14 February 1989 Income Tax Severed Letter 7-3554 -  

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.

TO Source Deductions Division L. Mancino, Director

FROM Small Business and General Division S. Short 957-2134

Attention: I. McDonald A/Chief Reserach and Enquiries Section

DATE Feb 14 1989

SUBJECT: Section 67.1 Expenses for Food Limitation
         and Paragraph 6(1)(a) Value of Benefits

We are replying to your January 3, 1989 memorandum concerning an employer query about the limitation on the amount that may be deducted in respect of amounts reimbursed to employees for meal expenses under new section 67.1 of the Income Tax Act (the "Act").

The employer has asked whether he may deduct 80% of the reimbursed meal cost as a meal expense in accordance with section 67,1 of the Act and the remaining 20% as employee remuneration. The amount deducted as employee remuneration would be added to the employee's income in the form of a taxable benefit under paragraph 6(1)(a) of the Act.

Fact determines whether a meal reimbursed to a employee constitutes a taxable benefit to that employee under paragraph 6(1)(a) of the Act. An employer is not permitted discretion in the amounts to be included as income from office or employment. It should perhaps be noted that the valuation of the personal benefit, if one exists, is determined by the value of the benefit received or enjoyed by the employee and not necessarily by the actual cost incurred by the employee. The fact that the employer is unable to deduct a portion of the meal expense in his calculation of profit is irrelevant in determining if a taxable benefit exists and the value of that benefit.

If the reimbursed meal does not confer a benefit on the employee, no benefit under paragraph 6(1)(a) of the Act exists. If no benefit exist then there is no "remuneration" to the employee and hence the employer has no deduction for "salary, wages and other remuneration" in the situation. The employee is reduced to claiming only a meal expense deduction as permitted by section 67.1 of the Act.

We hope that the above comments will be of assistance to you.

ORIGINAL SIGNED BY ORIGINAL SIGNÉ PAR

B.W. Dath

Director Small Business and General Division Speciality Rulings Directorate Legislative and Intergovernmental Affairs Branch