Employees, who are called upon to travel within the metropolitan area of their usual place of work to meet clients, receive a daily meal allowance of $17 per day worked (including those where they are not travelling) so that they can remain on the road and thus be more efficient. Is the allowance taxable?
After noting its position in ITTN No. 40 that “a travel allowance paid by the employer in respect of travel within the municipality or metropolitan area of an employee for the purpose of the performance of the duties of the employee’s office or employment may be excluded from income if … the allowance is reasonable [and] is paid primarily for the benefit of the employer,” CRA stated:
[A]n allowance would be paid primarily for the benefit of the employer if the principal objective of the allowance is to ensure that the employee's duties are undertaken in a more efficient manner during the course of a work shift, and where allowances paid are not indicative of an alternate form of remuneration.
In such a case, we are generally of the view that the allowance of $17 paid for the days during which the employees are travelling should not be included … . However, they should include in computing their income the allowance of $17 they receive while they are not travelling, as that allowance is not based on an estimate of the average travel expenses they incur.