16 February 1995 Internal T.I. 9501607 - MEAL ALLOWANCE REDUCTION

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

		February 16, 1995

	Audit Technical Support Division	Head Office
E. H. Gauthier	Rulings Directorate
	Director			A.M. Brake
	Attn: Ian J. D. Rathwell	(613) 957-8953
		950160

67. 1(2(e) - "particular place of business"

This is in reply to your memorandum of January 19, 1994, regarding the application of subsection 67.1(1) and the exceptions contained in subsection 67.1(2) and more specifically, what constitutes a "particular place of business".

In the film and television industry (the "Companies") it is common practice to feed actors and crew during filming. This practice occurs regardless of whether the filming is on location or in the studio. The rationale for this is that if the Companies feed the employee, they can minimize the time allotted to meal breaks.

One example of a location which would generally be considered 'a particular place of business' is a customer's premises which are located well outside the municipality where the employer's operations are usually centred. Also, a site that qualifies as a 'special work site' for the purposes of subparagraph 6(6)(a)(i), can generally be considered a 'particular place of business'. We agree with your view that the studio and the filming location could both be considered to be a particular place of business for purposes of paragraph 67.1(2)(e) of the Act and, as you suggest, section 67.1 would not have application by virtue of paragraph 67.1(2)(d) if the employees are taxable on a benefit in respect of receiving free meals from the employer.

It might be noted that subsections 67.1(1) and (2) are not relevant in considering whether a benefit or allowance is taxable in the hands of an employee. Hence, for purposes of determining the status of the employee, it is not relevant whether an exemption to the employer from subsection 67.1 is provided or not.

Paragraph 6(1)(a) requires to be brought into income an amount relating to a benefit in respect of board or lodging and any other benefits of any kind whatever except benefits described in subparagraphs 6(1)(a)(i) through (v). Paragraph 6(1)(b) requires all allowances to be brought into income in the year received for personal living expenses or as an allowance for any purpose to the extent that they are not described within the exceptions set out in subparagraphs (i) to (xi) thereof. Allowances received as meal or food allowances that are not described in the exceptions are subject to tax unless specifically exempted by some other provision of the Act and in this regard subsection 6(6) will be discussed later. Hence, it can be said that, generally speaking, the value of free meals constitute a taxable benefit under paragraph 6(1)(a) and that non-accountable allowances are required to be brought into income by virtue of paragraph 6(1)(b), subject, of course, to the exceptions provided by these respective provisions (paragraphs (a) and (b)), unless they are exempted by virtue of paragraph 6(6)(a) which provides exemption for allowances received at a special work site or remote area. Subparagraph 6(6)(a)(i) applies to non-accountable allowances paid to employees at a special work site whereas subparagraph 6(6)(a)(ii) relates to non-accountable allowances at a remote location.

Hence, in the situation you describe, it would seem that the value of the free meals constitute taxable benefits in the hands of the employees by virtue of paragraph 6(1)(a) of the Act and would fall within the paragraph 67.1(2)(d) exception. If, however, in the unlikely event that the meals are not taxable and therefore not exempt under paragraph 67.1(2)(d), they could fall within the exception provided by paragraph 67.1(2)(e) of the Act. It might be noted that the exceptions provided by paragraphs 67.1(2)(d) and (e) relate only to amounts in respect of meals or allowances for employees of the person bearing the cost. Paragraph 67.1(2)(c) could provide exemption in respect of the cost of meals provided to employees of some other person at the work site provided that person is billed specifically for these costs.

With regard to sports teams where the home team club provides the meals to its players and the visiting players, it would seem that the home team employees would be enjoying a taxable benefit at home and would be considered to be on travel status while on the road. The home team club would get a 67.1(2)(d) exemption for the home team employees by virtue of the benefit being taxable but it would not be exempted on the cost of the visiting players meals unless the costs were specifically billed to the visiting teams club as set out in paragraph 67.1(2)(c). If so, the cost would now be borne by the visiting team club for its own employees in travel status on the road and the visiting team club would be subject to subsection 67.1(1).

The current interpretation of paragraphs 67.1(2)(d) and (e) is that (d) excludes from subsection 67.1(1) amounts that are actually taxable including amounts that are exempted by virtue of subparagraph 6(6)(a)(ii) and that other non taxable amounts, including subparagraph 6(6)(a)(i) amounts, may be excluded if they satisfy the requirements of paragraph 67.1(2)(e).

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R. Albert
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch