24 March 2010 External T.I. 2009-0348151E5 - Meal Allowances

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.

Principal Issues: Whether certain employer provided amounts for meals fit within the CCRA administrative policy for employer-provided meals or allowances as described in ITTN #40

Position: Question of fact

Reasons: Must be determined based on facts
JURISPRUDENCE: SCC Shell Canada Ltd v The Queen, 99 DTC 5669

2009-034815
XXXXXXXXXX Brenda White
519-645-5454
March 24, 2010

Dear XXXXXXXXXX :

Re: Meal Allowances

This is in response to your letter of November 10, 2009 wherein you requested clarification of the Canada Revenue Agency's ("CRA") administrative policy on employer-provided overtime meals or allowances as described in Income Tax Technical News #40 (ITTN #40).

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of a request for an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, "Advanced Income Tax Rulings", dated May 17, 2002. This Information Circular and other CRA publications can be accessed on the internet at http://www.cra-arc.gc.ca. Where the particular transactions are complete, the inquiry should be addressed to the relevant tax services office, a list of which is available on the "Contact Us" page of the CRA website. Although we cannot comment on your specific situation, we are prepared to provide the following comments in respect of the issues that you raised. Please note, however, that these comments are of a general nature only and are not binding on the CRA.

By operation of paragraph 6(1)(a) of the Act, employees are generally taxable on the value of all benefits they receive by virtue of their employment. However, the courts and the CRA generally accept that when an amount is paid in respect of something that is primarily for the benefit of the employer, there is no taxable benefit to the employee. It is the employer's responsibility to determine whether the primary beneficiary of the economic advantage is the employer or the employee.

ITTN #40 describes the CRA's revised overtime meals and allowances policy, which is effective for 2009 and subsequent years. In order for an overtime meal or allowance to be non-taxable to the employee, one of the several conditions that must be met is that the value of the meal or allowance must be reasonable. For purposes of this policy, the CRA will generally consider an amount not exceeding $17 as being reasonable. The CRA will also consider amounts exceeding $17 to be reasonable if the relative cost of obtaining meals in that particular location is higher, or there are other significant extenuating circumstances. However, if the amount paid by the employer does exceed $17 and is considered to be unreasonable in the circumstances, the full amount paid by the employer will be taxable

We trust these comments will be of assistance.

Yours truly,

Renée Shields
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch