16 January 2007 External T.I. 2006-0187761E5 - Meal Reimbursement Policy

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: How to treat meal reimbursements received by travelling employees where it is not viable to bring their own lunch.

Position: Question of fact.

Reasons: Based on facts and whether subparagraphs 6(1)(a) or 6(1)(b)(viii) would apply.

XXXXXXXXXX 2006-018776
Joy Bertram
January 16, 2007

Dear XXXXXXXXXX:

Re: Meal Reimbursement Policy

We are writing in response to your letter of May 23, 2006, wherein you requested our opinion on whether certain reimbursements or employer payment for meals are considered taxable benefits of employees under section 5 or 6 of the Income Tax Act (the Act). We apologize for the delay in responding.

You indicated that the employer reimburses employees for lunchtime meals purchased at restaurants or permits them to use a company credit card. The employees are inspectors at construction sites and work on projects throughout Ontario. The employees leave directly from their homes and report to work at their first inspection site. An employee may travel to as many as twelve different locations to perform site inspections throughout each day. The employees return home each evening. The employer does not provide the employees with a place to eat lunch. Under the employment contract, the employer is required to provide a sanitary place where the employees can consume a lunchtime meal. You indicated that the inspection sites are not sanitary and the employer has adopted a policy to reimburse or pay for lunchtime meals purchased in restaurants.

Our Comments

Written confirmation of the tax implications inherent in particular transactions is given by the Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out Information Circular 70- 6R5, Advance Income Tax Rulings, dated May 17, 2002. However, based on the information provided to us, we are prepared to offer the following general comments, which may be of assistance. Paragraph 6(1)(a) of the Act generally requires an employee to include in employment income the value of board, lodging and other benefits of any kind whatever received or enjoyed in the year. Depending on the circumstances, it is our view that this provision is sufficiently broad to include employer reimbursements or payments in respect of meals. In addition, paragraph 6(1)(b) requires an employment income inclusion of all amounts received in the year as an allowance for personal or living expenses. Subparagraph 6(1)(b)(vii), however, provides an exception for taxation in respect of reasonable allowances for travel expenses (including meals) that are paid to an employee for travelling in the course of employment away from the municipality where the employer's establishment where the employee ordinarily worked or reported was located, and the metropolitan area, if there is one, where that establishment was located.

Where an employer reimburses or pays for employee meals, and subparagraph 6(1)(b) (vii) of the Act would have applied, say if the employee were provided an allowance, it is the Agency's general view that the reimbursement or payment is not required to be included in income under paragraph 6(1)(a) of the Act. In terms of how this would impact reimbursements or payments in the situation you described would depend on the facts of each individual reimbursement or payment.

We trust the above will be of assistance to you.

Yours truly,

Randy Hewlett
Manager
Business and Personal Section
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch