Generally, an employee must include the value of any benefits received or enjoyed in their taxable income. CRA normally considers a taxable benefit to be conferred when:
the benefit provides an economic advantage to the employee; the benefit is measurable and quantifiable; and
it mainly benefits the employee (or a non-arms’ length person) and not the employer.
If the meal is reimbursed while the employee is travelling within the municipality or metropolitan area of the establishment of the employer, the employee is generally considered the primary beneficiary. However, in certain cases, the reimbursement can be excluded from the employee’s income. For example, if the main purpose of the reimbursement is to ensure that the employee’s functions are carried out more effectively as part of a shift, then the employer could be the one who mainly benefits.
Meal reimbursements when the employee travels outside the municipality of the employer in the performance of their duties is generally considered to primarily benefit the employer.
The fact that the employer charges the client for the reimbursement is not a factor in this determination.
Action Item: Consider the tax ramifications when developing and implementing a meal reimbursement policy.
The above information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions in a newsletter such as this, a further review should be done by your qualified DJB professional.
Although every reasonable effort has been made to ensure the accuracy of the information contained in this newsletter, no individual or organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of liability for its contents.
For further questions… please give your DJB advisor a call.
Article originally published in: Tax Tips & Traps 2017 First Quarter – Issue 117.