19 January 1994 External T.I. 9319595 F - Restaurant Meals

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.

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Attention:  XXXXXXXXXX

Dear Sirs:

RE:  Restaurant Meals - Section 67.1 of the Income Tax Act (the "Act")

This is in reply to your letter of June 30, 1993 in which you requested a technical interpretation on section 67.1 of the Act as it would apply in several hypothetical scenarios. We apologize for the delay in replying.

Our Comments:

The fact situations which you set out are quite specific and seem to relate to completed transactions. Assurance as to the tax consequences of completed transactions can only be given by officials of a District Taxation Office. Although we are unable to provide any opinion in respect of the specific scenarios you have described, we have set out below some comments of a general nature which may be of assistance to you.

Where an employee travels from his employer's office (his "Home Office") in one city at which he normally works, to another office (the "Visited Office") of his employer in a distant city such that he could not reasonably be expected to return home daily and he is away for at least 36 hours, the Visited Office could qualify as a "special work site" to that employee under subparagraph 6(6)(a)(i) of the Act if the other prerequisites are satisfied. Ordinarily, a site which qualifies as a "special work site" should also qualify as a "particular place of business" under paragraph 67.1(2)(e) of the Act.

In order to qualify for the exemption provided by paragraph 67.1(2)(e), it is necessary for the employer to incur the expense. Thus, normally the employer must provide the food or make the arrangements for the food to be made available. It is only in extenuating circumstances that the Department will look through the transaction to the ultimate payer. Examples of extenuating circumstances are where the location of the particular place of business or a lack of catering facilities prevent the employer from directly providing the food or making arrangements for the food to be made available. The number of employees involved is not the kind of circumstance which we consider to be extenuating.

A determination as to whether extenuating circumstances exist in any particular case could only be determined when all the details of the case have been established and reviewed. Such a review would normally be made by officials of the local District Taxation Office, who are in a better position to appreciate all of the circumstances.

If the Visited Office were to qualify as a special work site, this would not be sufficient to qualify the travelling employee's expenses for food, beverages and entertainment under paragraph 67.1(2)(d) since that provision applies only in respect to remote work sites, which are described in subparagraph 6(6)(a)(ii).

The exception in paragraph 67.1(2)(e) applies specifically with respect to employees. As noted in Interpretation Bulletin IT-518, paragraph 67.1(2)(c) of the Act enables a contractor to deduct 100% of his costs for food, beverages and entertainment where he is compensated for such costs and they are specifically identified in writing to the person paying the compensation. However, the person paying the compensation is restricted to 80%.

The above responses assume that the expenditures are otherwise reasonable.

We trust that our comments are of assistance.

Yours truly,

Murray Brake for DirectorBusiness and General DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch