Golf Haters: 1 Canada Revenue Agency: 0

Employees routinely pay tax to the Canada Revenue Agency in relation to benefits received as an employee.  Rarely, it seems, an employee is able to escape the burden of the Income Tax Act in relation to such a benefit.

One such person is Henry Rachfalowski, who had been taxed for a perquisite of employment but fought back and, after taking his case to the Tax Court of Canada, succeeded.

As part of his employment, his employer paid for a golf membership.  Mr. Rachfalowski tried to decline the golf membership, to no avail.  He asked to be provided with the cash equivalent of the golf membership or to have its value put towards some recreational activities of his choice.  His employer insisted on the golf membership.

In 2002, an assessment was made pursuant to the Income Tax Act, the result of which was that the value of the golf membership was included in his income for tax purposes.  He appealed that assessment to the Tax Court of Canada which sided with Mr. Rachfalowski, deleting the golf fees from his income. 

The Court inferred that Canada Life wanted its senior executives to belong to a golf club.  It “enhanced the company’s image and provided a place for its executives to entertain clients”.  Overall, the Court concluded that the membership in the golf club was primarily for the benefit of Canada Life.  It was, at most, of minimal benefit to Mr. Rachfalowski.

The T.C.C. decision, Rachfalowski v. The Queen, may be viewed at:
http://decision.tcc-cci.gc.ca/en/2008/2008tcc258/2008tcc258.html