# Believe I was overtaxed (Meal Subsistence). Please Review



## Diptherious (Sep 14, 2018)

Hi all, I have a tax question related to my paycheck which I've posted (with personal information removed). Basically I believe my meal subsistence (which is tax free) was added to my tax deductions, and thus I was overtaxed. The jurisdiction is Alberta FYI.

If you add up all the money except for the meal sub the total comes to $2590.62 (the number listed under the insurable amount). When you add the meal sub of $320 it adds up to $2910.62 (The number listed under total payments)

Now when you look at the tax section you'll see that the tax deductions of $651.33 when added to the net pay of $2259.29, add up to $2910.62, which is the amount with the meal sub included. Should my taxes not have been calculated using the $2590.62, which is the amount without the meal sub included, and thus my taxes be lower?


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## OnlyMyOpinion (Sep 1, 2013)

Sounds like the meal allowance was treated as ataxable benefit. 
What leads you to think it should not be?
See this link: https://www.canada.ca/en/revenue-ag...its-allowances/benefits-allowances-chart.html


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## Diptherious (Sep 14, 2018)

OnlyMyOpinion said:


> Sounds like the meal allowance was treated as ataxable benefit.
> What leads you to think it should not be?
> See this link: removed due to post count (diptherious)


My payroll administrator stated that it is tax free. I tried to tell her that I felt I was being overtaxed, but she seems to be dismissive of the issue. Do you know what government department I would bring this issue forward too?


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## OnlyMyOpinion (Sep 1, 2013)

You could try calling the general CRA number: 1-800-959-8281 but be prepared to have to wait for a rep to speak to. They may or may not be helpful and may just tell you to sort it out with your payroll person. 

I am not a taxable benefits expert, but it sounds as if you are an employee and are being paid a meal allowance in addition to salary or hourly rate. Generally that would be considered a taxable benefit (unless paid when you are working overtime).
From CRA: _Whether or not a benefit is taxable depends on whether an employee or officer receives an economic advantage that can be measured in money, and whether that individual is the primary beneficiary of the benefit... The benefit may be paid in cash (such as a meal allowance or reimbursement of personal cellular phone charges), or provided in a manner other than cash, such as a parking space or a gift certificate..._
https://www.canada.ca/en/revenue-ag...able-benefits-allowances.html#benefit_taxable

Hope you are able to sort this out to your satisfaction.

BTW, welcome to CMF!


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## carson (Apr 28, 2011)

Diptherious said:


> Hi all, I have a tax question related to my paycheck which I've posted (with personal information removed). Basically I believe my meal subsistence (which is tax free) was added to my tax deductions, and thus I was overtaxed. The jurisdiction is Alberta FYI.
> 
> If you add up all the money except for the meal sub the total comes to $2590.62 (the number listed under the insurable amount). When you add the meal sub of $320 it adds up to $2910.62 (The number listed under total payments)
> 
> Now when you look at the tax section you'll see that the tax deductions of $651.33 when added to the net pay of $2259.29, add up to $2910.62, which is the amount with the meal sub included. Should my taxes not have been calculated using the $2590.62, which is the amount without the meal sub included, and thus my taxes be lower?


HI, I think you got paid correctly.

Gross income of $2590.62 and $651.33 deductions = $1939.29 Net income. Add the non-taxable pay $320 to your net income = $2259.29.

Edit: If they included the $320 as taxable income your paycheck would've been $2140.53 instead. So it looks correct to me.


Cheers


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## Jimmy (May 19, 2017)

You get the $320 for meals. The cost is just the tax you pay on it as a benefit. tax/ pay = $486/2910 = ~ 16%tax rate

So you get meals 84% tax free.


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## carson (Apr 28, 2011)

Jimmy said:


> You get the $320 for meals. The cost is just the tax you pay on it as a benefit. tax/ pay = $486/2910 = ~ 16%tax rate
> 
> So you get meals 84% tax free.


No, in this case there was no tax withheld for the meal allowance.


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## OptsyEagle (Nov 29, 2009)

I am not sure why you would think that because a number subtracted from your total payments equals the total payments when that same number is added back to it, would somehow proves that you were taxed on the meal allowance.


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## Jimmy (May 19, 2017)

carson said:


> No, in this case there was no tax withheld for the meal allowance.


Tax isn't whled. Paid meals are a taxable benefit and added to his income. You can see the benefit of $320 under ' Meal' . His total taxable income then is $2910 including the $320. You can add it up. Then he pays tax on that amt.

He has to pay some tax because the company is deducting his meal allowance as a tax expense.


