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.
Response to 1993 Tax Executive Institute Canadian Tax Conference
Question:
Can the Department comment on the applicability of section 67.1 of the Act to a corporate taxpayer in the following fact situation:
A corporate taxpayer whose principal business is the transport of goods provides an amount to employees in respect of a meal allowance. The employer includes the amount of the meal allowance on each employee's T4 supplementary slip pursuant to paragraph 6(1)(b) and signs a duly completed TL2 form. The employee deducts the actual amount of meal costs incurred under paragraph 8(1)(g) subject to the 80% limitation imposed by section 67.1 of the Act. The corporation deducts the full amount paid to the employee as an allowance under paragraph 18(1)(a) of the Act. The corporate taxpayer is not subject to the 80% limitation because the payment of the meal allowance is recharacterized as wages by virtue of its inclusion on the employee's T4 supplementary slip and the actual meal cost has already been subject to the 80% limitation in the hands of the employee.
Response:
In our view, a meal allowance paid to an employee is not "recharacterized" as wages but is included in the employee's income under paragraph 6(1)(b) of the Act unless it meets the criteria listed therein for exclusion. Where a meal allowance is included in an employee's income, the 80% limitation will not apply in respect of the employer's deduction of that allowance by reason of paragraph 67.1(2)(d) of the Act.
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© Her Majesty the Queen in Right of Canada, 1993
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© Sa Majesté la Reine du Chef du Canada, 1993
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