Words and Phrases - "compensate"

The taxpayer, which sold its manufactured goods for a fixed price payable in instalments, paid reasonable meal allowances to its employees for their travel in connection with the sale of the goods (e.g., installations). As the only written mention to the purchasers of such allowances, the interim invoices contained a note, for information purposes only, setting out the cumulative amount of the meal allowances paid or payable to date.

Before concluding that (by virtue of the exception in s. 67.1(2)(c) s. 67.1(1) did not limit the deduction to the taxpayer for its incurring of the meal allowances and that such limitation instead applied to the purchasers respecting the cumulative amount of the meal allowances referred to in the interim invoice note, CRA indicated:

• The expression “amount … compensated” in s. 67.1(2)(c) was used in the sense of “paid or reimbursed”.
• The interim billing payments of the purchasers were intended to pay or reimburse the taxpayer for the costs incurred in performing the contract, including related reasonable meal allowances; and it was unnecessary to specify their amount in the contracts or for them to billed separately.
• A note on an invoice allowing a purchaser to determine the amount for food or beverages that was included in the total amount invoiced was sufficient to satisfy the “specifically identified in writing” requirement of s. 67.1(2)(c). Thus, the interim invoice note disclosure of the cumulative amount of the meal allowances was sufficient for the purchasers to determine the amount for food or beverages that was included in the total amount invoiced to them on the interim invoice, so as to determine the amount of their s. 67.1(1) expense denial.
• In light of the broad interpretation of “in respect of”, the cumulative amount of reasonable meal allowances paid or payable to date referred to in such interim invoices note disclosure was “an amount paid or payable in respect of the human consumption of food or beverages” for the purposes of s. 67.1(1).