertainment expense (including tax and tip) from their taxes, so long as the event helps them earn income. That’s true for a fancy dinner or front-row seats at a Flames game—but not for golf. According to the Canada Revenue Agency, any expense incurred for use of a golf course—membership, initiation or greens fees—cannot be claimed for tax purposes. Until 1997, you couldn’t even claim clubhouse meals.
That’s because the 1966 Royal Commission on Taxation found businesses were abusing the system by writing off employee golf vacations and recreational play, which led to reforms in 1972 that barred firms from writing off anything golf-related at all. But Gary Bernard, the CEO of the PGA of Canada and current chair of the National Allied Golf Association, says the industry is being unfairly punished because of an outdated view of the sport. “It’s critical that people realize that private, small-business people primarily run Canada’s golf industry,” he says. “Of the approximately 2,500 facilities across the country, only about 200 are private clubs. Forty years ago, that wasn’t the case.” Last June, NAGA approached New Democrat MP Peter Stoffer, an avid golfer whose Nova Scotia riding of Sackville-Eastern Shore is home to seven courses. “Golf used to be considered an activity of the rich,” says Stoffer. “But now the average price-per-hole is only $2.25 in Canada. It’s not outrageous.”
Stoffer became the leader of Ottawa’s informal golf caucus, which now consists of 22 MPs from different parties. “We’ve had a few meetings on Parliament Hill, and ideally we’d like to see changes announced when the government tables its 2012 budget,” he says.
But convincing the Conservatives to revise the law has so far been no gimme. Though the golf industry took a big hit during the downturn, the caucus knows that the economic climate will make it difficult to convince Finance Minister Jim Flaherty that golfers deserve tax breaks, even in the interest of doing business. “We know that golf is paid for by disposable income, and in these challenging economic times tax deductions aren’t a high priority,” says Bernard. “We need to connect with more people who are close to Flaherty.” The finance minister’s office responded that “the government’s priority is returning to balance and fulfilling election platform commitments.”
Still, Stoffer believes that his caucus can convince Flaherty—who golfs occasionally—to change his mind, and has so far sent him two letters. “I don’t think it will cost the government anything to change this law,” says Stoffer. “This is money that businesses are [already] spending out at a noisy hockey game, when they could be discussing the details of a deal on the green.”