CD 2011-014

Subject: New Overtime Taxable Meal Allowances Entitlement Codes

June 28, 2011

1. Purpose

1.1. The purpose of this directive is to provide you with information regarding two new taxable overtime meal allowance entitlement codes that have been created in the Regional Pay System (RPS):

  • Meal Taxable (ENT 1F5)
  • 2nd Meal Taxable (ENT 1F8)

1.2. An information notice to employees concerning the above subject has been included with this compensation directive.

1.3. This should be read in conjuction with the Treasury Board of Canada Secretariat Information Bulletin dated February 18, 2011.

2. Background

2.1. These new taxable meal overtime codes are being created in accordance with Canada Revenue Agency (CRA) and the Ministère du revenu du Quebec (MRQ) policies.

The CRA's T4130 Employers' Guide - Taxable Benefits and Allowances states the following in regards to overtime meals and allowances:

If you provide overtime meals, or an allowance for overtime meals, there is no taxable benefit if all of the following conditions apply:

  • The allowance, or the cost of the meal, is reasonable. We generally consider a value of up to $17 to be reasonable. We will consider higher amounts reasonable if the relative cost of meals in that location is higher, or under other significant extenuating circumstances;
  • The employee works two or more hours of overtime right before or right after his or her scheduled hours of work;
  • The overtime is not frequent and is occasional in nature (usually less than three times a week). If overtime occurs frequently or becomes the norm, we consider the overtime meals or allowances to be a taxable benefit, since they start to take on the characteristics of additional remuneration.

The MRQ Taxable Benefits IN-253-V states the following in regards to overtime meals and allowances:

If you provide a meal or reimburse meal expenses to an employee who works overtime, the employee does not receive a taxable benefit if the following conditions are met:

  • The overtime is done at your request and is expected to last for at least three consecutive hours;
  • Overtime is done rarely or on an occasional basis (fewer than three times a week);
  • The meal expenses incurred by the employee are reimbursed (in whole or in part) upon presentation of receipts;
  • The meal expenses reimbursed or the value of the meal provided (as the case may be) is reasonable.

3. Policy

3.1. Entitlement 1F5 (Meal Taxable) and 1F8 (2nd Meal Taxable) will be used to pay those employees who meet the overtime requirements for a meal and who work overtime on a frequent basis.

3.2. Any overtime meal meeting the conditions for a taxable benefit will be paid using these new entitlement codes.

3.3. These two new taxable overtime meal allowances are subject to the following deductions:

  • federal/provincial income tax
  • employment insurance (EI)
  • Quebec Parental Insurance Plan (QPIP)
  • Canada Pension Plan (CPP) or Quebec Pension Plan (QPP)

3.4. These allowances are not subject to the Disability Insurance (DI) Plan, the Long-term Disability Insurance (LTD) Plan, the Supplementary Death Benefit (SDB) Plan, the Public Service Management Insurance Plan (PSMIP) and the public service pension plan deductions.

3.5. These allowances are not considered part of salary for pay purposes. As a result, entitlements related to pay situations (such as promotions or acting pay) will not be recalculated. This payment is not to be used in calculating the 4% gratuity or premium pay in lieu of statutory holidays.

4. Procedures and Instructions

4.1. These two new taxable overtime meal allowance codes, which will be available June 30, 2011, will be processed in the RPS using one of the following:

  • Extra Duty Pay Input Form (PWGSC-TPSGC 2547)
  • Extra Duty Pay (EDP) screen

4.2. It will be the department's responsibility to determine if meals paid as a result of overtime are to be considered taxable or not.

4.3. For any non-taxable overtime meal allowances, the following existing codes should continue to be used:

  • Meal Allowance (ENT 032)
  • Overtime - second meal (ENT 259)

4.4. The Personnel Pay Input Manual (PPIM) will be updated to incorporate the relative information contained in this directive.

5. Inquiries

5.1. Any inquiries on the information contained in this document should be addressed to your Public Works and Government Services Canada (PWGSC) Compensation Services Office.

Original Signed by
Carrie E. Roussin

Carrie E. Roussin
Director General
Compensation Sector
Accounting, Banking and Compensation

Reference(s): CJA

Information Notice to Employees

The purpose of this notice is to provide you with information regarding the new taxable overtime meal allowance.

In order to comply with Canada Revenue Agency (CRA) and the Ministère du revenu du Quebec (MRQ) policies, any overtime meal allowance exceeding $17, or resulting from frequent overtime, will be taxable.

The new taxable overtime meal allowance is subject to the following deductions:

  • federal/provincial income tax
  • employment insurance (EI)
  • Quebec Parental Insurance Plan (QPIP)
  • Canada Pension Plan (CPP) or Quebec Pension Plan (QPP)

It is the department's responsibility to determine if meals paid as a result of overtime are to be considered taxable or not and use the appropriate code.

For more details, you may view the Canada Revenue Agency (CRA) T4130 Employers' Guide - Taxable Benefits and Allowances or the Ministère du revenu du Quebec(MRQ) Taxable Benefits Guide at the following Web sites:

Please contact your compensation advisors if you have any questions regarding the information contained in this notice.