Per diem allowances for business travel

Per diem payments cover lodging, meals, and incidental expenses (M&IE) for employees traveling for business. As part of our comprehensive guide on per diem rates, this article explores per diem meal allowances in Canada. It covers per diem meal expenses by destination, where to find the latest updates on per diem rates for meals, and how to ensure your employees’ per diem reimbursement is classified as non-taxable income.

Per diem rates in Canada

The Canada Revenue Agency (CRA) does not impose fixed per diem rates for employers in the private sector, allowing them to establish their own travel policy with the preferred daily rates. However, the CRA does establish conditions that must be met for per diem allowances to qualify as non-taxable income for employees, including:

• Business travel is part of the employment duties of the employee

• The employee works remotely or from a special work site

• The per diem allowance aligns with what the CRA considers a reasonable amount necessary for travel expenses

• The allowance is not given as an extra form of compensation

For government employees traveling on government business, the National Joint Council (NJC) establishes per diem rates for travel within Canada and certain regions of the United States, including Alaska and Yukon, as well as Northwest Territories (N.W.T.) and Nunavut. The per diem allowances issued by NJC have a tiered structure, depending on the length of the business trip:

• Accommodation allowance: Employees receive 100% of the accommodation allowance for the first 120 days of travel. From day 121 onward, this allowance decreases to 50%.

• Meal allowances: For the first 30 days of travel, employees receive 100% of the meal rates. From days 31 to 120, this allowance decreases to 75%. After day 121, the meal allowance further reduces to 50%.

• Incidental allowance: Employees receive 100% of the incidental allowance for the first 30 days of travel. From day 31 onward, the allowance decreases to 75%. 

You can find a detailed breakdown of Canadian per diem allowances for domestic and US travel on the NJC website.

For international travel to destinations other than the USA, Canadian per diem rates are established by the CRA. You can find a complete overview of Canadian daily rates for international travel on the CRA website.

Per diem meals & incidental rates in Canada

Per diem meal rates are meant to cover the cost of meals, while incidental rates are intended to cover minor, out-of-pocket expenses such as tips, local transportation, and other small costs that may arise during travel. These are determined by the CRA and NJC on a yearly basis, and provide individual lodging and M&IE rates for locations all over the world.

To find your specific international destination, you can look it up on the CRA website. Expenses are separated into meal types and incidentals and are presented on easy-to-read tables.

Source

For domestic business travel and trips within certain US territories, you can find the per diem meal rates on the NJC website. These are broken down by meal type and length of stay.

Source

Good to know: 

Employees must keep receipts and details like dates and times in order to submit an expense report to the CRA.

Managing per diem rates for business travel

Keeping up with changing per diem allowances is a task in itself, but knowing where to go to find the information you need is essential for corporate business travel. Per diem allowances for meal expenses can be spent wherever the employee desires; however, it shouldn’t exceed the allotted budget. If a per diem rate is deemed unreasonable by the CRA it will be considered a taxable benefit to employees.