By virtue of the combined operation of s. 8(4) and s. 67.1(1), the deduction for when a commissioned employee takes a client out to a restaurant within the metropolitan area of the employer is limited to 25% of the bill, i.e., a complete denial for the employee’s portion under s. 8(4) and a 50% denial for the client’s portion under s. 67.1(1). The Quebec equivalent of s. 8(4) provides an exception from its application where the commissioned employee takes a meal with a client.
After effectively confirming that s. 8(4) operated as described, CRA stated:
There is nothing in the Income Tax Act that allows the CRA to not apply subsection 8(4) where an employee's meal was not consumed during a period while the taxpayer was required by the taxpayer’s duties to be away, for a period of not less than 12 hours, from the municipality where the employer’s establishment to which the taxpayer ordinarily reported for work was located and away from the metropolitan area, if there is one, where it was located. …
At the request of the APFF, the situation described in the statement of the question and the response of the CRA will be brought to the attention of that Department [of Finance].