9 January 2001 External T.I. 2000-0060445 - EMPLOYEE BENEFITS - MEALS

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: Whether the provision of meals by an employer to an employee results in a taxable benefit which has to be included in the employee's income for tax purposes.

Position: Yes, unless they are supplied at a special worksite or remote work location.

Reasons: Unless the exception in subsection 6(6) of the Act applies, the provision of meals is considered to be an "other benefit of any kind whatever" for purposes of paragraph 6(1)(a) of the Act and must therefore be included in an employee's income.

National Defence - Financial
  Policy and Procedures
National Defence Headquarters					2000-006044
Ottawa ON  K1A 0K2							A. Seidel, CMA
(613) 957-2058
Attention: Frances Bertrand

January 9, 2001

Dear Sir:

Re: Employee Benefits - Meals

This is in reply to your letter dated October 6, 2000 in which you requested our views as to whether the provision of meals by an employer to certain employees would result in a taxable benefit to those employees.

The particular circumstances in your letter on which you have asked for our views appears to be a factual situation involving specific taxpayers. As explained in Information Circular 70-6R3, it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advance income tax ruling. Should your situation involve a specific taxpayer and a completed transaction, you should submit all relevant facts and documentation to the appropriate tax services office for their views. However, we are prepared to offer the following general comments which may be of assistance.

Subject to specific exceptions, paragraph 6(1)(a) of the Income Tax Act (the "Act") provides that income from an office or employment includes the value of "benefits of any kind whatever received or enjoyed by the taxpayer in the year in respect of, in the course of, or by virtue of an office or employment". This provision would generally include the value of any meals supplied by an employer to an employee at no cost to the employee.

Paragraph 28 of Interpretation Bulletin IT-470R ("IT-470R") discusses the value of the benefit in those situations where the employer is providing subsidized meals to employees. In general, subsidized meals provided to employees will not be considered to confer a taxable benefit provided the employee is required to pay a reasonable amount for the meal. It is our general view that a reasonable charge is one that covers the cost of the food, its preparation and service of the meal. Where less than a reasonable charge is paid, the value of the benefit is the total of the costs described above less the amount paid by the employee.

Subsection 6(6) of the Act provides an exception to the application of paragraph 6(1)(a) of the Act by allowing board and lodging benefits related to special work sites and remote work locations to be excluded from an employee's income. This would include the value of meals supplied at a special work site or a remote work location. Interpretation Bulletin IT-91R4 ("IT-91R4") discusses the requirements that an employee must meet in order to exclude from income the value of benefits, including meals supplied to an employee, at a special work site or at a remote work location. Paragraphs 4 through 11 of IT-91R4 discuss the requirements that must be met in order for the special work site exclusion to apply and paragraphs 12 through 18 of IT-91R4 discuss the requirements that must be met in order for the remote work location exclusion to apply.

A copy of IT-470R and IT-91R4 is available at your local tax services office or may be obtained from our Internet web site (www.ccra-adrc.gc.ca).

Yours truly,

John Oulton, CA
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch