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CRA tweaks policies on meal allowances, expenses

Thursday, September 03, 2020 @ 3:45 PM | By Ian Burns

The Canada Revenue Agency (CRA) has changed a number of its provisions on meal allowances and expenses in response to the COVID-19 pandemic.

The agency announced Sept. 3 it has increased the amount that employers can use to determine whether an overtime meal or allowance, or the meal portion of a travel allowance, is taxable, from $17 to $23. It also changed the rate at which transport employees and other individuals can claim meal expenses, using the simplified method (a flat rate per person), from $17 to $23 per meal. These increases are effective immediately and retroactive to Jan. 1, 2020.

“The increase to the reasonable amount for meal benefits and allowances, as well as the flat rate amount for meal expenses, demonstrates CRA’s commitment to ensuring our tax system is fair and meets the needs of Canadians today,” said Revenue Minister Diane Lebouthillier.

The government said increasing the amounts ensures that all employees, including essential workers, can access meals that meet today’s inflation rates as they continue to provide services that support Canadians through the COVID-19 pandemic. The CRA’s policies on taxable benefits and allowances 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 as long as the value is reasonable (among other conditions). If all of the conditions are met, the employer does not need to report the value of the meal or allowance on the employee’s T4 slip.

The $17 value in these policies was last updated in 2009. The CRA notes that these increases provide more flexibility and now accurately represent the average cost of a meal today. More information on the increased amounts and how they impact employers and/or employees will be made available in the coming weeks.

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