When is a meal a deduction?
When can you write off the cost of meals purchased while travelling?
This was one of the questions covered in a tax case heard this summer involving Air Canada pilot Robert Elwood, who found himself in court over his ability to deduct more than $3,200 he spent on lunches that he ate while flying as a pilot.
Under the Income Tax Act, there is a special deduction available to transportation employees for the costs of meals and lodging that they incur while travelling which are not reimbursed by their employer.
Mr. Elwood suffers from hemochromatosis, which requires that he eat low-iron food. While Air Canada does provide its crew, including pilots, in-flight meals on flights longer than four hours, he could not eat those meals due to his disease. As a result, in 2010, he was forced to make alternative lunch arrangements and to either purchase suitable meals or bring his own specially prepared, packed lunch from home or hotel room.
To be successful in his claim for meals, the Tax Act specifies that the transport employee be regularly required by his or her duties of employment to travel away from the municipality where the employer is located, on a vehicle used by the employer to transport goods or passengers and must spend money on meals and lodging while away. If these conditions are met, the employee can deduct amounts spent to the extent they were not reimbursed by the employer.
The Canada Revenue Agency tried to use the argument, contained in its information circular titled "Claims for Meals and Lodging Expenses of Transport Employees," that "the cost of a meal may only be claimed if it has been paid for, and lunches brought from home would not qualify."
The judge interpreted this to imply that a meal must be prepared in a restaurant to be deductible versus prepared somewhere else. She disagreed, saying that a "common sense approach" is that "lunch is a meal regardless of whether it is prepared in a restaurant or elsewhere" such that if a lunch is prepared while travelling, this could qualify as a deductible expense.
In other words, if Mr. Elwood purchases his food for the flight in the municipality in which he resides, he has not made disbursements "while away from the municipality" and thus cannot claim a deduction.
Since the judge didn't have sufficient evidence to determine which meals were purchased in restaurants or grocery stores while travelling as opposed to purchases of the food prepared and brought from Mr. Elwood's home, she denied his meals deduction, concluding that his "packed lunches from home were likely acquired by disbursements he made in his home/municipality or metropolitan area" and not while travelling.
What about meal expenses for non-transport employees? Meals would only be deductible if you're required to be away from your municipality for at least 12 consecutive hours. Your deduction is limited to 50% of the amount you paid.