- Form of play: Handicaps are used for scoring purposes, such as to calculate handicap (net) scores in stroke play or allocate handicap strokes in match play.
- Prizes: If players can win prizes based on handicap (net) scores or on both handicap (net) and scratch (gross) scores.
- Eligibility: Entry is limited in such a way that it excludes players who have a handicap below a certain threshold (such as only allowing players with handicaps for 5.0 or greater) or the field is broken into divisions or flights through the use of handicaps.

- The Rules consider the following competitions to be handicap competitions:
- Competitions where handicaps are used to divide a larger field into divisions or flights, even though only scratch (gross) scores are used to determine placing within divisions or flights.
- Competitions using scratch (gross) and handicap (net) scoring in the same competition.
- Competitions using player handicaps as a method to break a tie.

- But handicaps may be used in a scratch competition to limit who is eligible to enter, such as allowing entry only for players with a handicap index of 5.0 or less.

- An amateur competition requires that players designate whether they will play in the open division or the net division upon entry.
- The open division will use only scratch (gross) scoring.
- The net division will use handicap (net) scoring.

- As the players in these divisions are not competing against each other, the divisions are treated as separate competitions for the purposes of Rule 3.
- If the open division does not include any other Terms of the Competition that result in it being treated as a handicap competition under Rule 3, it is a scratch competition.
- The net division is treated as a handicap competition under Rule 3 because handicaps are used for scoring purposes.

Generally, only one division (or flight) may be a scratch competition under Rule 3 as only the division to which the most skilled players are assigned may be treated as a scratch competition. But see Example 3 for when a competition includes divisions based on player gender and / or age which could result in multiple scratch competitions under Rule 3 based on the Term of the Competition.

- The Terms of the Competition for an amateur competition split players into two divisions as follows:
- Players with a handicap of 5.0 or lower will be put in one division and
- Players with a handicap on 5.1 or higher will be put in the other division.

- The division with the more skilled players would be treated as a scratch competition under Rule 3 if it does not have any other Terms of the Competition that result in it being a handicap competition.
- The division with players having a handicap of 5.1 or higher is treated as a handicap competition under Rule 3 because there is a lower handicap limit used (i.e. 5.0 or lower) to determine eligibility.

- An amateur competition uses only scratch scores and the Terms of the Competition split men and women into separate divisions.
- If neither division includes any other Terms of the Competition that result in them being treated as a handicap competition under Rule 3, both would be treated as scratch competitions under Rule 3.

- For example, in an 18-hole individual competition, where gross and net prizes are awarded, a player who wins $700 in shop credit for the gross competition may accept only $300 in additional shop credit for the net competition.

- For example, Competition A and Competition B are both 36-hole scratch (gross) competitions played on two consecutive weekends, each with its own entry fee. Competition C is a 72-hole aggregate competition based on the results of Competitions A and B together. A player who wins a prize of $700 in either Competition A or B may only accept up to $300 for Competition C.