7 July 1993 Income Tax Severed Letter 931140A F - Meal Allowance

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.

July 7, 1993

Ted Janiec Business and General DivisionBusiness Audit Thunder Bay District Office

Paragraph 67.1(2)(e)

This is in reply to your round trip memorandum of April 16, 1993 concerning a submission, you received on behalf of a taxpayer, dealing with the application of paragraph 67.1(2)(e) of the Act where employees receive, pursuant to a collective agreement, a living accommodation and meal allowance while away from home.

In our previous letters which are referred to in the representation, we expressed the view that allowances and reimbursements paid to employees who purchase the food themselves are not eligible for the exception provided in paragraph 67.1(2)(e) of the Act in that the application of subsection 67.1(1) of the Act is broader than the more narrow application of paragraph 67.1(2)(e).

The taxpayer agrees that the meal allowance paid to the employees to satisfy the requirement in the collective bargaining agreement that states: "living accommodation and meals while away shall be provided, not to exceed $XXXXXXXXXX per calendar day", meets the conditions described in subsection 67.1(1) of the Act.

In addition, the taxpayer contends that the conditions described in paragraph 67.1(2)(e) of the Act are also met in that the meal allowance which is paid is accepted by the union as satisfaction of the collective bargaining requirement that living accommodation and meals be provided. To reach this conclusion one must define the word "for" as it appears in the phrase "is incurred by the person for food" to mean "with respect to" (i.e., is incurred by the person with respect to food).

OUR VIEWS

It remains our view as stated in our letter of July 17, 1991 that the application of subsection 67.1(1) of the Act is broader then the application of paragraph 67.1(2)(e).

The courts have established that words must be interpreted in context (and the context is the entire Act) and regard must be had to the scheme of the legislation. In our present case we must consider subsection 67.1(1) of the Act which restricts the deduction for business meals and entertainment expenses to 80% of their cost. Paragraph 67.1(2)(e) describes a situation to which the 80% restriction will not apply. The taxpayer agrees with our views that the meal allowances paid to the employees under the collective bargaining agreement meet the conditions as described in subsection 67.1(1) of the Act. Therefore we must now determine whether the meal allowances in question fall within the exception described in paragraph 67.1(2)(e) of the Act.

The Federal Court Trial Division in The Queen v. Taylor, 84 DTC 6234 stated:

"Prima facie the same words in different parts of the same statute should be given the same meaning unless there is a clear reason for not doing so."

The converse presumption was expressed by the Federal Court Trial Division in AEL Microtel Ltd. v. The Queen, 84 DTC 6525, where it was stated:

".... it is a rule of construction that, where in the same Act, and in relation to the same subject matter, different words are used such choice of different words must be considered intentional and indicative of the change in meaning or a different meaning."

The Supreme Court of Canada in the case of Nowegijick v. the Queen 83 DTC 5041 stated at page 5045:

`The words "in respect of" are in my opinion, words of the widest possible scope. They import such meanings as "in relation to", "with reference to" or "in connection with". The phrase "in respect of" is probably the widest of any expression intended to convey some connection between two related subject matters.'

The word "for" in paragraph 67.1(2)(e) can not be interpreted to mean "with respect to" or "in respect of". If it was intended that the word "for" were to mean "in respect of" or "with respect to" then paragraph 67.1(2)(e) would have read "is incurred by the person in respect of food".

The word "for" in paragraph 67.1(2)(e) is used as a function word to indicate the purpose or the object of the expenditure incurred. In our view in order that an expenditure may be considered to be "incurred by the taxpayer for food" the employer would either have to purchase the food or pay someone to provide food for the employees. Where the employer pays a meal allowance to the employees the expenditure would be considered as being incurred in respect of food but it would not be considered "incurred by the taxpayer for food".

We trust our comments will be of assistance.

R. Albert for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch