Updated for 2025 · Overtime meals · Travel meals · CRA thresholds
Employer-provided meal allowances have nuanced tax treatment in Canada. Whether a meal allowance is taxable depends on the circumstances: overtime, travel, regular work, or subsidized cafeterias. Understanding the rules helps employees know when a meal allowance is tax-free and when it becomes income.
As a starting point, employer-provided meals or meal allowances that substitute for the personal cost of food are a taxable benefit. Eating is a personal expense, and the CRA takes the position that if your employer covers it, you've received compensation you'd otherwise spend yourself.
However, several important exceptions carve out non-taxable meal situations.
The most common non-taxable meal allowance is the overtime meal allowance. CRA guidelines indicate that a reasonable meal allowance provided to an employee who works 2 or more hours overtime beyond their regular hours is not taxable — subject to a reasonableness threshold.
In 2025, CRA considers meal allowances up to approximately $23 per meal as reasonable for overtime meal purposes. An allowance of $23 or less per meal for genuine overtime situations is not reported on the T4. Amounts exceeding $23 per meal should be assessed for reasonableness given the location and circumstances; amounts clearly exceeding what a meal costs are taxable.
When you travel away from your principal place of work for business, meal allowances are generally not taxable if reasonable. CRA allows employees to claim meal costs when traveling on employment duties:
If your employer operates or subsidizes a cafeteria on the work premises, the CRA takes a special position:
Then the subsidy is not a taxable benefit. If the subsidy is very deep (employees pay nothing, or far below cost) and some employees benefit much more than others, the CRA may assess a benefit.
Meals provided at a business meeting where the primary purpose is business discussion are generally not a taxable benefit for participants — it's a business expense of the employer, not a personal benefit to employees. The CRA expects that the meal facilitates business, not that it substitutes for a personal meal.
If an employer provides free daily lunches to all employees as a general perk (not tied to overtime or travel), the CRA considers this a taxable benefit. The value of the free meals should be added to employees' T4 Box 40. This is common in tech companies and startups offering free catered meals.
Remote employees who work from home and receive meal allowances (beyond what's needed for work functions) are generally receiving a taxable benefit. There's no exception for "working through lunch at home" — eating at home is a personal expense.
Some employers bundle a meal and transportation allowance together. Each component must be assessed separately. The transportation allowance for traveling away from home is generally non-taxable if reasonable; the meal component is subject to the rules described above.
If you take a client to dinner and your employer reimburses the expense as a business entertainment cost, this is the employer's business expense — not your personal income. Keep receipts documenting the business purpose. The 50% limitation on meal and entertainment expenses applies to the employer's deduction, not to your personal income.
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Get KOHO Free — Use Code 45ET55JSYAThe CRA's administrative guideline has not been updated regularly. In practice, CRA applies a reasonableness test — if you're in downtown Toronto and a basic meal costs $25, a $25 allowance would likely be accepted as non-taxable. Document actual meal costs in higher-cost situations.
A per diem that includes a meal component is non-taxable if the total is reasonable for the location and duration. CRA provides per diem rates for government employees; private sector allowances should be benchmarked to similar reasonable amounts. Excessive per diems are partially taxable.
Employer-provided allowances should be used for their intended purpose. If the employer pays a fixed "meal allowance" regardless of whether you actually spend it on food (essentially cash), it's taxable income. True non-taxable meal allowances are tied to actual meal occasions, not flat cash payments.
This guide is for informational purposes. Meal allowance tax treatment depends on specific circumstances. Consult a CPA for guidance on your situation.