Meals provided by the employer

You may provide free or subsidized meals, an allowance, or a reimbursement for meals to your employee.

On this page

• Steps
• References

Steps

1. Determine if any exceptions apply to the benefit

   The benefit may not be taxable if the benefit is provided in one of the following situations:

   • You provide a meal as part of a travel expense to your employee
   • You provide a meal as part of a social event or a hospitality function to your employee

   ---

   • If the benefit is provided in one of the above situations, do not continue to the next step.

     Learn more on the above exceptions using the links.

   • If the benefit is not provided in one of the above situations, continue to: Step 2 - Determine if a benefit is taxable.

2. Determine if a benefit is taxable

   Generally, if you provide a free or subsidized meal, an allowance, or a reimbursement for meals to your employee, the benefit is taxable.

   Depending on your situation, the benefit you provide may not be taxable under the CRA's administrative policy.

   Situations

   Situation: You provide an overtime meal or an allowance for an overtime meal to your employee

   Non-taxable situation

   Under the CRA's administrative policy, if you provide an overtime meal or an allowance for overtime meal to your employee, the benefit is not taxable if all of the following apply:

   • The allowance or the cost of the meal is reasonable, generally up to $23 including taxes (higher amounts may also be considered reasonable if the meal cost in a specific location is higher or there are other significant extenuating circumstances)
     Prior year rates

     Meal rates for previous years

     Year	Flat rate per meal
     2023	$23
     2022	$23
     2021	$23
     2020	$23
     2019	$17
     2018	$17
     2017	$17
     2016	$17
     2015	$17
     2014	$17
     2013	$17

   • Your employee works 2 or more hours of overtime immediately before or after their scheduled hours of work
   • Overtime is not frequent and is occasional (generally less than 3 times a week)

   Example - Meal allowance is not taxable

   Robert is working on a very large project. In order to meet the deadline, he must work 3 hours of overtime, in addition to his normal work hours, every Tuesday, Wednesday and Thursday evening for the next 6 weeks. Robert will receive a reasonable meal allowance on those evenings.

   The allowance is not taxable because:

   • Robert worked more than 2 hours of overtime on each night.
   • The allowance was reasonable.
   • The overtime was infrequent and occasional (even though the overtime occurs more than twice each week, the CRA considers the overtime to be infrequent and occasional because it does not happen regularly for an extended period, and there is no anticipated overtime for Robert in the future once this project deadline is met).

   Example - Meal allowance is not taxable

   Phillip works in the shipping department of a mail order company. The last two weeks in each month, a predicted increase in orders causes him to work two nights of overtime at the end of his regularly scheduled hours. Phillip's employer provides him with a meal allowance on those evenings.

   The allowance is not taxable because:

   • Phillip worked more than 2 hours of overtime on each night.
   • The allowance was reasonable.
   • The overtime was infrequent and occasional (less than three times in those weeks).

   Taxable situation

   If the overtime meal or the allowance you provide to your employee for an overtime meal does not meet all of the conditions above, the benefit is taxable.

   Example - Free meal is taxable

   Joanne is a manager in the call centre of a large telephone company. The company is introducing a new product and expects an increase in enquiries from consumers over the next 6 months. During this time, Joanne will be working 2 hours of overtime, in addition to her regular hours of work, at least 3 times a week. Joanne's employer will provide her with a meal on each of these evenings.

   The free meal is taxable because the CRA considers the overtime to be frequent and regular.

   Situation: You provide subsidized meals to your employee

   Non-taxable situation

   Under the CRA's administrative policy, if you provide subsidized meals to your employee, such as in an employee dining room or cafeteria, the benefit is not taxable if all of the following apply:

   • Your employee pays a reasonable charge, which is one that covers the cost of the food, its preparation and service
   • You can justify your position regarding the amount being reasonable

   Example - Subsidized meal is not taxable

   Bits and Bites is an employer-operated cafeteria where employees can purchase menu items at subsidized rates. In determining the amount to charge, the employer calculated the cost of the food, its preparation and service.

   Because the employee pays a reasonable charge that covers the cost of the food, its preparation and service, the value of the meal would not be a taxable benefit to the employee.

   If the cost to the employee was unreasonably low, the value of the meal would be required to be included in their income from office or employment.

   Taxable situation

   If the subsidized meals you provide to your employee do not meet all of the conditions above, the benefit is taxable.

   For example, your employee paid a charge that is not considered reasonable because it is too low.

   Situation: You provide a meal as part of a collective agreement to your employee

   Taxable situation

   Generally, if you provide a meal as part of a collective agreement, the benefit is taxable because your employee receives an economic advantage by not having to purchase the meal, unless the benefit is provided in one of the above non-taxable situations.

   For example, collective agreements may contain clauses that entitle your employee to a fixed meal allowance after working a minimum number of hours of overtime.

   If the benefit is provided in one of the following situations, you need to determine if the benefit is taxable. Continue to:

   • Situation: You provide an overtime meal or an allowance for an overtime meal to your employee
   • Situation: You provide subsidized meals to your employee

   • If the benefit is not taxable, you do not need to do any calculations.

     Do not continue to the next step.

   • If the benefit is taxable, continue to: Step 3 - Calculate the value of the benefit .

3. Calculate the value of the benefit

   If the benefit is taxable, the value of the benefit for a free or subsidized meal is equal to:

   • Cost of the meal provided (including the cost of the food, its preparation and service)
   • minus Any amounts your employee paid for the meal
   • equals Value of the benefit to be included on the T4 slip in code 40 and box 14

   If the meal allowance or reimbursement is taxable, the value of the benefit is the amount you paid as an allowance or reimbursement.

   The amounts must be included in the pay period they were received or enjoyed.

   Example - Calculations

   An employer running a hotel provides a free lunch or dinner to all members of their kitchen and banquets departments. As the meal is not related to overtime and the employees do not pay a reasonable charge, the value of the meals will be a taxable benefit. The value of the benefit for each employee is $500 per year.

   • $500 is cost of the meal provided
   • minus $0 because the employee does not pay for the meal or reimburse the employer
   • equals $500 is the value of the benefit to be included on the T4 slip in code 40 and box 14

4. Withhold payroll deductions and remit GST/HST

   The withholding and remitting requirement depends on the type of remuneration: cash, non-cash, or near-cash.

   If the benefit is taxable, you must withhold the following deductions:

   • Non-cash and near-cash: Option 1

     Withhold:

     • Income tax
     • CPP
     • EI (do not withhold)

     Remit:

     • GST/HST in certain situations

   • Cash: Option 2

     Withhold:

     • Income tax
     • CPP
     • EI

     Do not remit:

     • GST/HST (do not remit)

   The amounts must be included in the pay period they were received or enjoyed.

   Learn how to calculate deductions and the GST/HST to remit: How to calculate - Calculate payroll deductions and contributions

5. Report the benefit on a slip

   If the benefit is taxable, you must report the following amounts on the T4 slip:

   • Non-cash and near-cash: Option 1

     Report on:

     • Box 14 - Employment income
     • Box 26 - CPP/QPP pensionable earnings
     • Code 40 - Other taxable allowances and benefits

   • Cash: Option 2

     Report on:

     • Box 14 - Employment income
     • Box 24 - EI insurable earnings
     • Box 26 - CPP/QPP pensionable earnings
     • Code 40 - Other taxable allowances and benefits

   Learn how to report on a slip: Fill out the slips and summaries - File information returns (slips and summaries).

References

Related

Legislation