2019-0809831E5 Meal Allowance

Principal Issues: Whether meal allowances for ambulance drivers for trips to medical centres outside of the region where the drivers are based is a taxable benefit.

Position: The meal allowance would likely be excluded from income on the basis of the exception provided in subparagraph 6(1)(b)(vii) of the Act.

Reasons: It would appear reasonable to consider that an employee involved in patient transports, and that is regularly required to transport patients between municipalities, will nonetheless be considered to have an ordinary place of employment at the employer’s establishment where the employee is based. Therefore, the allowances provided to employees of the taxpayer for emergency transports outside of the municipality of the employer’s establishment where the employee is based would appear to qualify as meal allowances for travel outside of the municipality and metropolitan area where the employer’s establishment, at which the employee ordinarily worked, was located for the purposes of the exception in subparagraph 6(1)(b)(vii) of the Act.

Author: Witteveen, Tobias
Section: 6(1)(b)(vii) and 67.1

XXXXXXXXXX                                                                                2019-080983
                                                                                                        T. Witteveen
October 9, 2019

Dear XXXXXXXXXX:

Re: Tax Treatment of Meal Allowances

We are writing in response to your correspondence of August 22, 2018, regarding the tax treatment of meal allowances for ambulance transport employees. Thank you for your understanding regarding the delay of this response.

Based on the information you have provided and your subsequent telephone conversation with Tobias Witteveen from the Income Tax Rulings Directorate (Witteveen/XXXXXXXXXX) on June 6, 2019, it is our understanding that:

*     XXXXXXXXXX provides both emergency and non-emergency patient transports.

*     Meal allowances are provided for emergency transports only since non-emergency transports allow for sufficient notification for employees to make arrangements for meals.

*     XXXXXXXXXX is based in XXXXXXXXXX municipalities in XXXXXXXXXX and employees are involved in the transport of patients to medical centres in other municipalities that are a significant distance from the municipalities where the employees are based.

*     Employees are based out of and reside in, or close to, one of the XXXXXXXXXX municipalities where XXXXXXXXXX is based.

*     The allowances are paid in respect of patient transports where employees are required to travel a certain minimum distance in the course of a patient transport.

*     Employees that are called in for an emergency transport will proceed directly to the patient pick up location and drop the patient off at medical centres in various municipalities in the province.

*     Employees can be frequently involved in patient transports that will entitle them to a meal allowance.

Our comments

This technical interpretation provides general comments about the provisions of the Income Tax Act (the “Act”) and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R9, Advance Income Tax Rulings and Technical Interpretations.

An allowance or advance is defined in Guide T4130, Employer’s Guide - Taxable Benefits and Allowances as any periodic or lump-sum payment that an employee receives without having to account for its use. Paragraph 6(1)(b) of the Act requires that a taxpayer include in employment income all amounts received by virtue of an office or employment as an allowance for personal or living expenses. However, there are exceptions to this general rule. In particular, subparagraph 6(1)(b)(vii) of the Act generally excludes from income reasonable travel allowances received by an employee from the employer for travelling away from the municipality (and the metropolitan area, if there was one) where the employer’s establishment, at which the employee ordinarily worked, was located.

The reasonableness of a travel allowance (in this case, an allowance for meals) is always a question of fact to be considered in light of all the relevant circumstances. Although the Canada Revenue Agency (“CRA”) will generally accept $17 (including taxes) per meal as a reasonable allowance, it will also consider a higher amount to be reasonable where the allowance is designed to cover the out-of-pocket expenses an employee could be expected to incur for meals while travelling for work. An allowance would not be considered reasonable where the travel time for a trip suggests that a meal on the trip is not required. Other relevant factors to consider in determining if the amount of a travel allowance is reasonable for the purposes of subparagraph 6(1)(b)(vii) may include:

•     the average cost of ordinary meals in the area to which the employee is travelling;

•     the availability of meals in the proximity of the location where the employee is working or lodging while away;

•     whether the employee is likely to have some meals provided to him or her at no cost; and the amounts paid to Canadian federal government employees travelling on government business (see the appendices to the National Joint Council's Travel Directive, available at www.njc-cnm.gc.ca/directive).

Where the CRA considers an allowance to be unusually high (for example, higher than the National Joint Council rates), the employer should ensure that receipts, vouchers or other acceptable evidence are available to show that the allowance is not in excess of a reasonable amount.

Based on the facts provided above it would appear reasonable to consider that an employee involved in patient transports, and that is regularly required to transport patients between municipalities, will nonetheless be considered to have an ordinary place of employment at the employer’s establishment where the employee is based. Therefore, the allowances provided to employees of XXXXXXXXXX for emergency transports outside of the municipality of the XXXXXXXXXX establishment where the employee is based would appear to qualify as meal allowances for travel outside of the municipality and metropolitan area where the employer’s establishment, at which the employee ordinarily worked, was located and would be excluded from income under subparagraph 6(1)(b)(vii) of the Act.

We trust these comments will be helpful.

Yours truly,

Sandro D’Angelo, CPA, CMA
Acting Manager
Business and Employment Income Section
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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