Exemption on the meal allowance for pensioners as former employees

According to the current wording of the Income Tax Act (the ITA), the meal allowance (in both monetary and non-monetary form) is exempt from personal income tax only if the employee works at least three hours per shift or calendar day. Since former employees (for example pensioners who go to the company canteen for lunch at a discounted price) do not work the required three hours and therefore do not meet the above-stated condition, the possibility of exempting their meal allowance ceased in their case as of January this year and the allowance is now subject to personal income tax. This has led to a number of companies suspending the provision of this benefit.

The draft amendment to the ITA therefore introduces a new provision that exempts the meals of former employees from tax if they were working for the employer before they retired from work. However, unlike ordinary employees, meals may only be provided to such persons in a non-monetary form for direct consumption at the workplace or for direct consumption as part of meals provided through another entity. It cannot therefore be claimed as a cash meal allowance or as a meal voucher.