The digital age has revolutionized the way we eat out.  At the tap of a finger we can now enjoy our favourite restaurant-cooked meals in the comfort of our own homes.  This "dining in" trend has speckled bike lanes with couriers sporting thermal backpacks.  As the trend is on an upswing, bicycle and foot couriers should turn their minds to a unique tax deduction they may be able to claim.

It all began nearly 20 years ago when Alan Wayne Scott, a Toronto-based "foot and transit courier", pushed the limits of tax law in Scott v the Queen.  In the decision, the Federal Court of Appeal described a day in Scott's life as a "foot and transit courier":

  • 6:45 am: A dispatcher advises Scott of the packages to be delivered;
  • 7:45 – 9:30 am: Scott picks up and drops off packages in the downtown Toronto core;
  • 9:30 am – 6:00 pm: Scott travels by subway and foot to make deliveries.

Scott worked 5 days per week, 52 weeks per year.  Each day, he covered approximately 150 km by foot and public transit, for a total of 39,000 km per year.  According to Scott, the physically demanding nature of his job required him to consume what essentially amounted to an extra meal each work day.   He sought a tax deduction for the amount of the extra food and water he was required to consume as fuel for his job.

Subsection 9(1) of the Income Tax Act (the Act) applies to independent contractors and provides that a taxpayer is required to declare profit from a business as income.  In calculating profit, certain business deductions are allowed.  Subsection 18(1)(a) provides that that allowable deductions include an expense made or incurred "for the purpose of gaining or producing income from the business".

Typically, the costs of food and water during the work day are not allowable deductions.  Rather, they are considered non-deductible personal and living expenses captured by subsection 18(1)(h) of the Act.  Nonetheless, the Court found in Scott's favour, stating that "just as a courier's automobile requires fuel in the form of gas to move", Scott required "fuel in the form of food and water".  The Court reasoned that, since couriers who drive automobiles are allowed to deduct the costs of their fuel,  so too should Scott, as a foot and transit courier, be allowed to deduct the cost of his fuel; i.e., the extra food and water he consumed to do his job.

Following the Scott decision, Canada has allowed self-employed foot and bicycle couriers, as well as rickshaw drivers, to deduct a daily flat rate of $17.50 (without receipts) for the cost of the extra food and beverages they must consume in a normal working day (8 hours).  The applicable Government of Canada notice requires individuals claiming the deduction to be prepared to provide logbooks demonstrating the days and hours worked on each of the days the deduction is claimed.  The Canada Revenue Agency may also ask for dispatch slips and other documentation.  Any deduction claimed beyond the $17.50 flat rate requires supporting receipts and evidence that the nature of the work demanded an amount of food and beverages in excess of what the average person would consume.

Written with the assistance of Elana Friedman, summer student. 

About Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global law firm. We provide the world's preeminent corporations and financial institutions with a full business law service. We have 3800 lawyers and other legal staff based in more than 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

For more information about Norton Rose Fulbright, see nortonrosefulbright.com/legal-notices.

Law around the world
nortonrosefulbright.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.