Principal Issues: Whether a non-transport employee making an otherwise allowable claim for meals under paragraph 8(1)(h) of the Act is entitled to use the simplified method described in IC 73-21R9.
Position: No.
Reasons: See response.
XXXXXXXXXX
2013-051117
C. Underhill
February 19, 2014
Dear XXXXXXXXXX:
Re: Travel expenses, meals - simplified method
We are writing in response to your e-mail of November 5, 2013, concerning the calculation of certain travel expenses. More specifically, you asked whether a non-transport employee who is otherwise eligible to make a claim for meal expenses may use the simplified method described in Information Circular IC 73-21R9, Claims for Meals and Lodging Expenses of Transport Employee.
Our Comments
This technical interpretation provides general comments about the provisions of the Income Tax Act (Act) and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R5, Advance Income Tax Rulings.
Paragraphs 8(1)(g) and (h) of the Act allow an employee to deduct travel expenses, such as meals, where specific conditions are met. While paragraph 8(1)(g) of the Act only applies to employees whose employers' principal business is the transportation of goods, passengers, or both, paragraph 8(1)(h) of the Act generally applies to all other employees. Any deduction for meal expenses under those paragraphs is subject to the limitation imposed by subsection 67.1(1) of the Act. Subsection 67.1(1) of the Act limits the deduction for meal expenses to 50% of the lesser of the amount actually paid and an amount that is reasonable in the circumstances. For long-haul truck drivers, subsection 67.1(1.1) increases the deductible portion of meal expenses to 80%. For more information on the conditions that must be met for employees to deduct travel expenses, see Guide T4044, Employment Expenses 2013 Includes forms T777, TL2, T2200, and GST370.
A claim for meal expenses should generally be evidenced by receipts in accordance with subsection 230(1) of the Act. That subsection requires every person carrying on business and every person who is required by or pursuant to the Act, to pay or collect taxes or other amounts, to maintain records and books of account in such form and containing such information as will enable the taxes payable under the Act to be determined.
Despite the above, the Canada Revenue Agency (CRA) allows transport employees, who have met the conditions to claim travel expenses, to use the simplified method when claiming meal expenses. The simplified method allows transport employees to deduct a flat rate for each meal expense incurred while travelling in the course of their employment duties. Although employees using the simplified method are not required to keep receipts, they must maintain a record of trips actually taken during the taxation year. Transport employees are generally employees whose duties consist of transportation activities which regularly require them to travel on journeys of substantial distance and duration. For more information on the simplified method, see paragraph 11 of IC 73-21R9.
The CRA also allows the simplified method to be used by individuals who are claiming meal expenses for purposes of the moving expense deduction, medical expense tax credit, or the northern residents deduction. However, the CRA does not allow this method to be used by a non-transport employee making an otherwise allowable claim for meals under paragraph 8(1)(h) of the Act.
We trust these comments will be of assistance.
Yours truly,
Nerill Thomas-Wilkinson, CPA, CA
Manager
for Director
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
