Golf industry renews call for tax break

Golf industry renews call for tax break

Should executives be able to claim golf as a business expense for tax purposes? The industry thinks so.

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Golfers contribute about $14.3 billion a year to the Canadian economy, or about one per cent of GDP, but the industry claims it’s being unfairly held back because corporate-types can’t claim their rounds as a business expense for tax purposes.

Jeff Calderwood, the chair of the National Allied Golf Association (NAGA), which represents a half-dozen different Canadian golf associations, presented the figures Tuesday as he lobbied MPs for a tax break for businesses that use golf to entertain clients. Unlike their American counterparts, Canadians haven’t been able to write off part of their green fees as a business expense since 1971. That’s in contrast to other forms of entertainment like restaurant meals and hockey games, which are eligible for deductions of 50 per cent. “This outdated legislation is simply unfair and does not allow us to compete on a level playing field,” Calderwood said.

Calderwood said that, if implemented, a tax break for golf “could easily double corporate play” in Canada, which a 2012 study by the National Golf Course Owners Association of Canada estimated at about $293 million annually. Calderwood added that the cost to the treasury would be relatively minimal—about $20 million a year.

The industry has been agitating for changes to the tax code for years. It argues the government did away with the tax break at a time when golf was considered to be an “elitist” pursuit, played by a relatively small number of wealthy individuals. By contrast, recent studies have shown that golf is actually a more popular adult pastime in Canada than hockey.

That said, there are signs the game’s popularity is on the wane after enjoying explosive growth in the 1990s. While NAGA’s survey showed overall spending on golf has held relatively steady since 2008, even in the face of the recession, the number of rounds being played by Canadians has dropped significantly— down nine per cent to 26,100 in 2013 compared to 28,700 in 2008— and fewer young people are entering the sport compared to previous generations.

In the U.S., the atmosphere is even more gloomy. About 400,000 golfers hung up their clubs in 2013 and nearly 160 courses shuttered their fairways, according to the U.S. National Golf Foundation. Only 14 new courses were built in the U.S. last year, marking the eighth straight year that more courses closed than opened. Among the culprits blamed for golf’s declining popularity in North America is cost—everything from memberships and equipment to green fees and cart rentals—and the time commitment required to play a round, which can be as long as five hours.

Given the headwinds, it’s not clear whether a corporate tax break would do much to insulate Canada from golf’s downward slope. A 2012 study by NAGA found the majority of golf rounds in Canada were played by about 1.5 million people, or about 26 per cent of all players. These are the game’s most avid players—people who take lessons, belong to private clubs, are highly educated and tend to be executives, managers or professionals. In other words, big-business types who can afford to play, and are already doing business deals on the links, whether they get a tax break or not.