Corporate per diem travel policy

Per diem allowances can make business travel easier to manage for employees, finance teams, and employers. Rather than requiring travellers to submit receipts for every meal or minor expense, a company can provide a fixed daily allowance for eligible costs.

For Canadian businesses, the key is to set a clear per diem policy, apply reasonable rates, and understand when an allowance may be non-taxable. This guide explains how per diem allowances work in Canada, including meal and incidental expenses, domestic and international rates, extended-trip reductions, and the essential elements of a corporate per diem travel policy.

What are per diem allowances for business travel?

A per diem is a fixed daily allowance paid to employees while they travel for work. It commonly covers:

• Meals, including breakfast, lunch, and dinner

• Incidental expenses, such as gratuities and small out-of-pocket costs

• Private, non-commercial accommodation, such as staying with friends or family

• Mileage for using a personally owned vehicle for approved business travel

• In some cases, transportation home for eligible weekend travel during extended assignments

Per diem payments can reduce the administrative work involved in reimbursing actual expenses. Instead of reviewing individual meal receipts, employers can reimburse an agreed daily amount under their expense reimbursement policy.

Employers are not required to use government travel rates. Private-sector organizations can set their own business travel allowances, provided they are reasonable and aligned with the nature, location, and duration of the trip.

Who sets per diem rates in Canada?

Several Canadian bodies publish travel allowances that employers may use as reference points:

• The Canada Revenue Agency (CRA) provides tax guidance on travel allowances and determines whether an allowance may be treated as a taxable benefit.

• The National Joint Council (NJC) publishes travel directive rates for federal public-service travel, including domestic meal, incidental, accommodation, and kilometre allowances.

• The Treasury Board of Canada Secretariat supports travel policy for the federal public service.

For private-sector employers, NJC and CRA travel figures are useful benchmarks rather than mandatory rates. A company can establish its own allowance amounts through its corporate travel policy, but should ensure the amounts are reasonable and consistently applied.

Are per diem allowances taxable in Canada?

A reasonable travel allowance may be non-taxable when it is paid for legitimate employment-related travel and is not a form of extra compensation. The CRA considers several factors, including whether:

• The employee is travelling as part of their employment duties.

• The employee is travelling away from their regular workplace, including to a special work site or remote location where applicable.

• The allowance is a reasonable amount for the travel expenses incurred.

• The employee, rather than the employer, is the primary beneficiary of the allowance.

• The payment is not intended to replace regular wages or provide additional compensation.

For employees travelling away from their normal work location, the CRA generally considers whether travel takes place outside the municipality and metropolitan area where the employee ordinarily works. Government travel directives also use “travel status” rules, including being more than 16 km from both the traveller’s residence and workplace for certain meal reimbursements.

An allowance that is excessive, unrelated to business travel, or paid as compensation may be a taxable benefit. Employers should review the CRA’s guidance on travel expenses, benefits, and allowances when designing their policy.

What expenses should a per diem cover?

A company can decide what its per diem allowance includes, but the policy should define the scope clearly.

Commonly covered expenses

Per diem policies often cover:

• Breakfast, lunch, and dinner during eligible travel periods

• Incidental expenses and gratuities

• Private, non-commercial accommodation

• Mileage for approved use of a personal vehicle

• Weekend travel home during qualifying extended assignments

Meal and incidental expense allowances are often grouped as M&IE: meals and incidental expenses.

Expenses often managed separately

Many organizations reimburse the following costs separately from per diem:

• Airfare

• Train and other long-distance transport

• Commercial hotel accommodation

• Car rental and fuel

• Airport parking

• Business internet or communications costs

• Client entertainment

• Conference registration fees

Separating these categories can help companies maintain better controls over high-value or pre-booked expenses. A travel expense policy should state which costs are booked centrally, paid on a corporate card, reimbursed as actual expenses, or covered by a daily allowance.

Per diem meal and incidental allowances in Canada

Meal allowances are intended to cover the reasonable cost of meals while travelling for work. Incidental allowances cover minor expenses that arise during travel, such as tips and other small out-of-pocket costs.

