Canada: Increased “reasonable meal allowance” for 2020

Canada: Increased “reasonable meal allowance” for 2020

The Canada Revenue Agency (CRA) increased to $23* (up from $17) as the amount that an employer can use to determine whether an overtime meal or allowance—or the meal portion of a travel allowance—is taxable.

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Also, the CRA increased the rate at which transport employees and certain other individuals can claim meal expenses using the simplified method to $23 per meal (from $17).

The increases are retroactive to 1 January 2020.

*$=Canadian dollar


Background

The CRA generally allows an employer to exclude the value of an overtime meal or allowance, or certain travel allowances (including a meal portion), from an employee's income if the value is reasonable and other conditions are met. Prior to the CRA's September 2020 announcement, the CRA generally considered a "reasonable" allowance or meal cost to be a value of up to $17 (including GST/HST and PST). If all of the conditions are met and the meal or allowance is not a taxable benefit, the employer does not need to report the value of the meal or allowance on the employee's T4 slip.

The CRA allows transport employees and individuals claiming moving expenses, medical expenses or the northern resident's deduction to calculate their meal expenses claim on their individual (personal) income tax return using the simplified method. This method is based on a flat rate, and individuals do not have to keep receipts for their meals.

Read a September 2020 report prepared by the KPMG member firm in Canada

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