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## carson (Apr 28, 2011)

Jimmy said:


> Tax isn't whled. Paid meals are a taxable benefit and added to his income. You can see the benefit of $320 under ' Meal' . His total taxable income then is $2910 including the $320. You can add it up. Then he pays tax on that amt.
> 
> He has to pay some tax because the company is deducting his meal allowance as a tax expense.


So here is what the OP said:

$2590.62 was his total earnings and he lives in Alberta. With the minimum claim codes and assuming he is paid twice per month the calculation looks like this.


Total income $2592
Federal Tax Deduction: $321.44
Provincial Tax Deduction: $165.87
Total Tax : $487.31
CPP: $121.02
EI: $43
TOTAL DEDUCTIONS : $651.33

NET PAY $1939.29

SO his net pay would be $1939.29 not including the non taxable meal allowance. Add the not taxable meal allowance and ($1939.29 + $320) = $2259.29. Which is exactly what he says he got paid.


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## OnlyMyOpinion (Sep 1, 2013)

So for the sake of discussion (and my elightenment) can anyone explain why a cash meal allowance should not be a taxable benefit?


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## carson (Apr 28, 2011)

OnlyMyOpinion said:


> So for the sake of discussion (and my elightenment) can anyone explain why a cash meal allowance should not be a taxable benefit?



I'm not an expert on the matter but I have been paid non taxable meal allowances in the past. The most common scenario is when an employee has to travel for work. The meal allowance is meant as a reimbursement for the cost of their meals while travelling. The idea being that the employee would have spent after tax dollars on their meals while travelling.


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## Jimmy (May 19, 2017)

carson said:


> So here is what the OP said:
> 
> $2590.62 was his total earnings and he lives in Alberta. With the minimum claim codes and assuming he is paid twice per month the calculation looks like this.
> 
> ...


Sorry. $2592 are his 'insurable' earnings for EI and CPP. They are used for later CPP pension calculations. The 'meal 'tax benefit is not earned income for the CPP calcs. 

His total earnings again are $2910. Then he pays taxes on that amt. Pretty straightforward.

You either expense meals and get reimbursed ( then they dont' show on your pay cheques ) or here where it looks like they are a taxable benefit. Added to income and you pay tax on them . Like the taxable benefit from use of a company car.


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## carson (Apr 28, 2011)

Jimmy said:


> Sorry. $2592 are his 'insurable' earnings for EI and CPP. They are used for later CPP pension calculations. The 'meal 'tax benefit is not earned income for the CPP calcs.
> 
> His total earnings again are $2910. Then he pays taxes on that amt. Pretty straightforward.
> 
> You either expense meals and get reimbursed ( then they dont' show on your pay cheques ) or here where it looks like they are a taxable benefit. Added to income and you pay tax on them . Like the taxable benefit from use of a company car.


He said his deductions were $651.33 which just happens to be the exact amount you would have deducted if your taxable income was $2592. So his paycheck is correct. Also, you are wrong about meal allowances not showing on your pay stubs. I have received many in the past.


Cheers


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## Jimmy (May 19, 2017)

carson said:


> He said his deductions were $651.33 which just happens to be the exact amount you would have deducted if your taxable income was $2592. So his paycheck is correct. Also, you are wrong about meal allowances not showing on your pay stubs. I have received many in the past.
> 
> 
> Cheers


Wrong. I said meal allowances are added to your pay stub. Reimbursed expenses aren't.

You didn't show that was the exact amt of tax deducted from your figure of $ 2,592 either (where is your AB tax calc?) . That $2,592 figure again is ' insurable earnings' and nothing to do w taxable income.

He also confirms this to be the case.



> Now when you look at the tax section you'll see that the tax deductions of $651.33 when added to the net pay of $2259.29, add up to $2910.62, which is the amount with the meal sub included.


From what he has said and presented his taxable income is $2910 including the meal allowance added as a taxable benefit. Not sure why you are arguing otherwise but either way we'll leave it there


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## carson (Apr 28, 2011)

Jimmy said:


> Wrong. I said meal allowances are added to your pay stub. Reimbursed expenses aren't.
> 
> You didn't show that was the exact amt of tax deducted from your figure of $ 2,592 either (where is your AB tax calc?) . That $2,592 figure again is ' insurable earnings' and nothing to do w taxable income.
> 
> ...


Hey Jimmy,

If you are interested you can do the calculations yourself using this online calculator provided by the cra.

https://www.canada.ca/en/revenue-ag...ses/payroll-deductions-online-calculator.html

Cheers


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