For federal government travel, the NJC travel directive provides meal rates by destination category. The following rates are drawn from the CRA travel directive’s Appendix B: Meals and Allowances. Employers should always verify the latest published figures before adopting them in a policy.

Domestic and U.S. meal allowances

The incidental expense allowance is $17.50 per day under the referenced travel directive. For travel in most Canadian provinces, this brings the standard daily meals-and-incidentals benchmark to $129.45.

Rates generally do not differ between major cities in the provinces. For example, the meal per diem benchmark for Ottawa, Toronto, Montreal, and Vancouver is the same as the allowance for other locations in the provinces. Different rates apply for Yukon, Alaska, the Northwest Territories, and Nunavut.

Private accommodation allowance

Employees who stay in private, non-commercial accommodation rather than a hotel may be eligible for a flat accommodation allowance. The referenced federal travel directive lists a rate of $50 per night for private accommodation.

Commercial hotel stays are generally managed through actual-cost reimbursement or a company lodging cap rather than this private-accommodation allowance.

Weekend travel home allowances

For employees on qualifying extended assignments, the travel directive also includes allowances for weekend transportation home.

A private employer does not need to offer these allowances, but should state its approach to weekend travel, extended assignments, and personal travel days in its policy.

Mileage rates for using a personal vehicle

If employees use their personally owned vehicle for approved business travel, employers may reimburse them using a kilometre rate. The following rates, in cents per kilometre, are based on the CRA travel directive’s Appendix A kilometric rates.

A mileage policy should specify eligible journeys, required trip details, approval requirements, parking and toll treatment, and whether employees must use the most practical route. Companies can use these figures as a benchmark or set their own reasonable reimbursement rates.

How extended trips affect per diem allowances

Long-term assignments may require reduced allowances, particularly when the employee remains in the same location and has access to more stable accommodation arrangements.

Under the federal travel directive framework:

• Meal and incidental allowances are generally reduced to 75% after 30 days in the same location.

• Meal allowances may be reduced to 50% after 120 days.

• Accommodation treatment may change after 120 days, particularly where corporate residences, furnished apartments, or other long-term accommodation options are available.

These reductions recognize that longer stays can reduce daily travel costs and provide the employee with access to kitchen facilities or negotiated long-stay accommodation.

Private employers should establish their own rules for extended travel. A strong policy explains when an assignment becomes long-term, how rates change, whether furnished accommodation is required, and whether weekend travel home is permitted.

Example: calculating a domestic per diem allowance

An employee based in Vancouver travels to Toronto from Monday to Thursday and stays for three nights in private, non-commercial accommodation.

Using the benchmark rates for Canadian provinces:

• Daily meal allowance: $111.95

• Daily incidental allowance: $17.50

• Private accommodation allowance: $50.00 per night

For Monday, Tuesday, and Wednesday, the total is:

($111.95 + $17.50 + $50.00) × 3 = $538.35

For Thursday, assuming no overnight stay is required, the total is:

$111.95 + $17.50 = $129.45

The total allowance for the trip would be $667.80, subject to the company’s eligibility rules and whether meals are provided by a conference, airline, hotel, or client event.

International per diem rates for Canadian business travellers

International travel rates are destination-specific because costs vary substantially between countries and cities. For travel outside Canada and the United States, the CRA travel directive’s Appendix C: Daily Meal Rates at Locations Abroad provides meal and incidental allowance benchmarks.

International rates may be listed in the currency of the destination. Employers should clarify whether they reimburse travellers in Canadian dollars, the local currency, or according to the exchange rate used on the travel date or expense date.

The table below illustrates how destination-specific rates can differ.

For example, the total daily meal allowance in Monaco, Monte Carlo is €196.15, while Sarajevo, Bosnia and Herzegovina has a total daily meal allowance of €59.20. This variation is why international travel policies should rely on destination-based rates rather than applying one global amount to every trip.

For U.S. business travel, companies may also consult U.S. General Services Administration (GSA) rates where appropriate. GSA rates are location-specific and may vary across the continental United States, Alaska, Hawaii, and U.S. territories.

