13 February 2001 External T.I. 2000-0053615 - EMPLOYEES MEALS EXPENSES-AMBULANCE DRIVERS

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Are meal expenses incurred by Emergency Medical Technicians and Paramedics in carrying out the duties required by their employment deductible?

Position:

Depends on the facts but generally they would not be deductible.

Reasons:

For the purposes of subsection 8(1)(g) of the Act, it cannot be considered that an Emergency Medical Technician and Paramedic is an employee of a person whose principal business was passenger transport, even though they may regularly transport patients in an ambulance. Moreover, subsection 8(4) of the Act provides that meal expenses cannot be deducted pursuant to paragraph 8(1)(h) of the Act in computing income from an office or employment unless it was consumed during a period while the taxpayer was required by the taxpayer's duties to be away, for a period of not less than twelve hours, from the municipality where the employer's establishment to which the taxpayer ordinarily reported for work was located and away from the metropolitan area, if there is one, where it was located.

XXXXXXXXXX 	2000-005361
		Patrick Massicotte
February 13, 2001

Dear XXXXXXXXXX:

Re: Meal Expenses

We are writing in response to your letter of inquiry of October 19, 2000. Your inquiry detailed the circumstances of employees of XXXXXXXXXX You asked whether meal expenses incurred by your employees would be deductible in computing employment income for the purposes of the Income Tax Act (the "Act").

Our Comments

The situations described in your letter appear to involve actual ongoing transactions involving specific taxpayers. Written confirmation of the tax implications inherent in particular transactions is given by this directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R4, dated January 29, 2001. Where the particular transactions are completed, the inquiry should be addressed to the relevant tax services office. Although we are unable to provide any opinion in respect of the specific transactions, we have set out some general comments that may be of assistance.

While your letter was not specific, we have assumed your employees are paid a salary and are not volunteers. More specifically, you inquire about the possibility for your employees to deduct meal expenses they incur while carrying on their duties.

Generally, deductions in computing employment income are restricted. Pursuant to subsection 8(2) of the Act, no deduction is allowed in computing employment income, except for the amounts provided under section 8 of the Act. Moreover, as mentioned in Information Circular IC 73-21R7, Away-from-home Expenses (copy enclosed), generally speaking, neither paragraphs 8(1)(g) nor 8(1)(h) of the Act (explained below) allow a deduction for meals consumed by individuals who, though they may otherwise qualify under either of these provisions, do not pay for meals but instead carry a lunch from home to work.

Transport Employee's Expenses

Paragraph 8(1)(g) of the Act allows a deduction for meals and lodging where a taxpayer was an employee of a person whose principal business was passenger, goods, or passenger and goods transport and the duties of the employment required the taxpayer, regularly,

(i) to travel, away from the municipality where the employer's establishment to which the taxpayer reported for work was located and away from the metropolitan area, if there is one, where it was located, on vehicles used by the employer to transport the goods or passengers, and

(ii) while so away from that municipality and metropolitan area, to make disbursements for meals and lodging,

equal to the amount so disbursed by the taxpayer in the year to the extent that the taxpayer has not been reimbursed and is not entitled to be reimbursed in respect thereof.

Although it could be argued that XXXXXXXXXX principal activity is the transportation of persons requiring emergency medical attention, it does not constitute the business of "passenger ... transport" for the purposes of paragraph 8(1)(g) of the Act. This expression generally refers to the commercial transportation of passengers as the prevailing sense of the term "passenger" implies a public conveyance entered by fare or contract. Such interpretation has been supported by the Tax Court of Canada in the case of Barton Pepper v. MNR (84 DTC 1613), where the Court said:

"Nevertheless, in accordance with the established rule of interpretation of statutes, the meaning of the words "principal business was . . . . transport" in paragraph 8(1)(g) of the Act must be gathered from their entire context. [...] In my opinion, what the paragraph contemplates is corporations and individuals whose principal business is what is generally regarded as transportation companies or enterprises such as commercial trucking, railroading, shipping and airlines."

In addition, when this provision of the Act refers to "... travel, away from the municipality ... and away from the metropolitan area ..." it contemplates journeys of such substantial distance and duration as to require disbursements for both meals and lodging. It does not encompass all cases in which a taxpayer goes from a place inside the metropolitan area to a place just outside it.

In the case of Kraushar v. MNR, 86 DTC 1210 (TCC), the court concluded that the municipalities of Stony Plain, Calmar and Nisku were all in the Edmonton area or alternatively not at a great distance from it nor close to any other major urban center, such that trips within that area are not substantial enough to come within the provision of paragraph 8(1)(g) of the Act. Accordingly, these municipalities can all be considered to be within the Edmonton metropolitan area or just outside it, as it appears are those involved in your situation.

For the above reasons, XXXXXXXXXX employees do not qualify for the deduction of meals under paragraph 8(1)(g) of the Act.

Travel Expenses

In general terms, under paragraph 8(1)(h) of the Act, employees may deduct travel expenses such as meals and lodging where:

i) the employee is ordinarily required to carry on the duties of employment away from the employer's place of business or in different places;

ii) the employee was required under the contract of employment to pay the travel expenses he or she incurred in the performance of the employment duties, and

iii) the employee was not in receipt of a non-taxable allowance for traveling expenses.

The employee must also obtain a completed Form T2200, Declaration of Conditions of Employment, from the employer pursuant to subsection 8(10) of the Act.

Paragraph 32 of Interpretation Bulletin IT-522R, Vehicle, Travel and Sales Expenses of Employees (copy enclosed), provides the Canada Customs and Revenue Agency's ("CCRA") position as to the meaning of the terms used above.

According to the facts submitted, XXXXXXXXXX employees could be considered ordinarily required to carry on the duties of their employment away from their employer's place of business or in different places. However, the deduction of the cost of meals is subject to additional requirements provided in subsection 8(4) of the Act.

Subsection 8(4) of the Act provides, inter alia, that an employee may not deduct under paragraph 8(1)(h) of the Act the cost of meals consumed while away in the course of performing the duties of employment, unless he or she is required to be away for a period of at least 12 hours from the municipality and the metropolitan area where the employer's establishment to which the employee ordinarily reported for work is located. According to paragraph 55 of Interpretation Bulletin IT-522R, this means that the employee usually cannot be allowed a deduction for meals unless they are consumed during a trip that requires an overnight stay away from home. These comments are consistent with those in respect of paragraph 8(1)(g) of the Act requiring that the trips be substantial.

It is our opinion, based on the facts submitted, that your employees are generally not required to be away for such substantial periods of time. Therefore, it follows that they would also not generally be allowed a deduction under paragraph 8(1)(h) of the Act for the cost of the meals they incur while carrying on their duties of employment.

We trust our comments will be of assistance to you.

Yours truly,

Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate

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