15 December 2009 External T.I. 2009-0320011E5 - Deductibility of Meal Expenses - Employees

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.

Principal Issues: Whether an employee who travels away from the municipality during a work shift but returns home each day is entitled to claim a deduction for meals under paragraph 8(1)(g).

Position: The meals are not deductible under paragraph 8(1)(g). However, and while ultimately a question of fact, it appears that the meals may be deductible under paragraph 8(1)(h).

Reasons: No amounts are disbursed by the employee for any lodging and the employee returns home at the end of each work shift.

XXXXXXXXXX 								2009-032001
									Michael Cooke, C.A.
December 15, 2009

Dear XXXXXXXXXX :

Re: Deductibility of Meal Expenses

We are writing in response to your letter of March 24, 2009, which we received on April 29, 2009, regarding the deductibility of certain meal expenses incurred by you.

The facts in your letter are briefly summarised as follows:

• You are employed as a XXXXXXXXXX and that your duties of employment typically require you to work 12-16 hours;
• Your employer's business primarily involves the transportation of XXXXXXXXXX on short and long haul trips;
• Your duties of employment take you away from the municipality where your employer's home terminal is located and where you report for work;
• You supply your own food and prepare your own meals during each work shift; and
• Subject to safety considerations, sometimes you are able to get some sleep during your work shift in an employer-provided bunk, even though you return home at the end of each shift.

It is your view, that you are entitled to claim a deduction for meal expenses under paragraph 8(1)(g) of the Income Tax Act (the "Act").

Our Comments

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 70-6R5, "Advance Income Tax Rulings", dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the internet at http://www.cra-arc.gc.ca. Where the particular transactions are completed, the inquiry should be addressed to the relevant tax services office, a list of which is available on the "Contact Us" page of the CRA website.

Notwithstanding the above, we are prepared to provide the following comments.

Paragraph 8(1)(g) of the Act applies only where each of the following four conditions are met:

1. The employee works for an employer whose main business is the transport of goods and/or passengers (such as an airline, railway, bus or trucking company);

2. The employee travels in vehicles the employer uses to transport goods and/or passengers;

3. The employee regularly has to travel away from the municipality (and the metropolitan area, if there is one) where the employer's establishment to which the taxpayer reports for work is located; and

4. The employee regularly makes disbursements for both meals and lodging in the performance of such duties and is not reimbursed (or entitled to be reimbursed) for such amounts.

While ultimately a question of fact, based on the information you have provided, it appears that while the first three conditions listed-above have been met in your situation, the fourth condition, requiring expenditures for both meals and lodging, have not been met.

As stated in paragraph 3 of Information Circular IC73-21R9, Claims for Meals and Lodging Expenses of Transport Employees ("IC73-21R9"), the deduction under paragraph 8(1)(g) of the Act is not intended for employees who return home at the end of each work day and the courts have supported this position. Moreover, while paragraph 3 of IC73-21R9 does indicate that the CRA will allow a deduction for "meals only" where an employee does not incur any expenditure for lodging, because the employee used other facilities, such as a truck equipped with a sleeper cab, this administrative policy does not apply where an employee returns home at the end of a regular work shift that happens to take place at night, such as appears to be the case in your situation (i.e., the transport employee must be regularly required to travel away on journeys of substantial distance and duration so as to require some form of "overnight" accommodations).

Paragraph 8(1)(h) of the Act, however, may have application to your particular situation.As discussed at the end of paragraph 3 of IC73-21R9, paragraph 8(1)(h) of the Act permits employees to deduct travel expenses, such as meals, where each of the following conditions is met:

1. The employee is ordinarily required to carry on the duties of employment away from the employer's place of business or in different places,

2. The employee was required under the contract of employment (which could be implied) to pay any travel expenses that were incurred in the performance of the employment duties,

3. The employee was not in receipt of a non-taxable allowance for such travel expenses, and

4. The employee has not claimed a deduction under any of paragraphs 8(1)(e)(f) or (g) of the Act.

The deduction of the cost of meals under paragraph 8(1)(h) of the Act is also subject to the requirements in subsection 8(4) of the Act, which provides that an employee can only deduct the cost of meals consumed during a period while the employee was required to be away for 12 hours or more from the municipality and/or the metropolitan area, if there is one, where the employer's establishment to which the employee regularly reported for work was located.

Paragraphs 10 and 11 IC73-21R9, describe a detailed and a simplified method by which transport employees may deduct the cost of meals. The simplified method alleviates the burden of substantiating meal expenses with vouchers. Moreover, as described in paragraph 12 of IC73-21R9, and as may be applicable to your situation, where transport employees are provided with cooking facilities and they purchase groceries and prepare meals either collectively or separately, the CRA will normally accept claims without supporting vouchers if the amounts they claim for meals per person per day do not exceed $34 for 2006 and subsequent taxation years. The total amount an employee can deduct for meals under paragraph 8(1)(h) of the Act, using either the simplified or detailed method, must be reduced by 50% pursuant to section 67.1 of the Act. In order to support any claims, the employee must keep a log detailing the nature of the travel (such as locations, times, etc).

Lastly, in order to claim a deduction under paragraph 8(1)(h) of the Act, subsection 8(10) of the Act requires the employee to obtain a completed Form T2200 - Declaration of Conditions of Employment from their employer. Should you or your employer have any questions concerning the completion of Form T2200, they should be directed to the relevant tax services office.

We trust that these comments will be of assistance.

Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy & Regulatory Affairs Branch