Principal Issues: [TaxInterpretations translation] Can employers of long-haul truck drivers benefit from the increase in the specified percentages of the amount paid or payable for food and beverages?
Position: Yes.
Reasons: As provided under the Department of Finance's Draft Legislative Proposals Relating to Income Tax dated November 5, 2010, including proposed technical amendments to existing subsection 67.1(1.1). Explanatory Notes to the November 2010 Draft Legislative Proposals Relating to the Income Tax Act, Department of Finance News Release 2010-105 dated November 5, 2010.
XXXXXXXXXX 2010-036475 Lucie Allaire, Advocate, CGA, D. Fisc. November 10, 2010
Dear Sir,
Subject: Meal expenses for long-haul truck drivers
This is in response to your letter dated April 19, 2010, in which you requested our opinion regarding the availability of subsection 67.1(1.1) of the Income Tax Act (the "Act") to employers for food and beverages consumed by long-haul truck drivers who are their employees.
Unless otherwise indicated, all statutory references herein are to the provisions of the Act.
Your Questions
You indicated that the March 18, 2007 Budget specified that the phased-in increase in the deductible portion of expenses related to food and beverages consumed by long-haul truck drivers should also apply to employers who pay or reimburse those expenses to long-haul truck drivers working for them. Currently, only individuals who are long-haul truck drivers come within subsection 67.1(1.1).
Our Comments
It appears to us that the situation described in your letter and summarized below could constitute an actual situation involving taxpayers. As explained in Information Circular 70-6R5, it is not the practice of this Directorate to provide comments on proposed transactions involving specific taxpayers otherwise than in the form of an advance income tax ruling. If your situation involved specific taxpayers and one or more transactions, you should submit all relevant facts and documentation to the appropriate tax services office for its opinion.
However, we are able to offer the following general comments that may be useful to you.
Subsection 67.1(1) provides, inter alia, that for the purposes of the Act, and subject to subsection 67.1(1.1), an amount paid or payable in respect of the human consumption of food or beverages or the enjoyment of entertainment is deemed to be 50 per cent of the lesser of:
(a) the amount actually paid or payable in respect thereof, and
(b) an amount in respect thereof that would be reasonable in the circumstances.
Subsection 67.1(1.1) in its current form deems an amount paid or payable by a long-haul truck driver during an eligible travel period to be the specified percentage of the amount, which is not the 50% provided for in subsection 67.1(1). Under the definition of "specified percentage" in subsection 67.1(5), that specified percentage is 70% in 2009, 75% in 2010 and 80% thereafter.
Based on the Department of Finance's November 5, 2010 Draft Legislative Proposals Relating to Income Tax and the Explanatory Notes to the Legislative Proposals Relating to the Income Tax Act dated November 2010, the preamble to subsection 67.1(1.1) will be amended to clarify that this provision is to apply to amounts paid or payable in respect of the consumption of food or beverages by a long-haul truck driver, regardless of whether the amounts are paid or payable by the driver. In this way, proposed subsection 67.1(1.1) will apply in respect of expenses paid by an employer.
This amendment to subsection 67.1(1.1) is intended to apply to amounts that are paid or become payable after March 18, 2007. Consistent with its long-standing practice, the Canada Revenue Agency ("CRA") is allowing taxpayers to file their income tax returns under that proposed legislation. However, if a taxpayer files a tax return under the existing legislation and subsequently requests an adjustment to the tax return to reduce the tax payable based on proposed legislation to amend the Act, the CRA will not accept the request.
Best regards,
François Bordeleau, Advocate
Manager
Business and Partnerships Section
Income Tax Rulings Directorate.