Do employees need to submit receipts for per diem expenses?

Receipt requirements depend on the reimbursement method.

When an employer provides a fixed, reasonable per diem allowance, it may not require receipts for every meal or incidental purchase. However, employees should still document the business purpose, dates, destination, and duration of their trip.

When employees claim actual expenses instead of a per diem, receipts and itemized expense details are normally required. Companies should also require receipts for expenses outside the per diem, such as airfare, hotels, car rental, and client entertainment.

A clear policy can reduce confusion by stating:

• Which expenses are reimbursed at a flat rate

• Which expenses require receipts

• What documentation is required for mileage claims

• How provided meals affect meal allowances

• When expense reports must be submitted

• Who approves exceptions

What to include in a corporate per diem travel policy

A per diem policy should be easy for employees to find, understand, and follow before they book or begin a trip. Include the following information.

Eligibility and travel approval

Define who is eligible for per diem payments and when travel must be approved. Specify whether the policy applies to employees, contractors, interns, executives, and visiting staff.

The policy should also explain what qualifies as business travel, including the minimum distance or overnight-stay requirements, if applicable.

Reimbursable and non-reimbursable expenses

List what the allowance covers, such as meals and incidentals, and identify costs reimbursed separately. Clearly identify non-reimbursable personal expenses, including minibar charges, leisure activities, personal shopping, fines, and upgrades that are not approved for business use.

Per diem rates and destination rules

State the daily rates, the source of those rates, and how often they are reviewed. If your organization uses CRA or NJC benchmarks, link to the relevant current tables. If it uses internal rates, explain how rates are determined.

The policy should also define:

• Domestic, U.S., and international rate categories

• Currency conversion rules

• Treatment of travel days

• Meal reductions when meals are supplied

• Long-term assignment reductions

• Private accommodation eligibility

Payment and reimbursement process

Explain whether employees receive an advance, a corporate card, payroll payment, or reimbursement after travel. Include submission deadlines, required documentation, and the approval process.

Where employees use corporate cards for meals, clarify whether the company uses a fixed allowance, actual-cost reimbursement, or a hybrid model.

Roles and responsibilities

State the responsibilities of travellers, managers, finance teams, and travel administrators. Employees should understand that they must follow the policy, provide accurate trip details, and report changes or exceptions promptly. Managers should understand their approval responsibilities and escalation routes.

International travel requirements

International business travel can involve visas, insurance, security requirements, currency conversion, local tax considerations, and emergency support. Include these items in the policy or link to your organization’s international travel guidance.

Travel risk management

A per diem policy should sit alongside a broader corporate travel risk management policy. That policy should cover:

1. Purpose and objectives: The company’s commitment to traveller safety and the scope of the policy.

2. Roles and responsibilities: Key contacts, traveller obligations, and escalation procedures.

3. Travel approval and risk assessment: Pre-trip approval, destination risk checks, and measures to reduce location-specific and individual risks.

4. Incident reporting: Clear instructions for seeking help, reporting an incident, and following up after an emergency.

5. Insurance coverage: What travel insurance covers, what it excludes, and how employees can access support while travelling.

Managing per diem allowances effectively

A well-managed per diem program can improve traveller experience while helping finance teams control costs and reduce manual expense administration. To make the process work, businesses should:

• Use clear, consistent rates and eligibility rules.

• Review rates regularly against reliable government or market benchmarks.

• Distinguish between per diem expenses and actual-cost reimbursements.

• Reduce allowances when meals are included in a hotel, conference, or event.

• Create approval rules for exceptions and extended assignments.

• Keep accurate travel records for tax, audit, and payroll purposes.

• Communicate the policy before employees travel.

Combining travel booking, expense capture, payment methods, and policy controls in one system can make it easier to enforce per diem rules and maintain accurate records. Perk helps businesses manage travel and spend in one place, while integrating with expense-management workflows to reduce manual work and improve visibility.

For help creating a complete employee travel framework, use a corporate travel policy template that covers approvals, bookings, expenses, traveller safety, and reimbursement rules.

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