12 August 1993 External T.I. 9309795 F - Moving Expenses

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.

XXXXXXXXXX

Attention:  XXXXXXXXXX

Dear Sir\Madam:

RE:  Moving Expenses

We are writing in response to your letter of March 31, 1993, wherein you requested our views regarding the application of section 67.1 of the Income Tax Act (the "Act") in a situation where an employer reimburses an employee for the cost of food and beverages incurred by the employee in the course of a relocation. We also refer to our telephone conversation of July 20, 1993 (XXXXXXXXXX/Larochelle). We apologize for the delay in providing a response.

In your letter you have set out the following situation:

An employee is transferred to a new work location and is entitled to deduct moving expenses under section 62 of the Act. Amounts paid for meals are not subject to the 80% rule by virtue of the exception in paragraph 67.1(1) of the Act. If, instead, this same employee is reimbursed by his/her employer for the cost of meals incurred as a result of the move, you have asked whether the employer is then subject to the 80% limitation for the cost of meals or is paragraph 67.1(2)(e) of the Act broad enough to include the reimbursement of such expenses where all employees at a particular place of business are entitled to receive the same benefit (even though the employee has to be transferred to receive it)?

Our Comments:

As explained in our telephone conversation, since subsection 67.1(2) of the Act does not specifically exclude employer reimbursements of food and beverage costs incurred with respect to employee relocations, it is our opinion that subsection 67.1(1) of the Act would restrict the deductibility of the costs to the employer. We therefore confirm that, while a 100% deduction is permitted where a taxpayer claims an amount for meals under section 62 of the Act, only an 80% deduction is permitted where the employer reimburses the employee for the same expense.

In answer to your reference to paragraph 67.1(2)(e) of the Act, we would advise that it is the Department's position that this paragraph, as amended in 1991 by Bill C-18, clarifies that the food, beverages or entertainment must be generally available to all employees at a particular business location of the employer. Accordingly, it is our view that the costs in question would not be described in paragraph 67.1(2)(e) of the Act and that subsection 67.1(1) would be applicable.

You will also note that the above comments are consistent with the following explanatory note released by the Department of Finance (May, 1991) in connection with the amendment:

This paragraph is amended to clarify that, for this exemption to apply, the food, beverages or entertainment must be generally available to all employees at a particular location of the employer and consumed or enjoyed by such employees.

We trust our comments are of assistance.

Yours truly,

P.D. Fuoco for DirectorBusiness and General Division SpecialtyRulings DirectorateLegislative and Intergovernmental Affairs Branch