MEALS AND SUBSIDIZED MEALS
Meals provided by employers to employees can sometimes be considered taxable benefits, depending on the nature and purpose of the meal. The Canada Revenue Agency (CRA) provides guidelines to determine the tax implications of meal allowances and subsidized meals.
Tax Treatment of Meals
- Overtime Meals or Allowances: A meal or meal allowance provided during overtime work is not considered a taxable benefit if all the following conditions are met:
- The allowance or the value of the meal is reasonable. Generally, a value of up to $23 per meal is considered reasonable.
- The overtime work is infrequent and occasional, typically less than three times a week.
- The meal is provided due to special circumstances, such as working extended hours beyond a normal schedule.
- Frequent Overtime Meals: If overtime meals or allowances are provided frequently, they may be considered a taxable benefit, as they become part of the employee's regular compensation.
Subsidized Meals
Subsidized meals provided to employees, such as those in a cafeteria or dining facility, are generally not considered taxable if the employee pays a reasonable charge. A reasonable charge covers the cost of food, preparation, and service, minus any payments made by the employee.
- If the charge is not reasonable, the taxable benefit is the difference between the cost of providing the meal and the amount paid by the employee.
- Examples of non-taxable meal allowances include:
- A $20 meal allowance for overtime work, as deemed reasonable in Morissette, 2012 CarswellNat 379.
- A $40 meal allowance provided after 10 hours of work at a remote job site, as deemed reasonable in Hamilton, 2020 CarswellNat 234.
- Reasonable meal allowances for ambulance drivers on out-of-town emergency transports.
Employer Responsibilities
- Reporting Taxable Benefits: If the meal or meal allowance is taxable, the value must be included in the employee's income and reported on the T4 slip.
- Payroll Deductions: Employers must calculate and remit the necessary deductions, including income tax and Canada Pension Plan (CPP) contributions, on the value of the taxable benefit.
CRA Guidance on Meals
The CRA has clarified that employers are not required to prove that the meal was consumed to qualify for the allowance to be non-taxable. The focus remains on the purpose of the meal and whether the conditions for exemption are met.
Additional Resources
