Overtime Meals and Allowances Tax-Free Benefit

If an employer provides overtime meals or an allowance as an employment perk, there are three conditions that must all be met to in order to ensure that benefit is not taxable.

The benefit is tax free if the following criteria are met:

• The value of the meal or meal allowance is reasonable (a value of up to $17 will generally be considered reasonable).
• The employee works two or more hours of overtime right before or right after his or her scheduled hours of work.
• The overtime is infrequent and occasional in nature. Less than three times a week will generally be considered infrequent or occasional. This condition may also be met where the meal or allowance is provided three or more times per week on an occasional basis to meet workload demands such as major repairs or periodic financial reporting.

If overtime occurs on a frequent basis or becomes the norm, the CRA considers the overtime meal allowances to be a taxable benefit since they start taking on the characteristics of additional remuneration.