Where a blue-collar employee of a City works overtime for more than a certain number of hours above the regular hours of work, a meal allowance is paid, with a further meal allowance being paid if there is a further increment in the overtime hours for that period. For particular situations, such as snow removal operations, the employee may be called upon to work overtime more than two times in a week.
A part-time City firefighter responding to an emergency call receives an indexed meal allowance after X hours of continuous work, and to a further allowance following a further increment in the overtime hours.
Are these allowances taxable?
CRA found that the regular blue-collar meal allowances satisfied the following tests and, thus, were not taxable:
[T]he CRA does not consider a meal allowance paid to such an employee working overtime as income if the following criteria are satisfied:
- the value of the meal or meal allowance is reasonable: in general, an amount up to $17 will be considered reasonable;
- the employee works at least two hours of overtime immediately before or immediately following the employee's normal scheduled hours of work;
- the overtime is infrequent or occasional.
With respect to the third criterion, the CRA considers overtime to be of an occasional nature if it is worked less than three times a week. However, that condition can be satisfied where a meal or allowance is provided three or more times a week on an occasional basis to meet ad hoc workload requirements, such as major repairs. …
On the other hand ... a meal allowance to which an employee is entitled after working a certain minimum amount of overtime to be taxable if the payment to the employee is not truly related to whether or not the employee actually takes a meal.
However, the firefighter allowances were taxable as they were “not related to the requirement to work overtime.”