Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
WHY GOVERNMENT TRUCK DRIVERS CAN RECEIVE A NON-TAXABLE $45 PER DAY MEAL ALLOWANCE WHEN SELF-EMPLOYED TRUCKERS CAN ONLY DEDUCT 50% OF MEAL EXPENSES
Position:
Explains difference between taxable allowances and limitations on deductions as well as limitations on employees to deduct expenses
Reasons:
DEPUTY MINISTER'S OFFICE (2)
ADM'S OFFICE (2)
PENDING
RETURN TO INCOME TAX RULINGS
AND INTERPRETATIONS DIRECTORATE
15TH FLOOR, ALBION TOWER
March 11, 1998
XXXXXXXXXX
Dear XXXXXXXXXX:
Thank you for your letter of August 15, 1997, regarding your constituent's concerns about the 50 per cent limitation on the deductibility of his meal expenses at a time when government (salaried) truck drivers can receive a non-taxable $45 per day meal allowance. It is always a pleasure for me to address the concerns of residents of British Columbia.
As an independent trucker, your constituent may deduct reasonable business expenses in calculating his income unless an expense is specifically not permitted under the Income Tax Act. The 50 per cent limitation on the deductibility of food, beverages and entertainment is one example of such a restriction imposed by the Act. The Department of Finance, at the time of introducing the limitation on the deductibility of these expenses, noted that similar restrictions apply in other countries. The limitation was imposed to eliminate the personal consumption element which inherently exists in these types of expenses.
It is true that a trucker employed by the federal government can receive a daily non-taxable meal allowance. In fact, an employee with any employer may receive non-taxable meal allowances. This is so because the Act excludes from an employee's income reasonable travel allowances when certain conditions are met. However, when an allowance is not required to be included in the employee's income, the employee is precluded from deducting any amount of meal or other travel expenses from employment income even if the expenses incurred while in travel status exceed the amount of the allowance paid by the employer. The personal consumption element is absorbed by the employer who, when deducting the meal allowance paid, is subject to the same 50 per cent limitation as your constituent.
I hope that my comments clarify the issue raised by your constituent.
Yours sincerely,
Herb Dhaliwal, P.C., M.P.
S. Short
237-2136
972880
January 5, 1998