Club Memberships and Dues

Definition

ITA s.18(1)(l) is a bright-line denial: no deduction is allowed for an outlay or expense in connection with the use of a yacht, camp, lodge, golf course, or golf club facility, or for membership fees in any club whose main purpose is to provide dining, recreational, or sporting facilities. The rule applies even when every use is demonstrably for business. Industry associations, professional bodies, and trade organizations fall outside s.18(1)(l) and are deductible under the general rule.

Key rules

• Golf: green fees, cart rentals, golf club dues, and related facility charges are non-deductible under s.18(1)(l), regardless of who is playing or why.
• Yachts, camps, lodges, golf facilities: outlays for the use of these facilities are denied. This includes renting a yacht for a client event at a facility covered by the rule.
• Club memberships: denied if the main purpose of the club is dining, recreation, or sporting. Typical examples: private dining clubs, country clubs, tennis and squash clubs, curling clubs, and yacht clubs.
• Professional and trade associations: deductible. Chartered Professional Accountants, Canadian Federation of Independent Business, industry chambers, and boards of trade are not caught by s.18(1)(l).
• Food and beverage at a denied facility: s.18(1)(l.1) works with s.18(1)(l) to deny the broader cost of food and beverages at these facilities. Note that meals consumed at a golf club in the course of a business meeting are specifically non-deductible per CRA position, even though they might otherwise pass the 50% meals rule.
• Facility use vs. membership: one-off room rentals at a golf club for a non-recreational purpose can sometimes escape the rule. The CRA position is narrow; caution is warranted.
• Employee benefit consequence: if the corporation pays for an employee's club membership and deducts nothing, it may still be a taxable benefit under s.6(1)(a) when the primary beneficiary is the employee.

Example

Sentinel Advisory Inc. pays the following in 2026: $7,500 annual country club dues for the CEO, $1,200 green fees for a client tournament, $480 for the local Chamber of Commerce, and $640 for the CEO's CPA Ontario annual dues.

The $7,500 club dues and $1,200 green fees are denied by s.18(1)(l). They should be recorded to a non-deductible expense account and added back on Schedule 1. The $480 Chamber fee and $640 CPA dues are fully deductible. If the corporation also treats the $7,500 as a shareholder benefit to the CEO, the CEO must include $7,500 in income under s.15(1) unless the benefit is structured as taxable employment income on a T4.

Common mistakes

• Deducting green fees because the round of golf was with a client.
• Treating club dining charges as 50% meals. The dining bill at a covered club remains denied by s.18(1)(l) and s.18(1)(l.1).
• Classifying a country club as a business development expense to avoid the rule. The label does not override the statute.
• Missing the shareholder benefit. Paying personal club dues through the corporation creates a taxable benefit even though the corporation gets no deduction.

Related concepts