REASONABLE MEAL ALLOWANCES: Moving, Medical, and More!!
On September 3, 2020, CRA announced that, effective January 1, 2020, the rates allowable under the simplified method related to travel for medical expenses, moving expenses, and the northern residents deduction, as well as meal claims for transport employees, increased to $23 from $17 per meal, for a total of $69/day. This is also the amount that CRA has stated is reasonable for a meal and therefore the non-taxable portion of an overtime meal or allowance, or certain other travel allowances provided to employees.
CRA has previously noted that reasonable allowances paid by employers for meal costs incurred while travelling is a question of fact. Reasonable allowances are generally not taxable. Although they would generally accept $23 per meal (including taxes), higher amounts could be reasonable, provided they are supported by relevant facts, including:
- cost of ordinary meals in the travel area;
- availability of meals in proximity to the location of work or lodgings while away;
- whether some meals will likely be provided to the employee at no cost; and
- exchange rates where travel is outside of Canada.
CRA has also indicated previously that they consider the meal allowances based on the National Joint Council rates (which well exceed $69/day but are currently less than $23 for breakfast or lunch) to be reasonable for the meal portion of these travel allowances. However, these Council rates are not accepted for the other purposes mentioned above.
ACTION ITEM: Keep a list of all medical and moving travel. Retain associated receipts so that the actual costs can be compared against claims available under the simplified method rates.