Attention Golf Lovers! "Incorrect Recording of Golf Course Utilization Tax"

"Well, today's golf was great. I was able to get along with the client, and it looks like it will lead to the next job. Let's record the usage fee as entertainment expenses."
(A few days later, a phone call from the tax office...)
"Your expenses are recorded as excessive. Please file an amended return."

In reality, few people have likely had this experience. However, it is a story that can actually happen. What was the problem?
The series "If a dog walks, it hits a tax - things that business owners worry about at least once -" explains various tax matters that we often feel doubtful about in our daily lives but tend to overlook.

A story about receiving guidance from the tax office

My first job after joining a tax accountant corporation was dealing with guidance from the tax office regarding golf course usage fees. The business owner who received the guidance was a big golf enthusiast and went golfing with business partners almost every week. And he recorded those expenses as entertainment expenses. However, a tax audit took place, and the golf course usage fee was targeted!The reason was that the "golf course utilization tax" was recorded as a taxable purchase.
A taxable purchase is, as the name suggests, an expenditure subject to tax. For example, in the case of a restaurant, purchased ingredients and consumables are subject to consumption tax, so they are taxable purchases. On the other hand, rent is not subject to consumption tax and is outside the scope of taxation.
The larger the amount of taxable purchases, the smaller the tax payment amount.What would happen if you mistakenly recorded rent as a taxable purchase in your tax return? Since the amount of the purchase tax credit would increase, the tax payment amount would decrease. The tax office would likely see it as padding.
This was the point pointed out in the tax audit of the golf enthusiast. Of course, he probably didn't do it intentionally. In fact, when looking at the receipts, the amount including the golf course utilization tax was written in its entirety, and there was no breakdown. I feel it's understandable.
But that's where it gets tough. My job as a beginner was to investigate all the golf courses that issued the receipts for several years (sometimes making phone calls) and calculate the golf course utilization tax.It's a very difficult task, so if you are someone who says, "I don't want to have this experience!", please be careful.

What is golf course utilization tax?

Golf course utilization tax is a local tax that has existed for a long time.
Until consumption tax began in the first year of the Heisei era, there was something called the entertainment facility utilization tax. A 10% tax was applied to usage fees for dance halls, bowling alleys, golf courses, etc. However, with the start of consumption tax, the application was limited to golf courses, and it remained under the name of golf course utilization tax.
The tax amount varies depending on the scale and maintenance status of the golf course, but 400 to 1,200 yen per person per day is imposed. There are also cases where it is tax-exempt, such as for those 70 or older or people with physical disabilities. By the way, golf driving ranges are not subject to it.

For those who golf frequently! What to do when recording expenses

Since the golf course utilization tax is a small amount per time, it is rarely pointed out by the tax office under normal circumstances. For those who only go a few times a year, it is almost not a problem to record it collectively as a taxable purchase. However, for those who use it frequently, I recommend practicing this.

1. Check if there is a usage breakdown on the receipt

If it is a proper golf course, the usage breakdown will list the play fee and the golf course utilization tax separately. If it is not listed, ask for a receipt with it listed on the spot. If you forget to check and notice it is not listed later, inquire by phone or other means and make a note of the tax amount.

2. Separate taxable purchases and non-taxable purchases when making journal entries

Even if it is a golf course usage fee, it includes various service charges. Organize the taxable portion and the non-taxable portion. Golf play fees, food and drink expenses, accommodation expenses, locker fees, etc., are recorded as taxable purchases. Golf course utilization tax is a non-taxable purchase. In some cases, hot spring tax, golf promotion fund, greening cooperation money, etc., may be listed. Please note that these are also outside the scope of taxation.

That said, the task of checking each receipt and sorting and recording them yourself is troublesome. I think it is necessary to know about the existence of golf course utilization tax, but I recommend leaving the work to your familiar financial partner.

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